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NE Tipped Workers Would Lose $63 Million Under Proposed Rule

Tipped workers could lose an average of more than $1,000 each year under a proposed Dept. of Labor rule. (Satish Krishnamurthy/Flickr)
Tipped workers could lose an average of more than $1,000 each year under a proposed Dept. of Labor rule. (Satish Krishnamurthy/Flickr)
February 5, 2018

LINCOLN, Neb. — A proposed federal rule that some describe as "tip stealing" could mean a nearly $63 million loss for workers in Nebraska who get tips as part of their pay.

The public comment period ends Monday on a Labor Department proposal to allow employers to take the tips earned by their workers, as long as those workers are paid at least minimum wage.

Heidi Shierholz, senior economist and director of policy at the Economic Policy Institute, served as Chief Economist at the Labor Department in the last two years of the Obama Administration. She noted the government did not include a cost-benefit analysis in the proposal about its impact.

"They actually did do the analysis,” Shierholz said. “But it turned out to look really bad because it showed, as one might think, there would be a big transfer of money from workers to employers as a result of the rule. So, they buried it."

She explained that transfer would cost U.S. tipped workers $5.8 billion a year - almost $63 million for Nebraska tipped workers. The DOL contends the rule would reduce wage disparities between tipped and non-tipped workers, such as dishwashers, cooks and other back-of-house employees.

But Shierholz countered that it isn't an equal pay issue - because the rule doesn't make it mandatory that employers share the tip income with employees.

"They would be no more likely to give tips to back-of-the-house workers than to make any other business decision about what to do with a big, new windfall,” she said. “They could choose to make capital improvements to their establishments or increase executive pay, or just line their own pockets."

Tipped workers in the U.S. stand to lose on average more than $1,000 annually if the rule passes, she added. And nearly 80 percent of the total would affect women, who make up most of the tipped workforce.

More information on the Environmental Policy Institute's analysis of the proposed rule is available here.

Mary Kuhlman/Cynthia Howard, Public News Service - NE