JIM BOURG / Reuters

Why Martin O'Malley's minimum wage hike disappointed activists

Maryland’s wage increase under then-Gov. O'Malley did little to benefit workers who rely on tips, labor activists say

Democratic presidential candidate Martin O'Malley is so keen on talking about higher wages that he raised the issue three times in two sentences during his campaign announcement speech.

“Together, as one nation, we must build an American economy that works again for all of us. That means good jobs and wage policies that allow hardworking families to actually get ahead,” O’Malley said in the speech Saturday. "That means a higher minimum wage, overtime pay for overtime work, and respect for the rights of all workers to organize and collectively bargain for better wages."

In other words, O'Malley aims to make liberal economic populism a key element of his political identity as he challenges frontrunner Hillary Clinton in the Democratic primary. But he might have difficulty owning the territory to the left of Clinton on labor policy, as some activists have expressed disappointment with his record on the issue.

As governor of Maryland from 2007 to January of this year, O’Malley has already added his signature to legislation raising the minimum wage. Last year, amid a wave of similar increases across the country, O’Malley gave final approval to legislation raising Maryland’s wage floor from $7.25 per hour to $10.10 by 2017.

At the time, it was one of the most dramatic minimum wage increases in the country. But the legislation O'Malley signed got mixed reviews from labor activists, who say the wage hike left behind a key group of vulnerable, low-wage workers: those who rely on tips, such as waiters and waitresses.

Under federal law and most state laws, managers who employ tipped workers can make use of a “tip credit,” paying lower than the minimum wage out of pocket as long as workers earn enough in tips to make up the difference. As of 2014, restaurant owners in Maryland could pay their waiters and waitresses as little as $3.63 per hour so long as those employees received enough in tips to bring the total up to at least $7.25 per hour.

When O’Malley signed the law eventually bringing Maryland’s minimum wage up to $10.10, he also made it one of the few states to leave its base tipped wage of $3.63 exactly where it was. Labor advocates praised the overall wage increase while bemoaning the frozen tipped wage.

"Particularly given the good judgment shown by raising the state’s minimum wage to $10.10 per hour — which will still provide a much needed boost to thousands of workers and the state’s economy — it’s unfortunate that the legislature has left a black mark on this bill by leaving the tipped minimum wage frozen at such a meager rate,” Christine Owens, executive director of the left-leaning National Employment Law Project (NELP) said in an April 2014 statement released shortly after the Maryland General Assembly passed the wage hike.

Although Maryland had one of the highest overall statewide wage increases in the country over the past two years, it was one of the few states to keep the base wage for tipped workers locked in place. On the opposite end of the spectrum lies Hawaii, which raised its minimum wage to $10.10 and required business owners to pay tipped workers the full amount for anyone making under $17.10 when tips are included (those same employers are permitted to deduct $0.75 per hour for those who surpass the $17.10 threshold).

O'Malley originally favored raising the tipped wage, as noted in a fact sheet provided to Al Jazeera by an O'Malley campaign spokeswoman. In January 2014, months before the Maryland legislature approved the current minimum wage law, O'Malley suggested raising the base tipped wage to 70 percent of the minimum wage.

During an April public appearance at Harvard University, O'Malley said the final version of the legislation was "the furthest I could push it and still get the consensus to get it done."

Supporters of the tipped minimum wage standard — such as the industry lobby group the National Restaurant Association (NRA) — typically argue that it benefits both restaurant employees and owners alike, since the former still receive the minimum wage or higher and the latter have enough cash on hand to hire more people. A November 2014 policy brief from the restaurant association argued that tipped employees usually make above the minimum wage.

“National Restaurant Association research shows that on a national level, median hourly earnings for servers range from $16 to $22, depending on experience level,” according to the brief. “That includes median tip earnings of $12 to $17 an hour, plus a median employer-paid wage of $4 to $5 an hour."

But advocates for getting rid of the tipped wage differential say that having a discrepancy between the tipped wage and the overall minimum wage makes tipped workers more susceptible to wage theft. A 2009 NELP survey of 4,387 low-wage workers alleged that of those who relied on tips, roughly 30 percent “were not paid the tipped worker minimum wage.”

“You’re incredibly precarious,” Saru Jayaraman, co-founder and co-director of the advocacy group Restaurant Opportunities Center United (ROC-United), told AL Jazeera regarding tipped work. “You never know how much you’re going to earn day-to-day or week-to-week."

The current median hourly wage for waiters and waitresses nationwide is $9.01, according to the most recent data from the federal Bureau of Labor Statistics. White House economic advisers issued a report in March of last year stating that women make up 72 percent of the tipped workforce, and that workers in tipped occupations “are twice as likely as other workers to experience poverty."

Jayaraman said that she was “disappointed” with Maryland’s minimum wage law, but that she didn’t “fault [O’Malley] in particular.” Tipped labor as a policy issue had been receiving little attention at the time, she said. Now that may have changed.

“I think it remains to be seen what he would say about that issue now, whether he would stand up to the restaurant industry,” Jayaraman said.

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