Media clips
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The left-leaning Economic Policy Institute think tank estimated in a report last week that the 18 states that will boost their respective minimum wages in 2018 will effectively require employers to distribute more than $5 billion in additional pay to 4.5 million workers. (EPI cited throughout)
U.S. News and World Report December 27, 2017 -
Employers are “trying to hide the fact that it’s a huge windfall to restaurant owners,” said Heidi Shierholz, senior economist and director of policy for the Economic Policy Institute, a left-leaning think tank based in Washington, D.C. Ms. Shierholz, who served as chief economist for the Labor Department during the Obama administration, pointed to previous studies that have shown employers frequently pocket tips illegally. “It opens up a new avenue for wage theft,” she said. This month, she estimated the proposed rule would allow employers to pocket $5.8 billion in tips — about 16 percent of all those earned by tipped workers in 2016, according to her analysis of reported tips on tax returns.Pittsburgh Post Gazette December 26, 2017 -
Starting in 2018, 18 states will increase their minimum wage. EPI says that will provide over $5 billion in additional wages to 4.5 million workers, with increases ranging from $0.35 in Michigan to $1.00 in Maine. This is a trend to watch, because minimum wage increases can help boost average earnings data at the margin. And since low-income earners have a high propensity to consume – translated from econo-speak, they spend more of each dollar they earn – high floors can also matter for consumer spending. More on that here.
Bloomberg December 26, 2017 -
The left-leaning Economic Policy Institute estimates that the new rule would allow employers to seize about $5.8 billion in tips a year, taking an average of about $1,000 of every server’s income. Whether that money winds up in the back of the house or the owners’ back pockets will depend entirely on the owner’s integrity.
St. Louis Post Dispatch December 24, 2017 -
More broadly, while economic evidence suggests that cutting taxes on corporations does lead to some trickle-down benefits for workers, it also suggests that the sums are smaller than the White House has projected and would likely take some time to show up in paychecks. “These raises have zero economic connection with the tax cuts,” said Josh Bivens, an economist at the Economic Policy Institute, a left-of-center think tank. “We know this because the theory linking cuts to wage gains requires other mechanisms to fire first—mainly the rise in capital investment and productivity growth,” which would “permanently reset salaries at higher levels, not get firms to bestow one-time bonuses.” Businesses would need to use their additional funds to invest in machinery, equipment, and research and development, making their workers more productive, and then paying those workers for that additional productivity, in other words. Of course, these companies could claim they are issuing payouts now in anticipation of that chain of events, but the real process would take some time. (Josh quoted throughout)
The Atlantic December 22, 2017 -
How big of a deal is this? Maddeningly, the Labor Department didn’t estimate the economic impact, as it is required to do (and a legal challenge on those grounds could well stop this). The department said that it lacked the data to compute how much money would be involved, though it did calculate that there are “up to 1,298,231 tipped workers in 206,770 full-service restaurants, and 40,095 drinking places” around the country. The left-leaning Economic Policy Institute helpfully crunched some numbers; it estimates, loosely, that restaurant owners could pocket $5.8 billion a year under the proposed change, or 16% of the estimated $36.4 billion in tips. The group did not estimate how much of the tips would get redistributed from servers to kitchen workers, but the amount of the transfer would likely be significant in an industry notable for low pay, long hours and existing problems with wage theft.
Los Angeles Times December 21, 2017 -
“What the last few decades have shown us is that corporations are quicker to pull the trigger on layoffs, less likely to pay workers as much and less likely to contribute taxes,” said Josh Bivens, research director at the Economic Policy Institute, a left-leaning think tank. “I don’t think they got mean overnight. But changes in external conditions — globalization and the assault on unions — meant that they could claim a bigger piece of the pie.”
The Washington Post December 18, 2017 -
TIP-POOL ESTIMATE SINKS: The left-leaning Economic Policy Institute revised downward its estimate of the economic impact of a tip-pooling rule change on Thursday. The group estimates $5.8 billion in workers tips will be lost to employers rather than its original estimate of $6.1 billion. The change comes from taking into account “more protective state laws” against tip crediting in Montana and Washington. DOL has yet to publish a quantitative analysis of the proposed rule change, which would allow employers to redistribute tips to back-of-house employees. Read the report here.
Politico December 18, 2017 -
Trump’s Labor Department Says Employees Don’t Own Their Tips
Truthout/Michael Arria
Trump’s tip-pooling move would give more power to businesses in an industry where wage theft is already rampant. The Economic Policy Institute (EPI) recently released a report that assessed minimum wage violations in the 10 most populous US states. The EPI found that 2.4 million workers are reportedly paid less than the minimum wage in their state. This amounts to about $8 billion in stolen wages every year and, if these states’ numbers are in line with the rest of the country, the national number is probably around $15 billion. According to some studies, one in five workers is already having their tips stolen. This reality is set to get worse with Trump’s Labor Department making decisions and a powerful industry group guiding policy.
Truthout December 18, 2017 -
“Consider a common employment arrangement in which a staffing agency hires a worker and assigns her to work at another firm. The staffing agency determines some of the worker’s terms of employment (such as her hiring and wages), but the other firm directs her daily tasks and sets her schedule and hours,” Marni von Wilpert, of the left-leaning Economic Policy Institute, explained in a blog post.
CBS Moneywatch December 18, 2017