Week in Review – 10/30/2022

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Image: Emil Otto Hoppé, Reader.

It felt like a quiet week, as if the chill in the air had slowed things down a bit. That doesn’t mean we didn’t find some interesting nuggets from the dining world to flag for your interest. And if you read to the bottom, there are some thoughts on D.C.’s Initiative 82 to eliminate the tipped minimum wage. The thoughts are a bit long, so we kept them to the end for those who truly wish to plow through. But first let’s start with updates to our dining guide for the District.

Updates to D.C. Recommended Restaurant List

Page Updated:

La Piquette – We continue our mini-streak of posts about neighborhood spots, this time it is the French bistro in Cathedral. As we once said of Montmartre, every neighborhood deserves a great French bistro.

Boogy & Peel – Tim Carman reviewed the funky, fun pizza spot off the circle in Dupont, and was positive.

D.C. Dining News

Compensation: For years we have been tracking compensation as a festering issue in the restaurant world. Now, the Initiative 82 debate is coming down to the wire with a bunch of summaries.

When the precursor Initiative 77 was repealed by the D.C. Council, it created a wage reporting system. Few companies have reported under the system according to a FOIA dump to an advocacy group. But Amanda Michelle Gomez gets a scoop that it is probably because D.C. data portal is broken.

Read to the bottom for more Initiative 82 thoughts.

Found Treasures: “She had a mission, then unknown to the Fenveses, who were on their way to the first of two Jewish ghettos. She was going into the apartment to rescue, among other things, the family recipe book. The one that Fenves’s mother, Klara, had composed in her tight, tiny and nearly flawless Hungarian script.”

The Crush: Behind the scenes a La Tejana on a busy Saturday morning, and the high-stakes, romantic-pitch origin story: “I was like, our whole relationship depends on the success of this pop-up.” In other La Tejana news, they are expanding their run with 2fifty for brisket breakfast tacos and are close to getting a liquor license.

Phrasing: The Archer crew could teach the Wharf team something.

Drink

Criticism: What if the most subjective wine review is the most objective?

Industrial: A look at the winemakers that seek to make quality wines in large volumes. From Matt Kettmann, whose material was hugely helpful in the deep dive into Santa Barbara wines last year. “Elitists regularly rail against such affordable and accessible offerings—as happens in every craft that equates being small with being special. There are certainly examples of brands that cut corners in ways that aren’t friendly to the palate, to transparency or to the environment, which happens on both ends of the quantity spectrum. But many of these big brands exhibit a captivating degree of consistent quality, and that’s thanks to the real people working just as diligently as their small-batch brethren to create wines of substance and style.”

Other News

Food and Culture: Marco Torres, Taco Columnist for the Houston Chronicle, writes about a contemporary take on the old-school fusion of Mexican and Middle Eastern food. “The next day, the memory of the lovely dinner at Tres was still fresh on my mind, so I asked my foodie friends if anyone else in Houston served Mexican-Arab tacos.”

The Times profiles Madhur Jaffrey. “She published the first of several dozen cookbooks beginning in 1973. When the BBC asked if she would be interested in hosting an Indian cooking show, Ms. Jaffrey sent in an audition tape. “Madhur Jaffrey’s Indian Cookery” premiered in 1982. The series on the BBC was so popular that Ms. Jaffrey remembered being told that the city of Manchester, England, ran out of cilantro after she used it in a recipe with chicken.” Needless to say, she is still going strong and this month her 1985 children’s book, Seasons of Splendour: Tales, Myths and Legends of India, is being republished in hardcover.

