How far out can you move in Bushwick before you fall into some lake or find yourself actually out of the city or can’t access a subway. That’s what club and restaurant workers are asking themselves as more and more places begin to comply with the (sort of new) tipping regulations. Will tipped employees be able to support themselves now that IRS rules about mandatory gratuities (a.k.a., "autograt") are to be strictly enforced?
The latest update says the added practice of adding an automatic tip of say 18% more or less to large parties needs to be reclassified as a wage rather than a tip. All sorts of grief comes from this as payroll tax withholding and sales tax stuff, not to mention tons of added paperwork, which requires day staff an additional expense owners won’t enjoy or probably agree to.
It will be easier just to end the practice at the expense of the help. The server would have to be paid minimum wage instead of the lesser server wage. It’s a can of worms and the industry ain’t fishing. Autograt will be eliminated. Some places are fooling around with a suggested tip but this probably won’t fly with the government, which will see it as a scam to get around their concept. They would be right. The industry has changed over the years. Cash used to be king, but now its all about the plastic. Hiding or underreporting tips has become harder for those trying to make a living a buck or 3 at a time.
We live in a city where tourist dollars pay for the bread and butter and tourists—especially foreign ones who don’t tip as well as locals…if at all. Without forcing the issue and demanding tips, bartenders and wait staff will suffer. Gone will be the $500-a-night tips and a change in lifestyle will ensue. Without wads of cash, bar employees will spend less. There will be fewer meals in late-night diners and less disposable income for shoes and such. There will be peripheral damage to the economy in general. Staff will seek out cheaper rents in less attractive neighborhoods or live with more roommates. The industry will be less attractive to aspiring models, actors and artists who depend on tip money while they try to make it here.
New York City may become a less attractive option for artist types who just can’t pay the bills. Bar staff may become less attractive as other options surely exist for the beautiful. Fewer "B" models and aspiring actors will find financial support in hospitality and find other options or move back to Peoria or go to back to school and abandon their dreams of stardom. Starving artists working as waitrons may actually starve.
The sky may or may not be falling, only time will tell. But change will be felt come January when all need to comply. I think you might see a time where joints just pay a wage and keep all that tip money and pay the taxes on it as required. Instead of server wages, places may opt to pay a bartender $250 a night and let them grab cash tips as they will. Drink prices may go up a buck or 2, but have a "tip included" line added. Naysayers scream doom. But they screamed doom when smoking was banned.