Tips are making up more of New Orleans' restaurant workers' pay
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Tips are making up more of New Orleans restaurant workers' pay, according to new data from payments company Square.
Why it matters: Much of the city's big hospitality industry relies on tips to bolster hourly wages.
By the numbers: In October, tips made up 23% of restaurant worker pay nationally — up from 14% in 2019, according to Square's report examining payroll data.
- But in New Orleans, tips made up more than 30% of restaurant worker pay. That's nearly double what it was back at the start of 2019, when tips were around 16% of their pay here.
Zoom out: Louisiana's statewide tipping numbers seem to underscore how much of New Orleans' hospitality relies on the practice.
- Tips made up 22% of restaurant workers' income statewide through the end of September, with patrons leaving an average tip of 16%.
The big picture: The restaurant business fell off a cliff in the pandemic, but it bounced back fast. Americans went back to dining out, and restaurants scrambled to hire, driving up wages and prices.
- In recent months, the industry has seen a slowdown. But overall, restaurants have seen an increase in sales volume over the post-pandemic years that has translated into more customers per hour — and more tips, says Ara Kharazian, research lead at Square.
Reality check: Relying more on tips leaves workers in a more precarious position.
- "If you're a restaurant worker who's already in an industry subject to a lot of ups and downs, a large component of your income coming from tips isn't gonna simplify that," Kharazian says.
Between the lines: One of President-elect Trump's more popular campaign proposals was to eliminate taxes on tips.
- Looking at this data, that would mean exempting nearly a third of local restaurant workers' income from taxes — a meaningful chunk.
- Ideas like that are typically tough to turn into reality, but next year when the Trump tax cuts expire, Congress will likely pass some kind of new tax bill. That creates an opportunity to put new policies in place, says Brendan Duke of the Center for American Progress Action Fund.