NY governor's administration to raise tipped wage to $7.50

AP News
Posted: Feb 24, 2015 7:40 PM
NY governor's administration to raise tipped wage to $7.50

ALBANY, N.Y. (AP) — Hundreds of thousands of restaurant servers, hotel housekeepers and other tipped workers in the state will soon make $7.50 an hour before tips, a big raise for them and a significant increase in labor costs for business owners.

Like most states, New York allows businesses to pay tipped workers less than the state's minimum wage as long as tips make up the difference. Currently, servers in New York make $5 per hour, compared with a minimum wage of $8.75.

The increase will take effect Dec. 31, affecting an estimated 229,000 tipped workers. In New York City, the tipped wage will automatically go to $8.50 an hour if the city gets permission to raise its minimum wage above the state's rate.

For Erin Leidy, who delivers pizza in Ithaca, the bump in her base pay will help her cover her car payment and buy new boots. The old pair has holes, a significant problem in wintertime in upstate New York.

"I come home every night with my feet soaking wet and cold," Leidy said. "And I will buy better food. And more of it."

Restaurant owners warn the higher labor costs will force them to raise menu prices, reduce hours for workers or close.

"Tipped workers make their living on tips, not hourly wages," said Brad Rosenstein, the third-generation owner of Jack's Oyster House in Albany, where he says servers often make three times the minimum wage in tips or more. "It's just a question of time before inflation hits the restaurant industry. It's becoming harder and harder to operate a restaurant in New York state."

The increase was approved by Democratic Gov. Andrew Cuomo's labor commissioner as states across the country debate minimum wage increases.

In New York, the wage is set to go to $9 an hour at year's end. Cuomo wants to increase it further to $10.50 statewide and to $11.50 in New York City, where Mayor Bill de Blasio is seeking authority for a $13 wage.

"The sweetest success is shared success," Cuomo said Tuesday at a Manhattan labor rally. "We want business to do well and to have businesses growing. ... That is what New York has been about. That is what this nation is all about. That is what this wage increase is all about."

Seven states including California have abolished the tipped wage, meaning service employees are paid at least the minimum wage before tips.

A state Wage Board in New York reviewed but rejected that idea in its recommendations to state Labor Commissioner Mario Musolino. Musolino rejected the board's suggestion of a separate tip wage of $6.50 for workers who make significantly more than the minimum wage when tips are factored in.

The president of the New York State Restaurant Association, Melissa Fleischut, said the increase should have been phased in so businesses could absorb the impact.

"By rubber-stamping an extreme, unprecedented 50 percent increase it becomes hard to believe New York is really 'Open for Business,'" she said in a statement, mocking a recent state marketing campaign.

Labor advocates, however, vowed to fight for even higher wages.

"My faith that good things can happen in Albany when people step forward to be heard has been restored," said Sara Niccoli, director of the New York State Labor-Religion Coalition. "Next up, full elimination of the sub-minimum tipped wage."

The median annual wage for food servers in New York state is $19,103.