By Adam Pagnucco.
On Tuesday, a remarkable event is on the county council’s agenda: Council Member Will Jawando is scheduled to withdraw two bills, one phasing out the tip credit for the county’s minimum wage and another establishing a wage commission.
Why is this happening?
The council’s agenda for January 16 was amended to show the withdrawal of two bills by Jawando.
Let’s start with the tip credit bill. Current county law allows employers to pay as little as $4.00 per hour to tipped employees. However, according to the county government, “This amount plus tips must equal at least the Montgomery County Minimum Wage Rate,” which is currently $15.00 per hour for employers with up to 50 employees and $16.70 per hour for larger employers. So if tipped employees fall short of the minimum wage, employers have to make up the difference. Jawando’s bill would have phased out the tip credit by 2028.
The tip credit bill occurs in a context. First, the District of Columbia is currently phasing out its tip credit due to a voter referendum and the process is rife with chaos. Restaurants are adding service charges, reducing wait staff and even avoiding the District altogether. One owner of a D.C. restaurant told the Montgomery County Council that he is now losing $7,000 a month. Second, the county’s restaurant industry has never recovered from the pandemic and is facing significant price increases. Third, the Prince George’s County Council indefinitely tabled a similar bill in October. Fourth, a council staff analysis found that the bill would hurt the county’s economy. And fifth, while the primary advocate for the bill was an out-of-state group who had hired a contract lobbyist, the opponents were county-based restaurants and their employees.
Jawando gets ready to launch the tip credit bill in September.
Jawando started with one co-sponsor, Council Member Kristin Mink. The tip credit bill was headed to a joint vote this week by the Economic Development and Health and Human Services committees where it faced an overwhelming defeat. Overall, sources inside and outside the council building estimated that Jawando would have struggled to assemble three or four votes in favor of the bill when it needed six to pass. Facing disaster, Jawando has opted to withdraw it.
Why was the bill going to fail? Several factors played a part.
Four council members said no early on.
From the start, four council members – Andrew Friedson, Marilyn Balcombe, Gabe Albornoz and Dawn Luedtke – made it clear that they had big problems with the bill. That let opponents know they were only two votes away from winning. One source commented, “A few council members stood up from the beginning and said ‘no’ for once. No equivocation. No amendments. Our advocates were energized by this, saw we had a chance to stop it, and showed up.”
The business community got organized.
Certain segments of the business community learned a lesson from their debacle on rent control. Early on, they assembled a group of restaurant owners and tipped employees from inside the county to attend the bill hearing and communicate their concerns. One source said, “This is about our side stepping up and doing politics too. It works when you show up and are organized!” Another said, “The biz community did a good job with organizing opposition. We FINALLY had t-shirts and placards!”
It was local folks vs out of state advocates.
True or not, there was a perception that the bill was being pushed by out-of-state advocates against local folks. Politicians ALWAYS side with locals over outsiders. A source commented, “It was obvious that some of the speakers [in favor] were not from the county and didn’t know anything about our existing wage laws.”
The merits of the bill were questionable.
Advocates claimed that workers were making less than minimum wage but, as I described above, that is untrue under current law. One source said, “People realized once they focused on this that we already have a law that is supposed to make tipped workers whole.” Another said, “This was a solution in search of a problem.” The real effect of the bill was to move the tipped employees’ compensation further onto employers’ payrolls at a time when restaurant employers were already facing terrible economics. A source commented, “Supporters think that restaurants are either going to absorb it or raise their prices. That can’t happen. The cost of food has skyrocketed for restaurants. They already have to raise prices to pay for their costs.”
The regional context was a problem.
It was one thing for advocates to discuss how tip credits were unused by other states outside the region. But here in the region, the chaos in D.C. and the rejection of similar legislation by Prince George’s County mattered a lot more. One source commented, “When the Prince George’s bill fell apart, it took away Jawando’s argument that this was a regional effort.” A pending Office of Legislative Oversight report on the tip credit’s phaseout in D.C., due to be released on Tuesday, was anticipated to be unhelpful to Jawando.
Jawando sells the tip credit bill on Twitter.
Restaurant owners are not developers.
In the rent control battle, the bad guys were developers – a common whipping boy of MoCo politics. Restaurant owners are very different. In MoCo, they are often immigrants and minorities. One source told me, “These are people who have put everything into their businesses and are barely holding on.” They easily earned sympathy at the council, especially when they were teamed with their employees who were just as opposed to Jawando’s bill. A source commented, “It was the restaurant owners and servers that really sealed the deal.”
Why is the wage commission bill also being withdrawn? It faced similar challenges as the tip credit bill – especially in terms of lukewarm advocacy on its behalf. Opponents saw it as creating a path to skyrocketing minimum wage hikes and noted that it covered “working conditions” as well as wages. One source said, “It wasn’t talked about as much but for some in the business community, it was as threatening if not more than tip credit.” This bill also lacked the votes to pass.
Withdrawals are uncommon. In 2020, one zoning text amendment (ZTA) was withdrawn. In 2021, one bill and one ZTA were withdrawn. In 2022, no bills or ZTAs were withdrawn. And in 2023, one ZTA was withdrawn. A more common fate for bills that cannot pass is that they are allowed to expire, so why did that not happen this time? The answer is that the council changed its rules a year ago to shift bill expirations from occurring at 18 months after introduction to occurring at the end of a four-year council term. So if these bills were not withdrawn, they would be hanging around until the end of 2026. Two sources told me that some restaurant owners had told the council that they would not expand in the county while this legislation was pending. Without withdrawal, the county’s restaurant industry could have been frozen for years – an intolerable prospect when they had still not recovered from the pandemic. Jawando faced a choice: withdraw his bills or watch them go down in flames.
Jawando, now entering his sixth year on the council, has been effective at using progressive politics and outside pressure to pass legislation. Among other things, he has been the county’s foremost champion of limiting police powers and establishing rent control, both temporary and permanent. This time, he hit the wall. It is almost unheard of to withdraw two bills on the same day, but here he is. Make no mistake, he is still a prominent leader of the left – and this county is ruled by the left. But if he doesn’t pick his spots more wisely in the future, this council may just get used to saying no to Will Jawando.