Food and Community: Saveur does a feature on the vibrant culinary community in Santa Barbara wine country, where support and sharing creates a sum larger than the parts. “It doesn’t matter if you’re sitting in a seafood tavern eating a bowl of pad Thai or in the alley of a winery popping a bottle of wine and eating a burger off your lap.” One of the things that the region has is a concentration of tasting rooms that are off-premises from the wineries, that can be used to host pop-ups. If only D.C. had such spaces…

Basta: A week ago we flagged that CNN’s Sunday night programming has become a bit click-bait-ish. Now CNN’s new chief has axed outside production, the primary vehicle for those shows. CNN claims it is a cost-saving step, but then said that, “Amy Entelis, CNN’s executive vice president for talent and content development, will explore creating a studio focused on long-form content.” That sounds more expensive than contracting it out, unless by “exploring” they mean not really going to do it but just waiting for a period of time before sending it to the CNN+ graveyard.

In light of CNN’s expected staffing shortages, we will flag possibilities for content of the food world that they could explore. Of course, anyone is free to steal these, not just CNN:

The Post on Exploring the food of Canada’s Indigenous communities;

The Post also looks at the Pork Highway in Puerto Rico: Paying the toll for Puerto Rico Highway 52 takes you deep into the interior of the island, past weathered houses, towering palms, bamboo forests and sprawls of banana trees. Exit onto Route 184 near an area called Guavate, Cayey, and you will come upon La Ruta del Lechón, the “pork highway.”

See also the Madhur Jaffrey piece above, in case that was not obvious. And the wine country story.

Take-back: Russia backs out of deal to allow grain shipments.

Boiled Frog: Climate is affecting whale migration, putting them in the path of fishing grounds, and leading to death and injury.

Restor-aunt: What if the setting is more important than the food? “Restaurants inside stores aren’t a novel idea, and companies like Ikea and Neiman Marcus are well known for theirs. But none have outfitted theirs as lavishly as RH has, transforming rooftops and courtyards in cities like West Palm Beach, Fla., and Columbus, Ohio, into neutral-hued havens for affluent diners.”

Dissenting: A jeremiad against sweet potato fries.

Initiative 82

We have done some poking around on the google. So if you are still undecided, we share these thoughts with you in case they help you decide. But be warned, it is long and inconclusive.

The Case For:

The best summary for ending tipped minimum wage (TMW) is probably this Center for American Progress analysis that looks at both economic factors and societal ones. The analysis is based on comparisons of states where TMW has been eliminated and those that have not. This has obvious limitations because states that are likely to increase minimum wage and eliminate TMW tend to be different in other ways from those that don’t. Additionally, the higher minimum wage in D.C. means that non-tipped workers already do better here than in most other states. The key takeaways:

  • Eliminating TMW and increasing minimum wage across the board (fair wage states), resulted in reduced poverty in those states, especially for tipped workers.
  • Looking at employment data from 2010 to 2016, fair wage states did about the same as non-fair wage states.
  • For businesses in fair wage states, “Restaurant establishment growth from 2011 to 2016 was equal or higher in one fair wage states compared with low states.
  • According to the ROC United study, full-service restaurant employment rates grew by 20.4 percent during those years in one fair wage states but only by 16.4 percent in low states.
  • “They cite a study from National Women’s Law Center that, “Compared with workers in states with a tipped minimum wage of $2.13 per hour, workers in one fair wage states experienced a 33 percent smaller gender pay gap among full-time women workers, as well as poverty rates that were 15 percent lower for women overall and 25 percent lower for women of color.
  • “TMW creates other problems that don’t show up in the macroeconomic data, but do impose costs on tipped workers. Tipped wages are prone to theft by employers. Tipped employees are subject to increased sexual harassment and vulnerable to abusive customers.

The CAP paper makes the standard case that the overall economic impact will be minimal on businesses and beneficial to those near poverty, and non-economic reasons buttress the case for eliminating tipping. Not included in the paper is the additional argument that eliminating TMW will provide a way to better compensate those who work in the back of the house (BOH) like cooks and dishwashers. EPI did a summary of the literature in support of eliminating TMW and found similar data as CAP. They add comparisons to the cities of Seattle and San Francisco, with one fair wage laws. Those show that compared to D.C. workers, tipped workers in those cities did better overall, there is less inequality between tipped and nontipped workers (NOTE: D.C.’s higher than average minimum wage may mitigate that impact). They are less likely to be in poverty. For comparison sake, they also note that tipped workers make up a larger share of the population in the comparison cities, and D.C. has fewer “small businesses” and “This holds true for both restaurants with fewer than 50 employees and restaurants with fewer than 20 employees.”

