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To be clear: I don’t endorse inserting a “tip credit” into Seattle’s minimum wage ordinance. It would incentivize wage theft, while setting a terrible precedent for other lawmakers following in our $15 footsteps. Furthermore, despite its deceptive efforts to use small businesses and their tipped employees as a sympathetic proxy, the restaurant industry has failed to make a compelling argument as to why a tip credit is either necessary or proper.

But unfortunately, I’m not Benevolent Dictator (yet!), so as long as the politicians are debating a tip credit, I thought it might be useful to talk about how we might make the tip credit better, by using it as a tool for combatting both forced part-time employment, and wage and tip theft—two employment abuses that afflict many low-wage workers.

The perfect is the enemy of the good, and all that. So to this end I offer five sincere suggestions on how to make a tip credit a better less worse public policy:

Require Strict Business and Accounting Practices:
Any tip credit we implement must be conditional on establishments meeting strict business and accounting standards intended to impede wage and tip theft (and other abuses), while facilitating the investigation and prosecution of claims thereof. Don’t want to be told how to run your business? That’s fine. Don’t claim a tip credit. It’s your choice. Simple as that.

But of course, all the worker protections in the world aren’t worth shit if there’s no mechanism to enforce them. So with or without a tip credit, Seattle’s minimum wage ordinance should include a stable and adequate dedicated revenue stream to fund enforcement of labor standards—plus criminal penalties for violations. Maybe then every Seattle worker will finally get the paid sick leave required by law?

Raise and Exempt the Monthly Threshold:
Currently, the federal tip credit applies to all employees who regularly earn more than $30 a month in tips—the same monthly threshold that was put in place when the tip credit was first created back in 1966. That’s ridiculous. But raising the monthly threshold is about more than fairness; it could also serve as a powerful tool for incentivizing employers to move part-time employees to full-time work.

For example, let’s say we implemented a tip credit, but set the monthly threshold to $860 a month—the equivalent to earning $5 an hour in tips over 172 hours a month of full-time work. But we’d also need to exempt from the credit the first $860 a month in tips as well, in order to avoid plunging tipped workers off some sort of punitive cliff. (Without the exemption, workers earning $859 a month in tips would keep all of them, while workers crossing that threshold would lose their first $860 in tips, regardless of whether they earned much more that month.)

This takes care of all those mythical $80,000 a year servers we keep hearing about. In fact, the $860 monthly threshold and exemption would pretty much apply to any full-time tipped worker currently earning over $29,700 a year.

But remember: this is a monthly threshold, not an hourly one. So a part-time employee only working half the hours would need to average twice the hourly tips—$10 an hour—in order for the employer to start deducting a tip credit. And since the value of the tip credit would almost always be greater than the cost of providing benefits, it would remove much of the existing incentive for pushing tipped employees to part-time non-benefit-qualifying work.

I’m not sure what the optimal monthly threshold is to achieve the maximum economic incentive, but I’m confident that such a number exists. Regardless, any tip credit without a substantially higher monthly threshold than federal law should be off the table.

Prorate the Tip Credit for Part-Time Workers:
This is a variation or addendum to the monthly threshold provision described above. A half-time employee should only qualify the employer for half the maximum hourly tip credit a full-time employee would. For example, if the maximum tip credit is $5.00 an hour, the prorated maximum tip credit on an employee working only 20 hours a week would by $2.50 an hour.

Again, the goal is to dangle the tip credit as a carrot for moving part-time workers to full-time work.

Calculate Tip Credit Per Shift, Not Per Pay Period:
If you don’t think some employers switch workers’ shifts around in order to maximize tip credit, then you don’t know fuck about capitalism. This may not be an issue at Tom Douglas’s restaurants, where every server is allegedly a millionaire or something, but the third shift at Denny’s is a different story. Earn a tip credit worth of tips early, and you may find yourself filling ketchup bottles while a less well tipped colleague is given the better tables in order to push her over the top too. Likewise, earn some big tips early in your pay period, and you may find yourself bumped from a good shift to make room for a co-worker who hasn’t yet qualified the employer to take the full tip credit that pay period.

