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Hawaii Raises the Minimum Wage For Those Who Need it Most

Hawaii Raises the Minimum Wage For Those Who Need it Most

Written by Bryce Covert

On Tuesday, lawmakers in Hawaii voted toincrease the state’s minimum wage to $10.10 an hour by 2018 and it was signed into law by Gov. Neil Abercrombie (D) the next day. While the state is the third to raise its wage to that level this year, it’s unique in one aspect: its wage will apply to tipped and nontipped workers alike.

That means Hawaii willbecome the eighth state to require businesses like restaurants, nail salons, bars and barber shops to pay the employees who earn tips the same minimum wage as everyone else. Before Hawaii, Alaska, California, Montana, Minnesota, Nevada, Oregon and Washington had already done the same. Those seven states have more than 1 million tipped workers that make the full minimum wage.

There are opportunities for more to join the club. According to Saru Jayaraman, co-director of ROC United, ballot measures in Michigan and Washington, DC as well as legislation in Florida and Pennsylvania would get rid of the lower tipped minimum wage. “Our focus is on the ballot measures,” she told ThinkProgress, which she says “are likely to pass.”

Those seven states that have already eliminated the two-tier system stand out. The federal minimum wage for tipped workers is $2.13, about 30 percent of the $7.25 wage for all other workers, and it hasn’t been raised in two decades. But among those who did away with the lower wage, the minimum for tipped workers reaches as high as 130 percent of the federal level. And their experience with a higher wage for people who earn tips shows it could have positive benefits for the whole economy.

The low tipped wage leaves many people who earn it struggling to get by. Across the country, workers in predominantly tipped jobs aretwice as likely to experience poverty, and restaurant servers have a poverty rate that isnearly three times the rate for everyone else. Servers are alsotwice as likely to use food stamps to feed themselves. But the situation is different in states with higher tipped wages. In those seven states, the poverty rate for tipped workers has been reduced by a third.

Part of the reason so many tipped workers struggle to get by is that their employers don’t live up to their obligation to fill in their wages. If a workers’ hourly wage plus tips doesn’t add up to $7.25 an hour, the employer is required to make up the difference. But few do.More than one in ten tipped workers say their pay adds up to less than that even with tips. The Department of labor found 84 percent of employers weren’t compliant with the rule when it conducted 9,000 investigations over two years.

It doesn’t just help the workers themselves. A report from ROC United found that these states alsoexperienced above average employment growth in the restaurant industry compared to the rest of the country. It’s set to grow 10.5 percent in those seven states, compared to 9.1 percent in the others. Job growth for tipped workers also tends to be higher where they make more than $5 per hour and is even higher in those seven states without a lower wage.

And restaurants themselves can benefit. The report found that per capita actual sales in the industry over the last three years increased as the tipped minimum wage increased. One reason, it posits, could be an improvement in customer service and a reduction in turnover a survey of 1,000 employers in the industry found that higher wages cut their turnover in half. The higher wage also puts more money in workers’ pockets, which can translate to more money spent at these establishments.

Some restaurants have already decided that the benefits outweigh the costs. From abar in Washington, DC toa high-end sushi restaurant in New York City, some places are banning tips for their workers in favor of just paying them a higher wage and giving them benefits. One restaurant owner said doing soimproved both his service and revenues.

They have not just recognized that tipping can leave their workers making less, but that it doesn’t necessarily come with benefits. While customers think that tipping allows them to get better service, that doesn’t actually play out: their perception of service accounts for just apercentage point or so in what tips they leave. Meanwhile, tipping canperpetuate racism and sexism, rewarding attractive women and white servers over others.

This post originally appeared on ThinkProgress

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Photo credit: Thinkstock

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67 comments

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1:53PM PDT on Aug 6, 2014

The cost of living on the islands is so much higher than the main land.

7:36PM PDT on May 4, 2014

Mmmmm--we'll see

5:01PM PDT on May 4, 2014

good

4:20PM PDT on May 4, 2014

TYFS

5:43AM PDT on May 4, 2014

good news

3:55AM PDT on May 4, 2014

about time

10:26PM PDT on May 3, 2014

What a sad comment on society. The story reminds me of the beginning of the film "Million dollar baby". I agree this is "too little, too late".

7:48PM PDT on May 3, 2014

I live on Maui and was happy to hear this but... 2018 really? They have no reason to wait that long. Get it done dammit!

7:22PM PDT on May 3, 2014

Excellent

6:38PM PDT on May 3, 2014

It's time for the federal government to step in and declare a decent minimum wage across the board, effective immediately. While $10.10 an hour might be a welcome improvement, it still isn't enough.

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