Economics aside, the main thrust of the pro Initiative 82 side is that it is a step towards eliminating tipping as a way of doing business and a social construct.

Civil rights activist Michelle Alexander summarizes the racial inequality that underpins tipping: “Today, 43 states and the federal government still persist with this legacy of slavery, allowing a tipped work force that is close to 70 percent female and disproportionately Black and brown women to be paid a subminimum wage. A nation that once enslaved Black people and declared them legally three-fifths of a person now pays many of their descendants less than a third of the minimum wage to which everyone else is entitled.” [Links in original]

Twenty-five years ago Michael Lewis wrote from the consumer perspective (somewhat callously) that the proliferation of tipping created confusion, in part because, “if you fail to tip the person getting you that coffee, you may be directing and even substantially affecting that person’s level of income.” But you don’t know by how much. This Vox piece points out the obvious, “Consumers should not be responsible for paying the incomes of a restaurant owner’s employees.”

Putting the customer in role of employer by making them directly responsible for a portion of an employee’s pay leads to obvious bad outcomes. Customers behave like employers in abusive ways. This CAP piece summarizes the sexual harassment numbers for the industry, which leads all other sectors in complaints. “The data on sexual harassment claims are bolstered by other research documenting long-standing concerns regarding its prevalence within this industry. For instance, a recent survey of fast-food workers found that two-thirds of female workers and more than half of male workers had experienced sexual harassment from restaurant management; nearly 80 percent of women and 70 percent of men reported sexual harassment from co-workers; and nearly 80 percent of women and 55 percent of men experienced some form of sexual harassment from customers. In addition, a Hart Research Associates survey found that 40 percent of women working in the fast-food industry had experienced some form of sexual harassment.” Emphasis added.

The Case Against:

That case in favor elides a few points that opponents of eliminating TMW make. First, a large number of tipped workers have adapted to the model and do well by it. That is why the most prominent voices against Initiative 82, other than business owners, are bartenders and servers. They are at the heart of many stories from the past couple years where individual restaurants attempted to eliminate TMW and faced push back from employees. These stories include Zuni Cafe in San Francisco and Danny Meyer’s Union Square Hospitality Group (which later reversed the policy and returned to tipping). The pro-82 voices also tend to use macro data that washes out the specific impacts, such as the CAP piece cited above that uses state-wide data.

The anti 82 campaign was summarized by Kathy Hollinger, then head of the RAMW. Scraping away the framing, her two key points were that 1) tipped employees fear wages will go down for many of them, and 2) shifting the cost of labor to employers (away from customers) will increase costs that restaurants can’t afford in the current economic environment. It should be noted that in 2018 they made the case that changing the rules in a stronger economy was bad policy.

There is some economic analysis that tends to support the RAMW position. This paper argued that “a reduction in the tip credit increases weekly earnings but reduces employment in the full-service restaurant industry and for tipped workers.” This more recent study came out with a similar conclusion: “Our evidence points to higher tipped minimum wages (smaller tip credits) reducing jobs among tipped restaurant workers, without earnings effects on those who remain employed sufficiently large to raise total earnings in this sector. And most of our evidence provides no indication that higher tipped minimum wages would be well targeted to poor or low-income families or reduce the likelihood of being poor or very low income.” A more plain language summary can be found here.

