The Hidden Problem With Democrats' $25 Minimum Wage Bill

The article analyzes the Living Wage for All Act introduced by Sen. Chris Murphy (D-Conn.), which proposes raising the federal minimum wage from $7.25 to $25 per hour. The hidden issue is the bill's elimination of the tip credit, a 60-year-old legal structure allowing tipped workers (e.g., waiters) to be paid below minimum wage if tips make up the difference. The National Restaurant Association notes the median wage for waiters is $27 per hour. The article argues scrapping the tip credit could hurt workers and restaurants. Census Bureau research shows that when tipped minimum wage rises, employer-paid compensation rises but tip income declines similarly, offsetting gains. In Oregon, where tip credit is banned, restaurants often add mandatory service fees (auto-gratuities), which become employer revenue under IRS rules, with restaurants keeping 25-40% before distributing to employees, potentially reducing take-home pay. The article suggests tipping fatigue may lead diners to welcome the change, but the overall effect could be negative for tipped workers.