Would Portland’s minimum wage proposal be good for restaurant workers?

Mary Hale works behind the bar during the lunch shift at Great Lost Bear. Hale has worked there for 23 years and said she opposes Question D. Brianna Soukup/Staff Photographer

Sara Johns has worked at the Great Lost Bear on Forest Avenue for 31 years as a server and manager.

The pay has always been good, which is one reason Johns has stayed. She’s worried about the effect of a proposal on Portland’s ballot that would raise the minimum wage and eliminate the tip credit, which allows employers of workers who get tips to pay them less than the minimum wage as long as tips make up the difference.

“Nobody who’s done this as a career wants this,” Johns, 51, said of the proposal. “And we understand the bigger picture. It’s not about tips, but about how much a restaurant has to absorb.”

Hayley Wilson is a bartender at the Portland Hunt & Alpine Club, where front-of-house staff already earn $15 per hour before tips, well above Portland’s minimum wage of $6.50 for tipped workers.

“I don’t understand why folks wouldn’t want a $15 minimum as a server or a bartender as a base, stable wage with tips on top,” said Wilson, 31.

The two workers are on opposite sides on whether to eliminate the tip credit or sub-minimum wage for tipped workers. The proposal is part of Question D, which also would raise the city’s minimum wage to $18 per hour by 2025.

The Maine chapter of the Democratic Socialists of America says the referendum it put forward as part of its Livable Portland campaign would increase and stabilize wages.

“Question D is about bringing up the minimum wage for everyone in the city so they’re not reliant on customers to subsidize their wages,” said Wes Pelletier, who chairs the campaign. “These workers deserve to make their wages in full, the same as everyone else in the city.”

Opposition largely has focused on elimination of the tip credit, which some say could lead to lower tips for workers and higher costs for restaurants, potentially forcing closures, layoffs and bigger bills for customers.

Hayley Wilson, a bartender at Portland Hunt + Alpine Club, earns $15 per hour plus tips along with other servers at the Old Port cocktail bar. Wilson and said the higher minimum wage doesn’t negatively impact the amount of tips she receives. Ben McCanna/Staff Photographer

“Those of us who work in the industry understand unintended consequences better than the authors of Question D,” said Joshua Chaisson, a server at the Porthole and a spokesperson for Restaurant Industry United, a group formed to oppose the ballot measure.

“We understand that not only will you see job loss, tips decreased, increased automation taking the dining out of dining and increased service charges … you will also hurt the workers this legislation purports to help.”

A lot of money has come in to fight the proposal. The National Restaurant Association has given $50,000 to Restaurant Industry United. Because the proposal would raise the minimum wage for taxi drivers and ride-share and delivery workers, Uber and DoorDash each donated $25,000 to the group and an additional $50,000 each to Enough is Enough, which is fighting all 13 referendum questions on the ballot.

A group formed to support Question D called One Fair Wage Portland, which is affiliated with the national One Fair Wage movement, has reported only a $5,000 in-kind donation from the national organization.

A LIVABLE WAGE

Roughly 63,500 people work in Portland, with about 1,500 of them working under the tip credit system. About 22,600 workers would see a difference in their paychecks with an $18 minimum wage, according to the Maine Center for Economic Policy, a nonprofit research organization.

Portland employers can currently pay tipped service workers $6.50 – half the city’s $13 minimum wage. Under Question D, the minimum wage for all workers would reach $18 per hour in three years.

At least seven other states already require tipped workers to earn the same minimum wage as all other workers. A study last year by the liberal Center for American Progress found that poverty rates are lower for tipped workers in those states, and employment growth is the same or higher than other states. The study also references tipping’s roots in slavery, which supporters of Question D also have cited.

Hunt & Alpine isn’t the only Portland restaurant that pays its servers far above what’s legally required. A report this month from One Fair Wage named nearly two dozen restaurants that do so, including BaoBao Dumpling House, Ruby’s West End and Terlingua.

Hunt & Alpine co-owner Briana Volk said she and her husband always paid more than the tipped wage, but it wasn’t until May 2020, when the restaurant reopened after closing for COVID-19, that they raised pay to $15 per hour. “One of the things this does is create a livable wage for people so they can live and work in our city and they can hopefully be able to go out to restaurants, and be able to go do things,” Volk said.

Wilson, her bartender, said the higher minimum wage helps in the winter, when business can be slower. “Yes, the money is good in the summer, but why wouldn’t you want stability the rest of the year?” Wilson said.