There is one argument specific to Initiative 82 that is starting to get made more forcefully in light of current economic trends. [NOTE: The Post editorial includes a patently stupid argument that Initiative 82 will “transfer higher costs to consumers.” That is exactly what tipping does currently. Though we grant it will make the cost transfer more explicit, which the point the Post is really trying to make.] The initiative has a front-loaded pace of increases to close the gap for TMW that would result in a pay shift from tipping to employers from $5.05 currently to $10.00 per hour by July 1, 2024. The next $6 of gap would be closed over three years until tipped an non-tipped are the same in 2027. If the economic expectations are correct, that means the biggest hit would come at the time the country is most likely to be in recession due to aggressive Fed moves to check inflation.

Other Analysis:

In addition to the DCist, Washingtonian, and other pieces cited above there has been some writing on this, but it is marked by a lack of hard data, lots of anecdotes, and a strong aversion to reaching a conclusion.

The Times did a story on the issue and came frustratingly close to finding data to support the various views. We also note a quote from restaurant lobbyist that is absurd on its face: “There’s a reason people choose tipped restaurant jobs — they know the economics are in their favor,” said Sean Kennedy, the group’s executive vice president of public affairs. The NRA’s own website notes that even after a robust end of summer run, “Eating and drinking places are still 560,000 jobs (or 4.5%) below their pre-pandemic staffing levels – tops among all U.S. industries.” People are not “choosing” tipped jobs. Ironically, it is a pro-elimination figure, David Cooper, the director of the economic analysis and research network at the Economic Policy Institute, who makes the case that it could push already vulnerable restaurants over the edge. The Times paraphrases him, “Restaurants and bars with less popularity and lower productivity could lose out in a substantially higher-wage environment, leading to higher prices and potentially closings.”

However, A Harvard study found that states that eliminated tipping did not suffer more restaurant closures than those that kept the traditional model, but it covered a period from January 2020 to January 2021, raising doubts as to its baseline applicability.

The lack of clarity is reflected in the economic discourse. Reading the Wikipedia page on minimum wage gives a distinct impression that economists just don’t know the impact of changes outside of very controlled circumstances. As one economist that is often cited on the issue says, “The literature on the economics of tipping is relatively small.” Though one study does seem very relevant now that the disruption of the last two years has created more porous conditions between various sectors, especially the leisure and hospitality sector. As the author writes, when adding just one variable [the ability to seek jobs in another sector] throws the entire model into doubt and that one additional variable exists throughout the market then, “the predictions of the textbook model simply cannot be relied on.” The old models generally treated the hospitality sector as a closed labor market (as did large restaurant chains that believed they were entitled to a supply of cheap labor). The last two years has crushed that premise as restaurant workers were fired, then found employment outside of the sector, and then had to be enticed back with higher pay. The free market has finally found some purchase in the restaurant labor market, and it is benefiting workers.

For those that like their critiques academic and neo-Marxist, there is this article. The article’s jargon-filled language prompts an observation about the entire debate. While pro-82 voices reflect the fervor of activists, the anti-82 crowd costs itself points in the debate by coming across as slimy as the Post editorial with the NRA lobbyist quote highlights, or apocalyptic. D.C. is a unique environment where there is a whole lot of BS in the air, but those who live here develop pretty strong BS-detection skills, whether the discourse is strident or slimy. The Council repeal of Initiative 77 only reinforced the crass politics of the issue and sensitized the BS-detectors.

A Few Observations:

Eliminating Tipped Minimum Wage (TMW) will likely push restaurants to move to a service-fee model or increase base menu prices. This will be disruptive, but the shifts of the pandemic era make this more viable now than when Initiative 77 was initially passed. Forcing everyone to do it at once will also mitigate the benefit to those who look to undercut the market while others move to eliminate tipping. As Kathryn Campo Bowen wrote in Eater in September 2020, the stories about eliminating tipping not going well, like Danny Meyer’s experience, were from the Before Times. The most vulnerable are probably the small independent restaurants, but in many cases have led the charge. There were several stories over the last year documenting the increased use of an 18-22% service fee linked to eliminating tipping. We cannot find hard numbers on just what percentage have adopted this model, but they include several prominent places at different price points like Pizzeria Paradiso, 2 Amy’s, The Duck and The Peach, La Collina, and Oyster Oyster. Sidman’s piece citing pro-82 sourcing, that “at least 100 restaurants in DC, via Indeed job postings, that already have the higher base wage.”

