In 2022, Washington, DC, passed Initiative 82, which created a process to raise the city’s minimum wage to $15 an hour by 2027. Leftist activists like One Fair Wage (OFW) pushed for and heralded it, arguing that everyone deserved a “livable wage.”

Specifically, OFW, which bills itself as a nonprofit group but is currently under investigation by the House Oversight and Accountability Committee regarding its IRS 501(c)(3) status due to its lobbying efforts, which are forbidden for nonprofits, has as its goal the raising of restaurant workers’ low minimum wage standards.

“We must raise the minimum wage and end the sub-minimum wage for tipped workers,” OFW states on its website.

The trouble for OFW is basic economics. Raising the sub-minimum wage for tipped workers is proving economically untenable.

This is why Democrat DC Mayor Muriel Bowser, in her latest budget proposal, is calling for the repeal of I-82. As Bowser explains, “DC restaurants are facing a perfect storm — from increased operating and supply costs to higher rents and unique labor challenges. DC must rebalance our system to ensure local restaurants can survive, compete, and employ DC residents.”

Bowser acknowledges the situation while avoiding the actual culprit: Raising the minimum wage for tipped workers is killing the city’s restaurant industry. “Nearly 70% of [restaurants] have already been forced to cut hours and lay off staff,” according to the Restaurant Association Metropolitan Washington. “In 2024 alone, the city saw a record 74 closures. The consequences of inaction are not hypothetical — they’re happening now.”

These are the results before the minimum wage reaches its $15 an hour target. Prior to the I-82 passage, DC’s tipped worker minimum wage was $5.35. A recent survey found that 44% of the city’s restaurants are “likely to close” by the end of the year. The reason is obvious: Restaurants already operate on the tightest of margins and can’t afford to triple their tipped workers’ hourly pay.

Indeed, the whole concept behind the tipping culture is that customers can express their appreciation for the service they’ve received from servers. While there is an expected tip percentage, it is also a system that rewards hard workers.

The irony is that for the restaurants to stay open, they must raise their prices. This reduces the number of customers, and the higher prices also discourage tipping. The result is that both the customer and the tipped worker end up losing.

Rebekah Paxton, a research director at the Employment Policies Institute, observed, “Advocates promised the law would bring higher wages with no impact on tips, but all D.C. tipped workers actually got were fewer tips, lost jobs, and closed restaurants.”

This is the same problem that workers in California have experienced after the state raised its minimum wage to $20 an hour for fast-food workers. The argument has been the same: These workers need a livable wage. However, what has transpired is fewer workers or workers getting fewer hours because the fast-food stores can’t afford to pay. Indeed, many of California’s fast-food stores are turning to technology, such as self-ordering kiosks, to replace increasingly costly low-skill workers.

Ironically, artificially rigging the system in favor of workers works against those very workers’ best interests. It makes it harder for young and less skilled workers to get a job. It disincentivizes working hard and developing one’s skillset to climb the socioeconomic ladder.

What it does incentivize is more dependence on the government to get involved in a process in which it has little incentive to seek the best outcome for workers and businesses.

What will be interesting is if congressional Republicans pass a new budget that includes Donald Trump’s call for no tax on tips. (The Senate passed it yesterday.) Such a law would certainly incentivize more tipped-based jobs. It would also counter the Left’s false narrative that tipped workers are unfairly compensated. But if such a law does pass, what impact will it have on the seemingly ever-increasing tip culture? Will it encourage or discourage Americans from tipping?

Time will tell, but the record shows that minimum wage hikes do little good for workers.