Regardless, calculating tip credit per shift is just more honest and less prone to manipulation. This should be one of those required business practices mentioned above.

Tip Credit Phase-Out:
Of course the best tip credit provision would be one that phases itself out, giving qualifying restaurants and other tipped businesses a bit more time to transition into our new living wage economy, but without establishing a tip credit as any sort of credible precedent.

For example, let’s say we phase in a $15 minimum wage with a tip credit over three years: $11/hour in 2015, $13/hour* in 2016, and $15/hour* in 2017. (* Adjusted for inflation.) Then we phase out the tip credit over the next three years, one third at a time.

The maximum legal tip credit would be the difference between Seattle’s higher minimum wage and the effective minimum wage for tipped employees under state and federal law—currently Washington State’s $9.32 an hour minimum wage. Assuming annual inflation of 1.75 percent, and no hike in the state or federal minimum wage other than CPI, the minimum wage and the minimum labor cost for tipped employees would rise accordingly:

Year	WA min wage	Seattle Min Wage	Max Tip Credit	Min Labor Cost*
2015	$9.48	$11.00	$1.52	$9.48
2016	$9.65	$13.23	$3.58	$9.65
2017	$9.82	$15.53	$5.71	$9.82
2018	$9.99	$15.80	$3.87	$11.93
2019	$10.16	$16.08	$1.97	$14.11
2020	$10.34	$16.36	$0.00	$16.36

* Minimum Labor Cost assumes employee earns enough tips for employer to take the full tip credit.

It is important to note that no worker would take home in cash compensation (wages plus tips) less than column three: the Seattle minimum wage. But for tipped employees, the wage portion of that compensation could be as low as column five, with employers deducting from their minimum wage obligation up to the maximum tip credit or the employee’s earned tips, whichever is smaller. Under this scenario, the impact on labor costs at tipped establishments is substantially delayed, giving them ample time to adjust their business model to the new reality.

Conclusion:
The tip credit as implemented in 1966 was little more than a straight-up giveaway to the powerful lobbyists at “the other NRA,” the National Restaurant Association. Washington State voters have twice approved minimum wage measures with no tip credit, and given the subsequently impressive employment growth within our restaurant industry there is no good reason to second guess Washington voters now.

That said, if are going to set a precedent by accepting some sort of tip credit, the least we can do is set a precedent of making the tip credit better by both incentivizing full-time work and combatting wage and tip theft. Any and all of the proposals above would help achieve that, so I hope this post adds a little more thoughtfulness to the debate.

For the past three-plus years I spent so much time writing for Slog that I barely had time to read it, let alone leisurely browse the rest of media/blogo-sphere. The result is, apart from a handful of major media outlets and a few favorite politically oriented sites, I’ve pretty much lost touch with what else is out there.

So I’m curious: what are you reading? Where are you getting your local news, reviews, and commentary? Which sites do you find indispensable, or merely just a damn pleasure to read, guilty or not? Of course, Facebook and Twitter—I understand that. But which sites and writers, if they disappeared tomorrow, would you miss the most? And why?

Seriously. Help me reconnection to my post-Stranger world.

– Happy home opener day, Mariners fans. It’s maybe not the nicest day for it.

– Happy? equal pay day.

– It’s always pretty to think that Washington will come together in bipartisan comity and start governing for the good of all the people. To think this will happen as a result of the vastly wealthy having even more influence than they already have strikes me as so optimistic as to be delusional.

– What Does 17% Mean?

– Here’s another benefit in Seattle for Oso if you’re interested in it.

– We should definitely keep policing other people’s weight.

– Poor, poor Representative McAllister

There are lot of good reasons to oppose a “tip credit”, but one that isn’t often discussed is the way it incentivizes bad behavior on the part of unscrupulous employers by magnifying the rewards of wage theft. The math is subtle, but simple.

