Perhaps the most-popular argument for eliminating the tip credit is the claim that states without one have half the rate of restaurant sexual harassment as those states that do. Earlier this year, the Employment Policies Institute released a report-length examination of the problems with this claim, which was based on a deeply-flawed survey conducted by the Restaurant Opportunities Center (ROC).
Based on a review of ROC’s methodology and Equal Employment Opportunity Commission data collected during the time period studied by ROC, EPI concluded that “claims about a tip credit and its link to sexual harassment are…baseless.” New data obtained from the Commission via a public records request, which cover all federal- and state-level sexual harassment charges from the restaurant industry filed between 2007 and 2017–from customers, coworkers, and management–cast further doubt on ROC’s claim.
Contrary to ROC’s claim, the data show that the seven states without a tip credit (plus Hawaii, which has a very small tip credit) all have a higher percentage of restaurant sexual harassment charges than does New York–a state where ROC is trying to eliminate the tip credit. In fact, the restaurant sexual harassment rate in all states with a cash wage below $3 an hour (3.7%) is almost-identical to the rate in those states that have eliminated the tip credit (3.8%).
EPI provided the EEOC data to economists at Miami and Trinity University, who used regression analysis to compare changes in states’ restaurant sexual harassment charges to changes in the tipped wage. (They controlled for state- and time-related trends. The regression output can be viewed here.) The economists find conclusive evidence that there’s no negative relationship between a state’s tipped wage and restaurant sexual harassment charges; if anything, their analysis shows a mild positive relationship between the two. To put this result in context, the EEOC data suggest a state like New York that raised its tipped wage by $5-an-hour could expect the share of sexual harassment charges from restaurants to increase by 3.5-percentage points.
There are few if any strong arguments for eliminating the tip credit. But the data make clear the worst argument for doing so is the claim that it’s in any way linked to sexual harassment.