Rose's Luxury in Washington, D.C. Photo: Olivier Douliery/AFP/Getty Images

Washington, D.C.'s city council is preparing to vote on a bill to repeal an initiative that requires businesses to pay tipped workers minimum wage, reports the Washington Post.

Why it matters: Supporters of Initiative 77, which is scheduled to go into effect in October, say workers often don't make enough in tips to earn minimum wage. Critics say the law would raise labor costs and ultimately lead to fewer jobs.

The backdrop: Businesses in Washington are currently allowed to pay restaurant workers as little as $3.89 per hour, as long as they make up the difference between tips and minimum wage — which currently sits at $13.25 but will reach $15 by 2020. The new law, which was approved via ballot initiative in June, outlaws the practice of paying tipped workers a lower wage.

  • According to Vox, tipped servers in D.C. barely make above minimum wage and are twice as likely to live in poverty than the rest of the city's workers.
  • The limited research that has been done on the effects of raising tipped minimum wage varies in its findings. Overall, businesses end up paying a greater percentage of their workers' wages — with that added cost often passed onto consumers in the form of higher menu prices.
  • In New York, where tipped minimum wage was raised from $5.00 to $7.50 in 2015, server wages increased by 6% with no negative impact on the number of restaurant jobs, per the Bureau of Labor Statistics.
  • But in D.C., hundreds of servers, restaurant owners and others in the industry signed up to testify in favor of repealing the initiative, claiming it would force businesses to close and customers to stop tipping.

The big picture: There are currently seven states where it's illegal to pay a lower wage to tipped workers. Positive results in Washington, the first major city to pass such a law, could have bolstered the fight to slow income inequality in the U.S. But based on what council members said at a hearing Monday, it's looking increasingly likely that the experiment won't get a chance to take effect.

Go deeper: None of the state minimum wages provide a family living wage

Several states putting minimum wage on the ballot in November

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