Let’s say you earn $27 in tips over the course of a nine hour shift. Under a straight up $15 minimum wage, you’d earn $15 an hour in wages plus $3 an hour in tips for a total cash compensation of $18 an hour. That’s $162 in tips and wages over a nine-hour shift.

But under a tip credit, that same shift would earn you only $135: $12 an hour in wages, plus $3 an hour in tips, for a total of $15 an hour. If your tips per hour are smaller than the maximum tip credit, all of your tips go toward your employer’s tip credit. You know—in his pocket. Whether you earn a dollar or two an hour more in tips or a dollar or two less, it makes no difference on your paycheck—all it does is raise or lower your employer’s labor cost by an equal amount. And that’s where the wage theft incentive comes in.

For example, let’s say your employer cheats you out of an hour, forcing you to clock out after only 8 hours or recording only 8 hours on your pay stub. Well, of course you lose an hour of pay, so your paycheck goes down $15 to $120. But your employer, who would have paid you $12 an hour over the course of a 9-hour shift, now gets to spread your $27 in tip credit out over fewer hours. $27 divided by 8 equals about $3.38 an hour in tip credit. So rather than paying you $12 an hour for 9 hours of work, your employer now only pays you $11.62 an hour for 8 hours of work. Such a bargain!

Of course, not all employers cheat like this. I’m guessing most don’t. But some do. And as the free marketeers will tell you, if you incentivize bad behavior, you’re likely to get more of it.

With Mayor Ed Murray expecting a recommendation on a minimum wage ordinance by the end of the month, members of his Income Inequality Advisory Committee are now negotiating in earnest. Nothing is set in stone, but the political realists on the committee realize that the proposal Murray ultimately submits to the city council will be for a $15 an hour minimum wage—if in name only. The proposal will also include some sort of multi-year phase-in, at least for “small” businesses; that’s a concession council member Kshama Sawant has already made from her initial “$15 Now” position. Also, expect to see tougher enforcement of wage and tip theft attached to the proposal.

Of course, details! But apart from the main points above, the debate has mostly shifted toward the definition of the word “wage.” Many on the business side of the table are arguing for a so-called “total compensation” minimum wage that would count both tips and the cost of providing benefits towards the employer’s $15 an hour obligation. As I’ve previously explained, that’s bullshit. Total compensation would mean a minimum wage worker earning $3 an hour in “benefits” (however those are defined and valued—again details!) would only take home $12 an hour in cash take-home pay. That’s not $15 hour! And that alone should make “total compensation” a nonstarter for anybody (or any mayor) who seriously claims to support raising the minimum wage to $15.

If we were talking about, say, an $18 total compensation minimum wage, that would be different. But we’re not.

(Also, because the cost of providing health care benefits inflates at a rate many times the Consumer Price Index, a total compensation model would erode the real value of an inflation-indexed minimum wage over time, as health care benefits gradually consumed a larger and larger share of total compensation. Honestly, read my analysis. The numbers are all there.)

Because of these obvious political and policy flaws, I am convinced that some on the committee are proposing total compensation as a mere negotiating tactic (you know who you are), intended to make way for a classic “tip credit.” (Opponents call it a “tip penalty.” What it really is, is a “tip deduction,” but we’ll use “credit” here for the sake of avoiding confusion.) A tip credit would permit employers to deduct from their minimum wage obligation the employee’s tips, up to the difference between Seattle’s minimum wage and the effective minimum wage for tipped employees under state and federal law—currently the Washington State minimum wage of $9.32 an hour.

To be fair, assuming no wage or tip theft, a tip credit would guarantee $15 in cash compensation. So there’s that. And on the vast majority of minimum workers who earn little to nothing in tips, a tip credit would have little to no impact. Considering where we were when striking fast food workers first started making the demand for $15 an hour, a $15 minimum wage with or without a tip credit would be a remarkable accomplishment.

