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Wages for NJ restaurant workers rising

However, diner are not tipping as much in response to 'tipflation'

By: Daniel Munoz
NorthJersey.com
USA Today Network - New Jersey

..... Wages for restaurant workers in New York City and the North Jersey suburbs has risen to among the highest rates in the nation, new data from private payroll processor ADP shows.
..... The ADP figures also suggest that while diners are pulling back on tipping in response to a so-called "tipflation" phenomenon, restaurant workers such as waiters are still narrowly coming out ahead.
..... Fro its report, ADP analyzed the pay of almost 100,000 hourly restaurant employees across all 50 states.
..... Nationally, tips mad up 57.4% of compensation to restaurant workers as of September 2024, compared to 67% since August 2021, during a period of time called the "Great Resignation," when businesses hiked pay as they struggle to find workers.
..... Based pay has rinse steadily since the COVID-19 pandemic, ADP said, as state governments have passed bills to increase minimum wages across the nation.
..... New Jersey's minimum wage is rising to $15.49 on January 1, 2025.
..... The wage for tipped workers in New Jersey will rise from $5.26 an hour to $5.62 an hour. If tips and minimum wage combined fall short of $15.49 an hour, employers will have to make up the difference.
..... "As more states increase minimum wages for tipped workers, that makes restaurant workers pay more predictable," says the ADP report.
..... "It also could eat away at full-service restaurant demand as menu prices rise and customers look for ways to lower their bills, such as redying their tip."

Tipping levels plateau

..... ADP found that the median pay for restaurant workers in New York City and North Jersey was $22.03, with a median base pay of $10.65 and tip making up the rest.
..... Tip share was the highest in the Washington metro area while base pay was the highest around Lose Angeles, ADP found.
..... Payment processor Toast found that tips at full-service restaurant stayed relatively flat at $21.48 an hour in September 2024, wh9ich is just 58 cents more than a year ago.
..... A survey of 1,000 U.S. consumers by Popmenu found that the number of people giving the standard 20% tip has decreased each year since 2022.
..... "The continued squeeze on consumer bank accounts is impacting restaurant and other indiscretions that are heavily reliant on tips, Popmenu co-founding CEO Brendan Sweeney said in a statement. "Not only are they dealing with heightened competition for guests, they have to work even harder for the tips that account for the major of tier income,"
..... Wells Fargo meanwhile estimated that just 50% of American consumers will tip or gift servicer workers this holiday season.
..... But the ADP report from this week [12/10/2024] was celebrated bu such groups as One Fair Wage, which campaigns for higher base pay and to end sub minimum wage.
..... Tips account to an "unstable and inequitable foundation for millions of workers' " and a "two-tier wage system," the campaign said in a statement Tuesday. [12/10/2024]
..... "The rise in base wages is not a gift from employers; it's the result of relentless organizing by workers and grassroots advocates, said Saru Jayaraman, president of One Fair Wage.

How COVID changed tipping culture

..... Parul Jain, who teaches finance and economics at Rutgers Business School, has said that tipping got a huge boost during the COVID-19 pandemic.
..... People use to tip on the basis of performance, she said. Now, the near ubiquitous sue of touch screen at places where we'd never previously think of tipping apples enormous pressure.
..... "You fell guilt or misery," Jain said, adding that during COVID when many eaters were struggling, it was not uncommon to tip 30%.
..... Problem is that the expectation remained high. "Tipping norms went up," she said. Moreover, restaurants already faced with increased food costs began relying on increased tips to pay their employees.

Will taxes on tips go away?

..... While on the campaign trail President-elect Donald Trump has vowed to eliminate taxes on tips, a proposal which has drawn mixed reactions from economists.
..... Some like Marlesse Lessing from BankRate, argue that it would mean more take-home pay for workers without having to provide them a raise, while at the same time making it easier to recruit restaurant workers.
..... On the other hand, Alex Muresianu, a policy analyst with the Tax Foundation, wrote that "by making one type of income (tips) exempt from income tax, while other types of income (most importantly, wages) rennin taxable, the proposal would make more employers and businesses interested in moving from full wages to a tip-based payment approach."
..... That would drive up the deficit by tens of billions of dollars over the next decade, Muresianu said.
..... "One could imagine a scenario in which, say, highly compensated lawyers or accountants begin to receive some of their income as voluntary tips," Muresianu wrote. "Lawmakers could design the exemption to prevent or minimize exploitation.

..... Daniel Munoz covers business, consumer affairs, labor and the economy for NorthJersey.com and The Record.
..... Email munged@northernmost; X; danielmunoz100 and Facebook.

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