Eliminating TMW will likely reduce the pay disparity between the front (servers, bartenders) and back (kitchen) of the house. Though that impact may not be as great as it might have been a few years ago, because overall minimum wage increases and a tight job market have pushed BOH wages up. This 2017 study found D.C. was an anomaly when it came to BOH v. FOH, so the gap may not be that big to start with. Chef Geoff (Tracy) points out that if base prices are increased, then tips will increase (tipping on a more expensive dish) and it will create a wider gap. For the same reason, the impact on poverty may also not be as great as elimination caused in other states.

Eliminating TMW will likely fall hardest on bartenders and servers. Though the impact may not be that great compared to what they fear, and many – maybe even most – will be better off financially and possibly emotionally in the long run. In some ways, this feels like a real-life example of prospect theory.

If Founding Farmers is annoyed about changing its system, it will not likely affect them or other large companies in the long run. In contrast to the independent restaurants, the larger ones will probably be just fine. One interesting nugget from the live blogging of the D.C. Council hearing from 2018 was the claim of Jason Berry of KNEAD Hospitality who owns Mi Vida and other places. He said that if Initiative 77 was not repealed, his restaurants would be closer to break even (as opposed to 5-7% profit) and “Building D.C. restaurants will no longer be an attractive investment.” Such claims sounded a little like crying wolf when at the end of 2021, he talked to Zagat about how the restaurant group went through massive expansion in the middle of the pandemic while shifting its employment model that added costs to each location. “In a restaurant like Mi Vida, it’s going to cost about $200,000 a year more to staff a four-days-at-work program, versus a five-day work week in terms of adding managers and chefs. But we believe that money will be replaced by higher revenue, better check averages, and lower turnover.”

That is the overall impact, but there are restaurants that remain financially vulnerable coming out of the last two years and heading into the headwinds of the upcoming year. Some of those vulnerable restaurants will probably not make it and implementing the shift in compensation will be a contributing factor. The D.C. Council has been largely AWOL on this issue, but cushioning the impact of implementation is a constructive role it could play. It retains the ability to step in and perform the functions of the relevant and responsible legislative body on this issue. Whether Initiative 82 passes or fails, the Council can take testimony, collect information, draft legislation, and enact laws. One factor to consider is whether they will address the underlying issue without being forced to by virtue of the initiative passing. As Barred in DC underscored, direct democracy through initiatives is an end run to the system of government we have. The counter-argument is that sometimes the system needs a release valve and this may be a necessary push.

We focused on the restaurant industry, but it should also be noted that the restaurant industry is the largest tipped-worker employer, but it is not the only one. As the Times piece noted it “can include hotel housekeepers, bellhops, car washers and airport wheelchair escorts” as well as nail salon workers.

There is little defense for tipping as a compensation model in the abstract. All other things being equal, it would not be part of the compensation model if it were being built from scratch. If anything, the intervening four years has confirmed the vulnerable position of tipped workers. It has also put many restaurants into a more vulnerable position. Initiative 82 is a clearly a blunt instrument. Its impact will not fall equally, nor will its benefits, though the higher minimum wage in D.C. and shifts in the labor market likely reduce the impact for better or worse. Is Initiative 82 a necessary tool to push change? Even if change is needed, is it too blunt of an instrument? If pay is going up naturally, is it solving a problem that the market is finally fixing on its own? Those are largely judgment calls, not something data can address. However you decide, we encourage you to vote.

One last thought: There is a belief that tipping improves service performance, but that has been debunked and does not seem a pertinent argument. Just as the belief that it derived from an acronym of “to insure prompt service” is not true.

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