CHICAGO, July 30, 2025 —Food-away-from-home employers warned that steep increases in the pay of restaurant workers would ultimately hurt the intended beneficiaries. Now they’re wielding research that shows they weren’t crying wolf.
A new report found that 18,000 quick-service restaurant jobs in California have been eliminated since the state adopted a $20-an-hour minimum on April 1, 2024 for workers at QSR chains with at least 60 units nationwide The study was drafted by three academics and released by the National Bureau of Economic Analysis, a nonprofit group that describes itself as nonpartisan.
Meanwhile, the restaurant industry of Washington, D.C., convinced local lawmakers not to eliminate the tip credit there. The local business cited findings that restaurants there were closing at a rate of two per week, or double the rate clocked after a phase-out of the tip credit began two years ago.
As the result of a compromise struck and approved yesterday by the D.C. Council, employers can continue to pay tipped employees $10 an hour if they collect at least $7.95 in gratuities. Nontipped workers will continue to be paid $17.95 an hour.
The wage directly paid to servers and bartenders will rise in stages until it accounts for 75% by July 1, 2034, of the minimum that other workers receive. The tip credit had been slated to be phased out—meaning employers would have to pay 100% of the standard minimum wage—by 2027.
The Council’s move was a significant setback for One Fair Wage, the union-backed group that’s been pushing local, state and federal lawmakers to kill the tip credit. It argues that employers should be required to pay all their workers the minimum wage mandated in their area instead of getting a break on the pay due tipped employees.
The group’s beneficiary is the Service Employees International Union (SEIU), the main proponent behind what’s known as California’s fast-food wage. The $20 minimum was set as a compromise brokered by Gov. Gavin Newsom between the union and quick-service chains in the state. The SEIU wanted a higher rate. Employers there didn’t want Newsom to set up a group that had unilateral authority to raise quick-service wages at will.
As part of the compromise, the state set up the Fast Food Council, a panel empowered to increase or decrease the fast-food wage by up to 3% annually. It has yet to raise or lower the pay floor since it jumped to $20, a 25% increase, on April 1, 2024.
The set-up was a first of its kind. SEIU vowed to recreate the model elsewhere but was rebuffed in those efforts to date.
Organized labor is not backing off its efforts to raise the pay specifically of hospitality workers.
Pressured by Unite Here, another union for the hotel and restaurant industries, the City Council of Los Angeles passed a measure in May that raises the minimum wage for airport concession employees and some hotel workers to $30 an hour, the highest rate in the nation.
A consortium of trade associations and individual employers have gathered the signatures to put the increase on a ballot and have voters decide if the pay floor should rise to that level. Unite Here is resisting the effort, contending to legal officials of California and Los Angeles that many of the signatures are bogus.
As Managing Editor for IFMA The Food Away from Home Association, Romeo is responsible for generating the group's news and feature content. He brings more than 40 years of experience in covering restaurants to the position.