For years, restaurant workers and food entrepreneurs have flocked to Cape Cod for a summer job, a side hustle, or a professional career opportunity in the culinary arts. The region’s bustling tourism economy and strong seasonal homeowner market present both challenges and opportunities for accommodation and food service businesses, which make up the Cape’s largest industry and account for 16.4% of the overall regional economy. Accommodation and food service businesses also contribute to Cape Cod’s ranking as the second biggest generator of state and local tax receipts, next to Boston. The industry’s substantial regional footprint stands in contrast to the statewide economy, where accommodation and food services does not even rank in the top ten industries by GDP.
Given the significance of the accommodations and food services industry for Cape Cod’s regional economy, the Cape Cod Chamber of Commerce has closely followed discussion around Ballot Question 5, a referendum that will be considered by Massachusetts voters this fall. The question proposes to gradually increase wages for tipped workers in accommodations and food services over a five-year period, to match the standard $15 per hour state minimum wage. At first glance, this ballot question may seem like a no-brainer – who doesn’t want restaurant workers to earn an equitable wage? However, the issue is more complex than it seems, given current state minimum wage laws and the unique conditions encountered by workers in seasonal regions like Cape Cod.
Question 5 will ask voters, “Should tipped workers in Massachusetts get paid minimum wage?” However, it’s important to note that, under current Massachusetts law, tipped workers already must be paid at least $15 per hour through a combination of an hourly minimum wage of $6.75, plus tips. If workers don’t earn at least $15 per hour between their base wages and tips, employers are required to cover the difference. This ballot question would require that employers pay the entire base hourly wage of $15, while still permitting workers to earn tips on top of that wage.
On Cape Cod, food service workers earn an average of slightly over $21 per hour, including tips. While this is undoubtedly too low to afford our region’s high cost of living, opponents of Question 5 have expressed concern that a standard minimum wage could drive wages down even lower.
According to a survey conducted by the Massachusetts Restaurant Association (MRA), 90% of servers and bartenders statewide believe that if tipped wages are eliminated, they will earn less. As employers take on increased labor costs, these costs would likely be passed on to restaurant patrons, increasing their overall bill to dine out and reducing the likelihood that restaurant-goers will tip as generously. This could especially ring true for tipped workers in seasonal regions like Cape Cod, where servers, bartenders, and others work long summer hours, hoping to earn enough in tips to make it through the slower winter months.
Unfortunately, neither MRA’s survey nor surveys conducted by proponents of Question 5 provide regionally specific data. This makes it difficult to discern what impacts the question could have on tipped workers and restaurant businesses in seasonal regions like Cape Cod.
While well-intentioned, Question 5 has the potential, more than any other ballot question this election season, to directly impact Cape Cod’s regional economy, workers, and visitors. The Cape Cod Chamber opposes this question due to the risk that it could function as a cap on the earning potential of restaurant workers, particularly those working in seasonal economies, and could serve to squeeze out small- and mid-sized restauranteurs who are already barely surviving on the margins of a seasonal economy.