So then why are the folks on the workers’ side of the table so adamantly opposed?

Because precedent!

Washington is one of only seven states without a tip credit, a distinction our restaurant industry and its Republican surrogates have relentlessly attempted to “fix.” Throughout much of the rest of the nation, the minimum wage for tipped employees is only $2.13 an hour, an absurdly low figure that inflicts poverty and abusive work conditions on a disproportionately female and minority workforce (70 percent of tipped workers are women!), while providing near-free labor to many restaurateurs. Wage and tip theft is rampant, and tip-dependent workers are forced to put up with all sorts of humiliation (and even outright assault) in order to secure the best shifts, and earn the highest tips.

Yes, the problem is with our tipped culture as much as it is with the tip credit, but a tip credit only makes things worse. Since the first $5.68 an hour of a worker’s tips would go straight into the employer’s pocket (as a deduction from their $15 obligation), any employee earning less than $5.68 an hour in tips (and most tipped employees do) would cost more to employ. Thus there would be even more pressure on a waitress to unbutton another button on her blouse in order to lower her employer’s labor costs.

I’ve got a daughter. Do I really want her being forced to show a little extra cleavage in order to keep her job, let alone up her hourly take-home pay? No.

So while $15 an hour with a tip credit would be a helluva lot better for most minimum wage workers than $9.32 an hour without, worker advocates and labor representatives simply don’t want to set the precedent that tip credit is an appropriate policy. They rightly fear giving state Republicans and squishy pro-business Democrats the ammunition to impose a tip credit statewide—a policy that would lower the income of Washington’s tipped workers everywhere outside of Seattle. That’s simply unacceptable. And they are also looking to set a good example for the cities and states that will inevitably attempt to follow in Seattle’s $15 an hour footsteps.

A tip credit is bad policy. It incentivizes wage and tip theft (an incentive I will illustrate in a subsequent post). It deceives consumers (who have no means of knowing if their tips are increasing the incomes of servers, or just decreasing the labor costs of employers). It helps perpetuate an unjust and abusive system. It is a totally arbitrary policy created in 1966 to buy off the National Restaurant Association (“the other NRA”) from opposing a federal minimum wage hike. And that is exactly what the Washington Restaurant Association and its surrogates are attempting today.

All that said, there may be room for a little compromise. But I’ll save that discussion for another post.

In Goldy’s metacommentary piece yesterday on The Seattle Times’ oppposition to funding Metro, he gave them some well deserved shit for pretending to oppose it because of its regressive nature.

Oh no! It’s a “regressive” tax! This from an editorial board that has opposed every single progressive tax (like, you know, on income or estates) that has come before it. What a bunch of fucking concern trolls.

But I think it’s even worse than that: We’ve known something was coming for a while. The Seattle Times ed board hasn’t exactly been leading the charge for a better system. Dow Constantine has been telegraphing since he got into office that he’d do something if the state didn’t act. And in that time The Seattle Times has neither suggested what that something ought to be nor have they pushed the legislature to act to allow King County to have a better system.

Could you imagine how different the debate would be in the state, if the state’s leading — or at least largest — paper had editorial after editorial pushing the legislature to let King County tax ourselves however we want? If they demanded that even if the GOP didn’t pass a complete transit package, that they at least give us a more progressive option?

Please join us tonight for an evening of politics under the influence at the Seattle Chapter of Drinking Liberally.

We meet every Tuesday in our new home at the Roanoke Park Place Tavern, 2409 10th Ave E, Seattle. The starting time is 8:00 pm, but some folks show up even earlier for dinner.

Can’t make it to Seattle? Check out another Washington state DL over the next week.

The Tri-Cities, Vancouver, WA, and Redmond chapters also meet on Tuesday. On Wednesday, the Bellingham chapter meets. On Thursday the Bremerton and Spokane chapters meet. The Centralia chapter meets on Friday.

