Internal Analysis Revealed Trump Plan Would Cost Workers Billions, So Labor Department Buried Study

Secretary of Labor Alexander Acosta gives remarks and participates in Q&A at the 44th annual American Legislative Exchange Council meeting.Secretary of Labor Alexander Acosta gives remarks and participates in a Q&A at the 44th annual American Legislative Exchange Council meeting. (Photo: Shawn T. Moore / Department of Labor)

Infuriating labor rights groups nationwide, the Trump administration reportedly prepared but concealed internal analysis “that showed employees could lose out on billions of dollars” if it moves forward with a proposal that would allow employers to pocket workers’ tips.

Worker advocates said the cover-up by the Labor Department “shows the lengths to which the Trump administration and Secretary of Labor Alexander Acosta will go to hide the fact that they are taking steps to actively make workers’ lives worse.”

In a piece published Thursday, four current and former department sources revealed to Bloomberg Law that “senior department political officials — faced with a government analysis showing that workers could lose billions of dollars in tips as a result of the proposal — ordered staff to revise the data methodology to lessen the expected impact.”

“Although later calculations showed progressively reduced tip losses,” the sources said Acosta and his team were still “uncomfortable with including the data in the proposal,” and “wound up receiving approval from the White House to publish a proposal Dec. 5 that removed the economic transfer data altogether.”

Bloomberg notes this revelation “lends credence to concerns from Democrats and labor organizers that the proposed rule will short change workers” and “raises questions about how much the [department] intends to take public feedback into account in shaping a final version of the rule.”

“It’s bad enough that the Trump administration wants to allow employers to take tips away from employees to line their own pockets, as the Department of Labor proposed in December,” said Seema Nanda, executive vice president and COO of The Leadership Conference on Civil and Human Rights.

“Today, we are deeply troubled to learn that the Labor Department buried the estimated cost of the rule because the facts proved that this rule change would be a disaster for working families,” Nanda continued, noting that “if finalized, this rule would take billions of dollars from tipped working people, the vast majority of whom are women, and disproportionately women of color.

Pointing out that the proposal “is already deeply unpopular with voters,” Christine Owens, executive director of the National Employment Law Project, denounced the department for carrying out a “cover-up” that “has kept workers and their advocates, along with many other stakeholders, in the dark about critical evidence related to the impact of the proposal.”

“The only appropriate remedy is to withdraw the rule,” Owens concluded, “and NELP calls on the Department of Labor to do so immediately.”

Amit Narang, a regulatory policy advocate at Public Citizen’s Congress Watch division, went a step further. Calling the administration’s actions “astonishing and deeply troubling,” Narang demanded that the department not only rescind its proposal, but also “launch an investigation into the cover-up.”

While the Economic Policy Institute (EPI) also called on the department to “release its analysis immediately or, better yet, withdraw its proposal and refocus on its mission of serving working people, not big business,” the group has released its own analysis outlining the likely consequences of the proposed “tip stealingrule (pdf).

EPI’s analysis predicts that if the department’s proposal is finalized:

  1. tipped workers would lose $5.8 billion a year in tips, with $4.6 billion of that coming from the pockets of women working in tipped jobs;
  2. the take-home pay of back-of-the-house or other nontipped workers would remain largely unchanged; and
  3. restaurant owners and other employers of tipped workers would get a $5.8 billion a year windfall.