WASHINGTON, D.C. – On June 19, D.C. voters approved Initiative 77 by a margin of 55 to 45 percent. The initiative called for workers who receive tips to receive a minimum wage equal to the minimum wage for other workers by 2026. At the time of the vote, the minimum wage for tipped workers was $3.33 per hour, which was just one-third of the minimum wage for other employees. While many of these workers earn more than the minimum wage through tips, many do not.
Almost immediately, restaurant-industry lobbying groups went to work to persuade D.C. Mayor Muriel Bowser and members of the D.C. Council to annul the results of the ballot initiative by legislation.
And on July 9, 2018, seven D.C. councilmembers – a majority of the Council – introduced legislation to repeal Initiative 77. A hearing on the bill is scheduled for September 17, 2018.
This report explores the role that campaign contributions play in giving those in the restaurant industry opposed to Initiative 77 an outsized voice that threatens to drown out the voices of the voters who approved the measure on election day.
This report also exposes the hypocrisy of leaders of the anti-Initiative 77 movement who have violated current wage and hour laws while arguing that the remedy that voters approved is unnecessary.
Along with the report, Public Citizen released a detailed data map of all of the contributions from anti-Initiative 77 individuals and entities.
- Anti-Initiative 77 entities contributed $236,013 to D.C.’s current 14 elected officials during their two most recent campaigns. Nearly all of the money went to officials who came out against Initiative 77.
- The average contribution to D.C.’s elected officials over their two most recent campaigns by anti-Initiative 77 entities has been $733, about double the $388 average contribution by other donors.
- Anti-Initiative 77 entities have contributed $130,270 to the seven D.C. councilmembers who have signed on to legislation to repeal the initiative. That is three times more than the $40,693 that they have given to the six councilmembers who have not signed on to the repeal legislation.
- Mayor Muriel Bowser has received the most from anti-Initiative 77 individuals and entities, more than $65,000.
- During the 2018 cycle thus far, Bowser and Council Chairman Phil Mendelson, the two most important elected officials in deciding the fate of Initiative 77, have received 80 percent of the money from anti-Initiative 77 forces.
- Anti-Initiative 77 forces contributed $25,900 to D.C. elected officials in March 2018. Of this, $20,250 went to Mendelson.
- Mendelson has received $31,500 from anti-Initiative 77 forces during the 2018 election cycle. During his last campaign, in 2014, he received only $2,500 from these contributors.
- More anti-Initiative 77 contributions came from corporations, LLCs, and corporate PACs than people. In total, 56 percent of the money ($131,743) came from corporations, LLCs or corporate PACs.
- Opponents of Initiative 77 claim that it is not necessary because restaurants are required to ensure that tipped employees’ wages at least equal the minimum wage. Several restaurants in Washington, D.C., have faced allegations of violating wage and hour laws. A few cases resulted in class-action settlements:
- Farmers Restaurant Group, which opposes Initiative 77 and contributed $6,000 to the anti-Initiative 77 committee, recently settled – without admitting wrongdoing – a class-action lawsuit for $1.49 million for allegedly failing to pay overtime and failing to pay the minimum wage. Rather than pass a minimum wage increase, Farmers’ co-owner Dan Simons proposed allowing an employee to work “60 hours or 55 hours” a week with no overtime pay in order to raise wages.
- Clyde’s Restaurant Group, which opposed Initiative 77, settled two lawsuits. In 2010 and 2011, Clyde’s was sued in D.C. and Virginia for, among other things, allegedly failing to pay its tipped employees the minimum wage and for altering time clock entries in order to avoid paying overtime. Both lawsuits settled without Clyde’s admitting liability, one for $345,000 and the other for an undisclosed amount. Clyde’s corporations and executives have contributed $57,600 to the campaigns of the elected officials covered in this analysis and contributed another $16,000 to the to the anti-Initiative 77 committee.
Workers of color are disproportionately affected by the low tipped wage, and within the tipped worker community, women are twice as likely to live in poverty as their male colleagues.
Undoubtedly, some servers in D.C. make more than the minimum wage. For example, servers working at places like Ghibellina, the restaurant owned by outspoken anti-Initiative 77 restaurateur Ari Gejdenson where patrons can dine on $110 porterhouse steaks, are likely making well above the minimum wage (Gejdenson and his associated corporations contributed $6,000 to the anti-Initiative 77 committee). But for restaurants where menu items are far less than $110, one can envision a scenario where a slow night could leave tipped workers with less than minimum wage. Further, it is not just servers and bartenders affected by the lower tipped minimum wage. The law would increase the wages of nail salon workers, bellhops, parking lot attendants, hair stylists and pizza delivery drivers.
One has to wonder if D.C. elected officials – who are no stranger to advocating for greater representation for their constituents (i.e., “taxation without representation”) – would have moved so quickly to nullify the will of the voters had they not received campaign support from anti-Initiative 77 individuals and entities.
The optics alone are enough to call into question whose interests are being represented by the Council: the 44,353 voters who approved Initiative 77, or the 163 anti-Initiative 77 individuals and entities that contributed large sums of money to their campaigns.
The good news is it doesn’t have to be like this in the future. In 2018, the D.C. Council unanimously passed the Fair Elections Act of 2017, which created a public campaign finance program where individuals running for office would no longer have to rely on large sums of corporate money to finance their campaigns. Candidates can participate in the program beginning in 2020.
The people had their say at the ballot box. Corporations had their say with campaign cash. The will of wealthy contributors should not trump the will of the people.