Many tipped workers have spoken out against Question D, but Wilson believes there’s a misperception that higher pay would make tips go down. “Nobody is asking me how much I make per hour before they decide how much to tip,” Wilson said. “It isn’t impacting me at all.”

A sign opposing Question D hangs on the door outside of Great Lost Bear last week. Brianna Soukup/Staff Photographer

‘NO PROBLEM TO BE SOLVED’

At the Great Lost Bear, a sign on the front door says, “Vote No on D. Protect our tips. Protect our jobs.”

Inside, there is a stack of flyers listing a litany of reasons to vote no: tips will decrease, restaurants won’t be able to afford raises for back-of-house staff, there will be a shift toward counter service and new service charges to cover higher costs.

Mary Hale, a bartender at the restaurant for the past 23 years, said she worries the proposal will have a “domino effect,” causing the restaurant to have to raise prices. “And personally, to segregate it just to Portland doesn’t make sense,” Hale, who lives in Windham, said of the vote.

Some servers around the city say they don’t see a need for change. “I don’t really see what the problem is and why they feel it should be mandatory (to pay a higher base wage),” said Tyler Picard, a server and bartender at Bird & Co.

“If they’re worried about a livable wage, I would say there’s no problem to be solved,” said Picard, 30.

Maine voters passed a minimum wage increase in 2016 that eliminated the tip credit. But the Legislature overturned the tip credit piece the next year after hearing from servers and workers worried the move would hurt the industry.

Chaisson, who was involved in that fight, cited a 2016 study by a U.S. Census Bureau researcher that found that as the minimum wage for tipped workers increases, tips decrease at the same rate. But he said he’s worried about other consequences, like an increase in service charges tacked on to bills that take control out of individual servers’ hands.

“We as tipped workers don’t want to be an experiment, and that’s ultimately what this would be,” Chaisson said.

ANOTHER PERSPECTIVE

In July, the Maine Center for Economic Policy conducted an analysis of the DSA’s minimum wage proposal, at the DSA’s request. James Myall, who wrote the analysis, said he was not paid and the DSA had no say in the final results.

Myall wrote that, in general, tipped wage systems tend to be harmful to workers. He said employers don’t always make up the difference when an employee’s tips don’t add up to minimum wage, and tips can be paid unfairly based on gender, race and physical attractiveness.

“It’s important to note that ending the tipped minimum wage system will not mean the end of tipping by customers,” he wrote, stating that data from wireless payment systems shows that customers in states without a tipped minimum wage still leave tips with frequency and amount similar to other states.

He also noted that the timeline for Question D – moving from a $6.50 base hourly wage for tipped workers in 2022 to $18 per hour in 2025 – “is significantly more aggressive than most minimum wage initiatives seen in the United States.”

“Employers will certainly be able to take steps to offset this increased cost (for example increasing prices) but will have to undertake these changes quickly,” the analysis said.

Myall found that just over a quarter of Portland’s workforce, about 17,800 workers, likely would be earning less than $18 per hour in 2025. Another 4,800, who earn slightly more than the new minimum wage, would likely see their pay go up as employers try to stay competitive.

“The increased minimum wage will help to close existing pay disparities, as women and workers of color are more likely than men and white workers to be paid wages below $18 per hour,” the analysis said.

THE COSTS

The city of Portland has estimated it would cost about $2.1 million for the city to implement Question D, including $701,000 to bring up the wages of city employees currently earning less than $18 per hour and another $875,000 for employees currently earning just over $18 per hour – that is, if it went into effect.

City ordinance states that employee wages aren’t subject to change by citizen referendum. If the proposal were to pass, spokesperson Jessica Grondin said, officials would have to discuss whether and how to implement it.

Some opponents of Question D support raising the minimum wage but don’t like that paired with the elimination of the tip credit. “I would have no problem at all if the minimum wage was $18 as long as they left the tip credit in,” said Shaun McCarthy, who owns Dock Fore. He said many restaurants already pay $18 or more an hour to attract and hold onto staff.

McCarthy pushed back on the notion that opposition to the proposal is driven by restaurant owners who care only about their bottom line, though he estimated an $80,000 annual increase to his payroll. “Prices will have to go up,” he said.

He also expects tipping would change, he said: “I can’t say with 100 percent certainty that people won’t tip something, but they won’t tip what they do now.”

Back at the Great Lost Bear, one customer said she wouldn’t tip less because of servers were paid more. After all, she used to be one herself.

“This industry is not easy,” Karen Fulbeck said as she sat at the bar on a recent afternoon. “You don’t always get happy people. People might think it’s an easy job, but it’s really not. They deserve that money, for sure.”