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NYC Restaurant Workers' Tips Have Declined Due to COVID-19—The City's Surcharge Is Only Making Things Worse, Report Says

 

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A report found that 59 percent of workers said their tips had dropped at least 50 percent since the start of the pandemic.

By Mike Pomranz 
February 26, 2021

COVID-19 has wreaked financial havoc on the entire restaurant industry, exacerbated in many places by a rollercoaster of openings and closings. But a new report looking at New York found that returning to work has come with a frustrating side effect for many workers in the state: Tips are often down from where they were pre-pandemic, and in New York City, a surcharge intended to help struggling restaurants has actually made things worse for many employees' wallets.

The report comes courtesy of One Fair Wage—a non-profit with the stated goal "to end all subminimum wages"—so their stance on how tips should be tied to wages is clear. Regardless, their findings present a troubling portrait of how the coronavirus may be affecting restaurant workers' tips in other subtle ways beyond obvious factors like reduced capacity.

Speaking to about 800 workers across the state and in New York City within the past five months, One Fair Wage found that 59 percent of all workers stated their tips had dropped at least 50 percent since the start of the pandemic. While broader financial hardship may explain why some customers were being stingier, a significant factor across the board is believed to be the inherent drop in customer service that comes with dealing with safety protocols: 65 percent of workers said they believed their tips had decreased due to enforcing these measures.

"These workers are being asked to enforce social distancing and mask rules with the very same customers from whom they must obtain tips to survive," Saru Jayaraman, president of One Fair Wage, said in announcing the report. "They are being asked to return to work and expose themselves to the virus for a nominal subminimum wage when tips are already down 50 to 75 percent."

In New York City specifically, the council gave restaurants the go ahead to add a COVID-19 recovery surcharge of up to 10 percent back in September. But though this additional revenue can certainly help restaurants, One Fair Wage found it was detrimental to tips: 35 percent of the nearly 350 workers they spoke with in NYC said their restaurant was using the surcharge, and 57 percent of those said their tips had dropped since the surcharge was added—likely a result of customers trying to save money elsewhere or not understanding where the surcharge would go. Restaurants can pass the extra revenue to workers, but they aren't required to.

"We need to support New York City's restaurant industry during the COVID-19 crisis, but as we do that, local government officials cannot just provide relief for restaurant owners at the expense of restaurant workers," Jayaraman added. "The surcharge is not effective if restaurants aren't paying their workers a minimum wage."

As a result, One Fair Wage even suggests that the long-term viability of the restaurant industry could be in jeopardy: The report also found that 38 percent of New York City restaurant workers told the group they were considering leaving their job.

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