cooked books

Trump Administration Allegedly Knew Tip-Pooling Rule Would Hurt Restaurant Workers

The Labor Department understood that the rule would be very good for restaurateurs’ bottom line. Photo: Fuse/Getty Images

Top officials in the Labor Department buried “unfavorable” data suggesting that servers stand to lose billions of dollars if the Trump administration’s tip-pooling proposal gets enacted. Insiders tell Bloomberg Law that the agency’s Wage and Hour Division presented top brass with an analysis of the rule’s potential effects — which have consistently struck labor advocates as unambiguously negative — and that the analysis predicted that restaurant workers would, in fact, be hit hard.

The proposed rule itself is meant to undo an Obama-era policy that declared that tips belong to the workers who earn them, not their employers. Bloomberg’s sources, however, say DOL leadership ordered the report’s methodology revised once they saw its findings, in order to “lessen the expected impact.”

Once doctored, the new calculations predicted “progressively reduced” losses for restaurant workers, but even this reportedly made Labor Secretary Alexander Acosta and others “uncomfortable.” In the end, they got the White House’s approval to yank the inconvenient economic data altogether from the proposal’s final version, which was published on December 5. The administration simply left out any estimate of how much money it might transfer from servers’ pockets to their employers’, saying it couldn’t figure out how to estimate the rule’s full effects.

Of course, common wisdom is that the administration felt it was better off hiding that analysis, given the support it gets from wealthy restaurateurs. Think-tank reports have predicted a massive loss for tipped-wage earners — the Economic Policy Institute’s guess is that under the Trump rule, employers would pocket as much as $5.8 billion worth of workers’ tips each year. Economists have also been perplexed by the Labor Department’s alleged trouble figuring these numbers out. Agree or disagree with its number, but the Economic Policy Institute’s team says it took them about three days.

Report: Trump Administration Knew Tip Law Would Hurt Servers