Baltimore’s restaurant industry is pushing back on a progressive policy proposal they say has been catastrophic for Washington, D.C., restaurants and could have similar negative impacts in Charm City.
Known as the “One Fair Wage bill” after the advocacy group of the same name, legislation pending before the Baltimore City Council could increase the base minimum wage for employees earning tips from $3.63 to $15 per hour. Businesses are already required to pay the difference for employees who still make less than $15 per hour with tips, but five council members say raising the minimum wage by phasing out this so-called “tip credit” can make earnings more predictable for bartenders, servers and other tipped employees.
But restaurant owners and some employees believe the proposal is anti-business and not necessarily pro-worker.
Gail Furman, an executive at Max’s Taphouse in Fells Point, says the bill’s passage would lead to higher payroll and insurance costs, thus increasing her operating costs by “over six figures” annually. Furman believes this environment would force her to shift the burden onto customers by raising prices substantially and charging service fees.
“Why are we fixing something that isn’t broken? That’s number one. But number two: What people don’t realize when they talk about all this is the cost to a business?” Furman said. “If you were to eliminate [the tip credit], we would have to implement a surcharge and increase our prices, which in turn, the public will not come back.”
Patrick Russell, the owner of two Kooper’s Tavern locations, Slainte Irish Pub and three food trucks, told The Sun the policy would make him cut his “entry-level” employees, many of whom are teenagers looking to learn important working responsibilities.
“If I had to pay $15 an hour to my [tipped] employees, what I would do is this: Hostesses, food runners, bussers and barbacks would all be no longer needed in my business,” Russell said. “I would charge 20% [automatic] gratuity, I would raise my prices, and I would instruct my guests to not have to tip like they do when you’re abroad in other countries.”
Russell added that the One Fair Wage could unintentionally lead to the consolidation of restaurant ownership among those with deep pockets — such as chef Cindy Wolf and the Atlas Restaurant Group — at the expense of smaller neighborhood establishments.
Max’s Taphouse bartender Rob Caruso has worked in the industry for 33 years, including 24 years for his current employer.
“I wouldn’t have been able to do this for as long as I have if I had to make an hourly wage,” said Caruso, 54.
Caruso told The Sun he wouldn’t have been able to put his children through college or buy a house if he had relied more on a higher hourly wage than tips for good service — a shift he worries could be another unintended consequence of the One Fair Wage bill.
“It could go [that] people aren’t tipping me [as] much anymore because I’m making this hourly wage. So maybe I know what I’m making, but it’s way less than I used to make,” Caruso said, adding that he doesn’t know “a single bartender who wants this.”
Baltimore economist Anirban Basu, the CEO of Sage Policy Group, described the bill as “bizarre, absurd policy-making … by people who have clearly never had to make payroll.”
“Anything that drives up their costs — particularly their labor costs, because restaurants tend to be labor- and service-intensive — is going to cause many of them to falter,” Basu said. “And therefore, the bill will end up hurting many of the people, meaning restaurant employees, that it seeks to help.”
Driving restaurants and workers out of the city
In a 2022 ballot referendum, voters in the nation’s capital adopted Initiative 82 to gradually phase out the city’s tipped minimum wage of $5.35 per hour to a universal minimum wage of $17.50 by 2027. Its subsequent enactment in 2023 marked a major victory for One Fair Wage, which had long rallied behind the effort.
But even with the tipped minimum wage now up to just $10 per hour, industry leaders say D.C. restaurants are at a “tipping point” and believe repealing Initiative 82 is the only way forward.
“Everything is still on the table, but we’re going all-in on repeal, and we’ll see where [the D.C. Council] lands,” Shawn Townsend, president of Restaurant Association Metropolitan Washington, told Axios.
According to National Restaurant Association data, more than 1,800 job cuts were made at full-service restaurants between May 2023 and August 2024. Some 74 D.C. restaurants shut their doors for good last year.
Basu, the economist, said that the Baltimore bill would similarly drive restaurant activity from the city to surrounding areas that are unlikely to pass similar legislation.
“It’s going to drive more restaurant workers and restaurant activity to Baltimore County in particular,” Basu said. “Obviously Howard County and Anne Arundel County also will see more patronage, all things being equal.”
Caruso, the bartender, said he’s not sure if he would leave Baltimore because of the proposal but has no reason to expect things would play out any differently from D.C.
“I wouldn’t be able to make a decision until it actually happened and I knew what the consequences were going to be,” he said. “… DC’s not like Baltimore, but it’s not that different. Why wouldn’t the same thing happen here that happened in D.C.?”
Earlier this year, One Fair Wage supported the Maryland No Tax on Tips Act — which did not advance through the state Senate after strong opposition from the restaurant community. While it would have exempted tipped earnings from state income taxes as the name implies, the bill would also have similarly phased out Maryland’s $3.63 minimum wage for tipped employees and increased the overall state minimum wage to $20 per hour.
City Council President Zeke Cohen opposes bill
Baltimore City Council President Zeke Cohen, whose vote typically carries considerable influence, is the only member to come out against the bill thus far. Cohen said that while he appreciates its intent, he cannot support the bill because of potential hits to the city’s restaurant industry.
“With the cost of everything rising, the restaurateurs putting our food scene on the map simply can’t afford to completely reinvent their business models,” Cohen said Thursday in an emailed statement to The Baltimore Sun. “Jobs cannot pay sustainable wages if they cease to exist, and I have serious concerns that this legislation could lead to more business closures at a time when our City desperately needs to grow.”
Five members of the 15-member council have sponsored the bill: John Bullock, Paris Gray, Jermaine Jones, Odette Ramos and James Torrence. Bullock introduced similar legislation last summer to increase tipped employees’ base pay, but that bill did not receive a hearing.
Other council members, like District 11 Democrat Zac Blanchard, are taking a more cautious approach before endorsing the One Fair Wage bill.
“I care a lot about ensuring all of our workers are making at least the minimum wage, and I care a lot about helping the city’s restaurants and main streets thrive,” Blanchard said. “If this bill makes it out of committee, I will definitely be doing my research before determining how I will vote.”
The remaining eight council members — Mark Conway, Ryan Dorsey, Antonio Glover, Danielle McCray, Sharon Green Middleton, Mark Parker, Phylicia Porter and Isaac “Yitzy” Schleifer — have not spoken publicly about the proposal.
Have a news tip? Contact Carson Swick at cswick@baltsun.com.