With 215 chapters of Living Liberally, including nineteen in Washington state, four in Oregon, and three more in Idaho, chances are excellent there’s a chapter meeting somewhere near you.

I’m trying to generate the appropriate outrage at the Seattle Times editorial board for endorsing a “No” vote on King County’s Metro-saving Proposition 1, but then it’s kinda like raging at my dog for killing squirrels. It’s what she does. It’s her nature. And reading this editorial is like watching the editors chase a squirrel.

VOTERS should weigh the regressive tax request embedded in King County Proposition 1 against history.

Oh no! It’s a “regressive” tax! This from an editorial board that has opposed every single progressive tax (like, you know, on income or estates) that has come before it. What a bunch of fucking concern trolls.

The pattern is clear. As in previous rounds of asking taxpayers for more money, Metro sees its shortfall as a revenue problem, rather than thoroughly confronting its well-documented unsustainably high operating costs.

And since the pattern is so “clear” and these unsustainably high operating costs are so “well-documented,” we can presume the editors are about to clearly document them.

Um… no:

Voters also should consider the near future when they face many other ballot requests, from parks to city transportation. Tax fatigue could jeopardize crucial investments such as public prekindergarten.

Yes, please consider the other future tax measures the Seattle Times will endorse “No” on. For the children!

When Washington voters in 1999 approved Initiative 695, it wiped away a vehicle excise tax that gave the King County Metro system about one-third of its revenues.

In response, King County leaders asked voters for a 0.2 percent increase in the county sales tax “to preserve and improve our bus system,” promising 575,000 more hours of bus service, as the 2000 voter pamphlet read. Voters said yes. Over the next six years, they got only 203,000 hours of new bus service.

Yes, voters did approve I-695. But not Seattle and King County voters. We rejected it. Also, the MVET that I-695 wiped away was the most progressive tax in the most regressive tax system in the nation. But I don’t remember the fucking concern trolls at the Seattle Times shedding any tears over that.

In 2006, King County leaders again asked for a 0.1 percent sales tax increase, to fund Rapid Ride expansion. Voters said yes. The promised expansion is behind schedule, and in spots is not the superfast service promised.

And in 2008 the nation plunged into the Great Recession, taking Metro’s sales tax revenue with it.

During this period, driver wages rose significantly, to the point that Metro had the third-highest-paid drivers in the country. In 2008, Metro attracted the scrutiny of the Municipal League of King County, which issued a damning report on the agency’s cost structure. In 2013, it issued a grumpy follow-up report, noting modest improvements but reiterating cost structure concerns.

A) That was six years ago. B) Don’t trust this editorial board’s numbers. Ever. And C) Unionized bus drivers! It burns!

In 2012, after sales-tax revenues crashed because of the Great Recession, Metro got a boost with a temporary $20 car-tab tax.

A temporary fee that only made up a portion of Metro’s shortfall. The rest was met through cost cuts, fare hikes, and using up the last of its cash reserves. Also, this temporary fee was intended to tide us over until the legislature approved a more stable funding source. It never did. So King County is using the only taxing authority it has.

This year, King County leaders are back again. Metro faces a $75 million deficit when that car tab expires. This time, the request is breathtaking, for its size and for the regressive nature of the proposal. A $40 hike in car tabs and another 0.1 percent sales tax increase would yield an estimated $1.6 billion over 10 years. Three-fifths of it goes to Metro, the remainder to roads, bike lanes and road diet programs.

Of course they’re back again. The temporary $20 car tab fee expired, and the reserve funds are all used up. Everybody understood it was only a stopgap measure at the time the car tab fee was passed. And the size of the package is no more “breathtaking” than the MVET authority Olympia promised, but refuses to deliver. The two tax packages raise exactly the same amount of revenue, and for exactly the same purposes.

As for the regressive nature of the tax, yes, car tabs and sales tax are more regressive than an MVET, which taxes the value of your car, and thus hits owners of more expensive vehicles harder. But what the fucking concern trolls at the Seattle Times don’t tell you is that is that the package includes a $20 rebate for low-income households, as well as a new low-income fare. And of course, nothing could be more regressive than slashing bus service!

