A recent bombshell report revealed that the Trump administration prepared, but then covered up, estimates that its controversial proposal to let employers keep worker tips could cost millions of waiters, nail salon workers, and delivery drivers billions in wages they need to get by.
The proposal, issued late last year by U.S. Department of Labor, would reverse their longstanding position that in all circumstances in which service workers receive tips from customers, they are the owners of those tips. The new rule would instead allow employers who pay their tipped workers the measly federal minimum wage of $7.25 to take all the tips their employees receive and do with them as they please.
In fact, the Labor Department’s notice explicitly said that employers could keep those tips to use to cover business costs like renovations or just add to their own profits. The Labor Department is required to issue an estimated economic impact with this sort of sweeping proposal, but this time it claimed that it was “unable to quantify how customers will respond to the proposed regulatory changes” and “currently lacks data to quantify possible reallocations of tips.”
That raised eyebrows among economists, because these kinds of estimates are exactly the kind of analysis the Labor Department does and is required to do on a routine basis. While analysts must make certain assumptions, there are well-accepted methods of doing such economic analysis that the Labor Department, under the control of both parties, has long used to estimate the impact of proposed policy changes.
Indeed, the Economic Policy Institute, employing tried and true methods routinely used by the Labor Department, quickly found that by conservative estimates, employers would likely keep $5.8 billion in tips that would otherwise go to workers if the Labor Department finalized the rule change.
Now we have learned that the Labor Department did, in fact, prepare an economic analysis of this proposed regulation. The results of their analysis similarly found that employers would, in fact, take billions of dollars in tips from workers under the new rule. Instead of owning up to that uncomfortable truth, senior agency officials instead decided to pull and bury that analysis, deceiving the public about the Labor Department’s ability to even produce such an analysis.
This is stunningly shameful, and possibly illegal, behavior particularly from an agency whose mission is “to foster, promote, and develop the welfare of the wage earners” in the United States. Instead of protecting wage earners, this Labor Department seems bent on carrying water for restaurant industry lobbyists and lying to the American people about what working people stand to lose.
The agency’s cover-up has kept workers and their advocates, along with many other stakeholders, in the dark about critical evidence related to the impact of the proposal, which is already deeply unpopular with voters. Even before news about the Labor Department cover-up broke, a recent poll revealed that 82 percent of Americans disapprove of the proposal. Worse, 57 percent indicate that if it is finalized, they would tip less money and less often, a fact that indicates that the economic reality of this proposal is probably even far worse than the Economic Policy Institute or Labor Department first estimated.
America’s workers deserve a Labor Department that puts their interests first at every juncture. For the sake of the integrity of this process, and for the sake of the low-wage workers who stand to lose billions in wages under the new rule, the Labor Department should scuttle this wrongheaded proposal and continue to let people keep the tips they earn through their own hard work.
Read the original op-ed at The Hill.
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