Initiative 82 will hopefully get 86’d

The city of Washington, DC has belatedly realized that passing a law whose purpose is to make a product or service more expensive will cause people to purchase less of that product or service. In this case, the law involved making restaurant service costlier. After a three year-long experiment that cost the lives of several DC eateries, the city may soon get rid of its minimum wage rule for waiters and waitresses.

Mayor Muriel Bowser revealed Monday that she would call for the repeal Initiative 82, the law that slowly phases out the tipped minimum wage for servers at DC restaurants. Bowser instead wants the city to revert to the earlier system that allowed servers to be paid less than the citywide minimum wage if the amount of tips they received from customers made up or exceeded the difference.

This special below-minimum wage is a common practice in many cities and states, and allowed under federal law. In fact, the government allows tipped wages to go as low as $2.13 an hour. The purpose is to ease labor costs on restaurants by using the direct contributions from diners to bolster the workers’ wages.

The practice has generally worked well for those workers. The average waiter or waitress doesn’t particularly care if their money comes from the manager or directly from the customers as long as it goes into their pockets and is enough to meet their needs.

If anything, restaurants have often struggled to hire people as cooks, dishwashers, and busboys because, while those workers must be paid at least the full minimum wage, they don’t typically interact with customers and therefore don’t get tips and frequently don’t make as much as the waiters, waitresses, and bartenders.

Initiative 82 was the brainchild of liberal activist groups and unions who claimed the servers were getting ripped off under this arrangement. These groups argued that servers should get the tips on top of the full minimum wage. The law is still being phased in, with the current wage for servers being $10 an hour.

The upshot of this was that hiring waitstaff in DC restaurants has been getting gradually more expensive in DC for the last three years. To compensate for the added expense, restaurants began adding a service fee on top of customer’s tabs, explaining that it was necessary to be able to comply with Initiative 82.

The activist group One Fair Wage, which pushed for Initiative 82, claimed in a paper last month that it was a success because “February 2025 marks the highest restaurant employment on record since the pandemic.” Of course, using as a baseline the time when people were literally forced to stay at home and restaurants across the country were closing as a consequence is stacking the deck.

Federal Reserve data for Washington, DC shows that employment by the restaurant industry was roughly the same in March 2025, about 30,000 people, as it was in March 2020, the last full month before the lockdown went into effect. The employment level remained stagnant as the population for the Washington metro area grew steadily, and at a faster rate than the rest of the nation. The region’s population grew by 1.4 percent between 2023 and 2024, rising to 6.4 million people. That should have bolstered the rebound of the restaurant sector.

Area restaurants that have closed have, time after time, cited Initiative 82 as the top reason for the decision. Local restaurant groups report that that 76 percent of owners say rising payroll costs is their main concern when it comes to staying afloat. Most restaurants operate on thin profit margins. Even liberals who live in Washington, DC have wrung their hands over whether the initiative backfired.

Initiative 82 was part of an broader effort by liberal groups, especially union-allied ones, to disparage the practice of tipping because it is problematic for them. Pretty much all laws, regulations, and taxes relating to the economy are focused on employers. Customers pay employers, who then use that revenue to pay their workers. The government at various levels adds sales taxes and payroll taxes to those transactions, then taxes the company’s profits. Unions use collective bargaining contracts with employers to control how workers get paid. Tipping can circumvent all of this since the money goes directly from customers to workers, bypassing management. Regulators and unions are therefore left out of the loop. It’s hard for a union to organize workers if they’re not getting most of their pay from management.

Thus, the attempt to phase out the special tipped wage for restaurant workers and replace it with a standard wage. The likely assumption on the part of the activists was that even if the higher labor costs caused restaurant bills to spike, customers would respond by tipping less and eventually tipping itself would die out.

Customers instead responded by dining less, meaning waiters and waitresses got less. Hopefully, the rule is on its way out.