Today, Americans for Tax Reform (ATR) submitted testimony to the New York State Department of Labor in strong opposition to Governor Cuomo’s proposal to end the wage tip credit, which allows service workers to earn less than the minimum wage and earn tips to supplement their income (they are still required to earn at least the minimum wage overall).

“The fact eliminating the tip credit is even under consideration shows how disconnected state government has become from the people it is supposed to serve,” said ATR State Projects Director Doug Kellogg. “The Governor’s proposal is a shameless hit job being executed on behalf of national labor interests. It is a blatant attack on restaurants, and the very workers the Department of Labor is supposed to protect.”

“A wave of service industry workers and business owners are standing up against this misguided proposal. They know what is best for them, government shouldn’t pretend it knows better,” Kellogg added.

The warning signs are clear:

– For each $1 increase in the base wage for tipped workers, a median-rated restaurant is at a 14 percent increased risk of closing, a Harvard Business School study found in studying San Francisco, as California does not have a wage tip credit. A similar effect in New York from the proposal you are considering would mean a 42 percent increased closure risk.

– In New York, over 270 restaurants closed after the minimum wage for tipped workers was increased by 50 percent in 2015.

– An Employment Policies Institute survey of 200 New York restaurants showed almost half of those that charge affordable prices said they will have to close if the tip credit is ended.

– Maine, which recently made a similar change to the tip credit, saw their legislature restore it less than a year later because it was such an overwhelmingly unpopular move. The concerns servers voiced about their net pay decreasing without the tip credit proved to be very real in practice.

For ATR’s complete testimony, click here: