D.C.’s new law that phases out tipped minimum wage could potentially have significant ramifications for Arlington, local restaurateurs say.
Voters in the District last week approved Initiative 82, a measure that essentially ends an employer’s reliance on tips from customers to ensure paying minimum wage to workers.
Currently, employers can pay tipped workers a minimum wage below that of non-tipped workers, contingent on tips making up the difference. Starting next year, however, D.C. employers — primarily restaurants — will no longer be able to do that and will have to pay a gradually increasing rate until 2027, when the minimum wage of tipped workers is set to match non-tipped employees.
As a result of Initiative 82 passing, a number of D.C. restaurants are expected to pass at least some of the cost on to diners by either raising menu prices or instituting a service charge on bills.
This has some local restaurateurs thinking about the impact across the river.
Mark Bucher is the owner of Medium Rare, the steakhouse with locations in D.C., Bethesda and Arlington. He believes that the potential for higher costs in the District is going to drive a lot of diners to Northern Virginia.
“I think this is Mardi Gras,” Bucher told ARLnow. “For Virginia restaurants, in Arlington especially, this is a gift that was given from a misunderstood initiative in D.C.”
He said that while it may take a couple of years, it will likely end up being noticeably less expensive to eat and drink in Arlington compared to the District.
“Where are you going to drink? Where are you going to go to happy hour?” he asked rhetorically. “You’re going to go to Virginia, where it’s more friendly and it’s more open and it’s less expensive.”
Beyond diners, Bucher said that this might also work to Arlington’s advantage in terms of where restaurateurs are looking to open their next business. He told ARLnow that he’s spoken to a few “national chefs” recently that have scrapped plans to come to D.C.
“All the young chefs, all the young mixologists, all the young restaurateurs that would normally come to D.C. are going to be looking in Virginia,” he said. “D.C. blew it, but it’s to Arlington’s advantage.”
Bucher does believe that the initiative was a good idea in concept, but it was voted under the “flawed premise” that restaurant workers don’t make minimum wage. As the law stands now, if an employee does not pull in the equivalent of minimum wage with tips, the employer is required to pay the difference.
Nick Freshman is a little less sure than Bucher that the new law is going to push diners, employees, and restaurateurs across the river. He owns The Freshman in Crystal City and Spider Kelly’s in Clarendon, and is part of a team that owns several District businesses.
He can foresee scenarios where Arlington becomes the recipient of lost District business, but that’s not for certain.
“There’s a lot of ‘potentially’ and there’s a lot of ‘possibly,'” he told ARLnow. “What has happened to the industry across the area, a little bit of a bomb is going off in terms of the disruption. And nobody really knows how to react to it from an operational standpoint.”
Freshman said the perception that it will end up being cheaper to eat in Arlington than in D.C. “doesn’t necessarily hold up.” He explained that if a diner is tipping “appropriately” — in other words, less than in places with a standard tipped minimum wage — then a tacked-on service charge would likely “net out somewhat the same.”
He does agree with Bucher that, while the current system needs to be fixed, the initiative was a “terrible mistake” and won’t end up helping tipped employees in the way that voters expect.
“The current tipping system in our country needs to be changed, it needs to go away. It absolutely adversely affects people of color and women… and I believe there’s some wage theft among owners,” said Freshman. “But this measure will do almost nothing to change that. I think it will make it very hard for smaller, independent restaurants… much more difficult to be profitable and, thus, remain open.”
Both Bucher and Freshman said that the new D.C. law, when it takes effect next year, it will not impact how they operate or manage tips at their Arlington restaurants — save for the fact that it just might be more crowded.
“My Arlington restaurant is going to be packed. It’s already packed. We’re going to be busier,” said Bucher. “And I’m excited.”