Understanding Massachusetts tipped workers ballot question

Flashback: Tipping dates back to the mid-1800s, when restaurant and hospitality businesses hired newly freed Black people but didn't want to pay them a full wage.

• Those workers had to rely on customers' tips.
• More than 150 years later, an estimated four million workers nationwide rely on tips, per the Yale Budget Lab.

State of play: The state ballot measure would increase tipped workers' base pay ($6.75) to the standard minimum wage ($15) between 2025 and 2029.

• Employers would have to pay workers the standard minimum wage as part of their overhead costs, instead of having customers pay through tips.
• Customers would still have the option to tip.
• The ballot measure allows for tip-pooling, including with back-of-house workers, but it's not required, GBH News reports.

What they're saying: "The restaurant industry has crazy levels of turnover, and increasing the wage is one significant way to keep people employed and to keep people happy,"Grace McGovern, a bartender and member of the campaign One Fair Wage, told GBH News.

Zoom in: The ballot measure would lead to a slight increase in the average service industry workers' pay in Massachusetts, per a report from the Tufts Center for State Policy Analysis.

Yes, but: Some high-earning servers and bartenders, like those working in the Boston area, may see their overall wages dip if the ballot measure passes.

Reality check: This system could cost restaurants more in the long run at a time when utilities, food, credit card fees and other costs are rising.

• That will likely prompt restaurants to raise menu prices and implement 18-20% service fees in lieu of tips. But service fees, unlike tips, are subject to sales tax.
• Chains might be able to withstand the higher costs, but the changes could hit small businesses hard, especially if they're already struggling to drum up business, says Evan Horowitz, the CSPA's director.

Cafe Iterum in East Boston, which opened in 2022, has paid its workers at least $17 an hour and collects service fees, says Matt McPherson, the owner.

• Keeping wages high is hard, he says, when there's no relief for businesses, like a tax exemption for service fees.
• "It's great to be able to give every restaurant a fighting chance and a more competitive playing field with wages, but with the added costs already rising within restaurants, it's much, much more difficult just to compete as a whole to stay profitable, let alone if you have extra expenses," he says.

The big picture: If successful, the ballot question would raise broader questions about tipping culture for years to come, Horowitz tells Axios.

• "It is something everyone in Massachusetts who eats out is going to be talking about for the next five years," he says. "What is an appropriate tip now? How do you figure that out?"