Full-service restaurants in Washington, D.C., have cut 3,700 jobs – about 12% of their workforce – since the jurisdiction began rolling back its tip credit in May 2023, according to data newly released by the U.S. Bureau of Labor Statistics.
The federal agency did not draw a correlation between the drop in jobs and the reduction in the credit, which fell in May and then again in July of last year. Restaurants there have also been affected by a slow return of government workers and employees of companies that interact with the government to their downtown offices. Operators say traffic has also been dampened by fears about rising nighttime crime.
But restaurants without table service have not cut jobs nearly as aggressively as their full-service counterparts have. Between May 1 of last year and the end of January 24, limited-service places have eliminated 400 positions, or just 1.7% of their collective payrolls.
In addition, downtown offices were even emptier during the corresponding eight months of a year earlier, yet full-service places added 1,200 positions during that timeframe, an increase in their workforce of 4.5%, according to the BLS’ numbers.
Industry advocates say the numbers underscore the damage that has been done to the local restaurant market by the ongoing phase-out of the tip credit.
“In just seven months, the city’s full-service restaurant employment has been gutted by the change,” Sean Kennedy, EVP of public affairs for the National Restaurant Association, said in a statement. “Higher labor costs mean higher menu prices. That means diners are eating out less and tipping less, which in turn means less income for servers and operators.”
The data comes to light as opponents of the tip credit are pushing to eliminate the employer concession in a number of other states, including Illinois, New York, Massachusetts and Ohio.