Metro’s defenders cite recent cost-saving reforms in the 2010-2013 contract with the Amalgamated Transit Union Local 587, including a wage freeze the first year and an overall 2.3 percent increase the second year.

In the private sector, that would be called a rational response to an economic crisis. In the public sector, those concessions are deemed justification for a breathtaking new revenue increase.

Though the Municipal League is supporting Proposition 1, it does so “reluctantly,” citing ongoing concerns with cost controls and efficiencies. It urges Metro to do better, including measuring itself against peers.

But: If voters approve Proposition 1, King County would have no incentive to do the hard work of bringing down labor costs that still saddle Metro with the fifth-highest driver costs in the country, behind only Boston, Santa Cruz, Washington, D.C., and Chicago.

Let’s be clear, the Seattle Times opposition to Proposition 1 is based solely on its opposition to anything that remotely smells of organized labor. The drivers union is the editors’ squirrel. It doesn’t matter how regressive the taxes in Prop 1 are—if the measure balanced the tax hike by busting the union, the paper would happily wag its tail in approval.

Also, don’t trust the editors’ numbers. They’re almost always wrong.

If voters turn down Proposition 1, King County threatens a round of devastating bus-service cuts, many on popular routes including those carrying students to college. County and Metro leadership should not let that happen.

County leaders are trying not to let this happen. By raising revenue. Because, you know, shit costs money.

The threat ignores other options, including further fare increases and ever tighter control of administrative costs and capital expenses.

And the editors ignore the fact that Metro has been pursuing these options for years. Metro is about to raise fares for the fifth time since 2008—and it already has some of the highest farebox returns in the nation.

Cutting services is not a threat. If Prop 1 fails, service will be cut, just like it was in Pierce and Snohomish counties when they failed to raise new tax revenue.

King County has been negotiating with the drivers union for nine months. Talks are now in mediation. Both sides could earn voters’ trust with quick resolution of a contract that further drops costs.

Jesus. Again with drivers union. Squirrel!

Saying no to Proposition 1 is not a message that transit does not matter. It does. The region, particularly job-dense downtown Seattle, needs reliable bus service. Nor should a no vote be read in Olympia as a sign the state Legislature does not need to pass a transportation package that includes less regressive transit tax options. It does.

No, it’s a message that low taxes matter more than transit. At least to the editors of the Seattle Times.

Vote no on Proposition 1, and send King County government a message that Metro has more work to do on righting its cost structure before asking voters for more revenue.

Actually, all the Seattle Times is doing is sending a message that it is either too stupid to understand that time has run out, or too dishonest honest to admit it. The legislature was supposed to grant Metro MVET authority two sessions ago, but senate Republicans have persistently blocked the bill, you know, just because.

The $20 tab fee expires in June. The reserve funds are empty. Whatever other options may exist cannot be exercised in time to avoid devastating service cuts. Reject Prop 1 and Metro will slash service. That’s not a threat. That’s reality.

But look: squirrel!

– I voted so if someone cuts your bus service, blame someone else.

– Nothing freaks me out like Muslims eating meat butchered in a fashion that affects me in no demonstrative way.

– Whether or not a person chooses to vote, elections happen and someone wins. And then, as in Wisconsin and elsewhere, the winner wins big, and the big winner is a raging ideologue, they tend to stomp hell out of their opponents.

– If you’ve been affected by the landslide, FEMA is asking you to call 1-800-621-FEMA (3362)

– These are some solid new stereotypes about women.

– Right Wing Science Dude.

Took me all day, and I’m not sure the DNS is fully propagated, but it looks like HA is up and running on its new server, and omigod is it faster! If you think the website was slow, you should’ve tried using the Admin. Can’t tell you how stupid I feel for making everybody suffer through the total shit show that our old server became.

Anyway, check things out and let me know if anything is broken.