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Committee hears hours of testimony on proposal to eliminate tipped wage; bill A5433 remains for discussion only
Summary
On a day of extensive testimony, the committee heard arguments for and against A5433, a bill to phase out the tipped-wage credit and raise the minimum wage for tipped workers; the matter was set for discussion only with no committee vote.
The Assembly committee held a long discussion of A5433, a proposal to phase out the tipped-wage credit and increase the minimum wage for tipped workers. The chair emphasized the hearing was for discussion only and that no vote would be taken that day.
Proponents argued the tipped-wage system is outdated and contributes to wage disparities. Peter Chen (New Jersey Policy Perspective) said the United States is “the only country in the world that has a different minimum wage for tipped workers” and described the system’s origins in post–Civil War labor arrangements. Chen testified states that eliminated the tip credit have not seen net declines in restaurant employment in the examples he cited.
A wide range of speakers opposed the bill, including restaurant owners, managers and many tipped workers who said current tipped wages result in average hourly earnings well above the minimum wage in their experience. Daniel Klim, president and CEO of the Restaurant and Hospitality Association, said the change would amount to a “200% increase” in labor cost for many tip-reliant operations and could lead to higher menu prices, reduced staffing, and closures. Multiple servers and bartenders described average hourly earnings in the $20–$50 range and said the bill would reduce opportunity, upward mobility and flexibility.
Restaurant groups and small-business associations — including the New Jersey Restaurant & Hospitality Association, Landmark Hospitality, NFIB, and local restaurant owners — provided testimony and submitted written slips in opposition, raising examples from Washington, D.C., California, and other jurisdictions where they said closures and operational changes followed similar policy changes.
Speakers emphasized a range of points: consumer price impacts, risks to seasonal and small operations, the potential for automation and reduced front-of-house staffing, and the claim that federal and state law already requires employers to make up any shortfall when tips do not reach minimum wage.
Several witnesses offered payroll figures and hypothetical calculations illustrating projected cost increases for small operators if the phased changes and wage hikes in the bill proceed as described in the committee packet.
Committee members thanked participants and noted the hearing’s breadth; the chair reiterated there was no vote that day. The record will be available for further consideration.
