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Tipped Workers’ Plight Gets Lost in Minimum Wage Fight

Tipped Workers’ Plight Gets Lost in Minimum Wage Fight

Since President Obamaís State of the Union address in January, there has been a great deal of focus on wages. While the unemployment rate has declined since its height at the recession, those that are finding the little work that is out there are often forced to work in lower wage jobs. There has been efforts to address the minimum wage in hopes to lift wages for everyone. Several local and state governments have raised, or are in the process of raising, their minimum wages. President Obama has issued an executive order to raise the minimum wage for federal contractor employees to $10.10 an hour.

Lost in the discussion of the minimum wage are the wages of tipped workers. While the Fair Labor Standards Act requires that employers pay at least the federal minimum wage, the restaurant employers lobby convinced the federal government to consider the money earned via tips. This created a provision allowing employers of tipped employees to pay an hourly wage of half the minimum wage as long as the tips earned made up the difference.† This remained the law until 1996, when legislation froze the rate based on the then current federal minimum wage of $4.26 per hour. Since then, the tipped wage minimum has not increased from $2.13 per hour, or 29 percent of the current federal minimum wage.

While federal law requires employers to cover the gap if the tips earned do not reach the current federal minimum wage of $7.25 per hour, many employers do not, making tipped workers more dependent on tips that vary by the size of the bill, the season and the mood of their customers. Currently seven states require employers to pay the full state minimum wage before tips, with several more that require paying more than the federal minimum (either a percentage or a dollar amount) before tips. However, there are 19 states that still do not require employers to pay anymore than the federal minimum of $2.13 per hour for tipped workers. These are also the states whose minimum wage is equal to the federal minimum.

As the cost of living has increased and wages have remained stagnant, tipped workers are feeling the pinch the hardest. Labor unions and restaurant worker groups have long been pushing for an increase in the minimum. The president has stated support for including an increase in the tipped wage minimum in his discussions of raising the minimum wage, something that would require Congressional action. Democratic Senator Tom Harkin, along with Representative George Miller,†introduced a bill last year that would increase the minimum wage to $10.10 per hour, as well as raise the tipped minimum wage to eventually 70 percent of the minimum wage. The increase would be gradual, with a 95 cent annual increase until the minimum is reached.

Needless to say, the National Restaurant Association does not support the bill.

They claim that the average wages for restaurant employees far exceeds the minimum wage (when tips are included) and that increasing it would lead to higher costs and more layoffs and ultimately bad for the economy. A study by an economist at the University of California at Berkley showed the average hourly rate (including wages and tips) for the majority of the estimated 3.3 million tipped workers was $9.12 per hour, much lower than the National Restaurant Associationís claim of $16 per hour. Furthermore, data shows that for those states that have a minimum wage higher than the federal rate and require the full minimum wage prior to tips, tipped workers have a lower poverty rate than those in states with the $2.13 tipped worker minimum is allowed.

In other words, increasing the minimum wage is good for the economy.

Nearly 70 percent of tipped workers are women. Many tipped workers have families and, because of the low wages, still rely on some form of public assistance such as food stamps to make up the difference. These arenít just waiters and waitresses. These are bellhops, bartenders and manicurists who are working longer hours via multiple jobs and still living in poverty. In the meantime, efforts to increase the minimum wage for everyone are being stymied by the Republican controlled House of Representatives, who continue to claim such an increase would be bad for businesses and ignore the needs of the employees who help those businesses keep their doors open.

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113 comments

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1:29PM PDT on Jul 6, 2014

Make living wages and forbid tipping.

I ALWAYS over-tip. This is not good for a person on a limited income.

I never received tips in jobs and most were below minimum wage by the time it got to me.

8:24PM PDT on Apr 18, 2014

Pay should be a LIVING WAGE for everybody, no matter what the skill level, education, or dedication to a job. Why? Because people need to live and this pay system of reward for 'good service' is elitist bullying.If we are not directly given a part of the mainstreet economy's money supply,as a garenteed annual income, then the Job Creaters need to supply it since they are responsible for funding the people, institutions, and infrastructure that keep everything humming along for everybody, poor and rich.You know, all that trickle down stuff.If people are going to keep repeating the same old arguments then lets see it really work in our daily lives. And if the businesses can't stay in business if they have to fullfill their obligations to the ideals they shout, well so be it. Then maybe we can get on with injecting the money supply at the base economy and letting it bubble up. It takes more money to create jobs than it does just to give people enough to live and thrive on and theres plenty of real work that needs to be done. Then you can talk minimum wage because it would be extra income for the worker.

8:33PM PDT on Apr 16, 2014

The wages paid to employees is based on the education and skills needed to perform a specific job. In my opinion someone who works at a fast food joint shouldn't make as much as someone who works in an office doing computer input etc. If these people want to make more money they should get an education or skill. I know many of them are working fast food joints only temporarily while going to school, but many of them have no desire to advance to a better paying job. I can't see how they could be worth $10.10 per hour for slapping some mayo, lettuce, tomato, & pickle on a bun. Even an 8 year old could do this.

12:31PM PDT on Apr 14, 2014

Eric

demonstrates

again and again,

that he can only see about an inch

beyond his own nose.

You pretend that everyone is born into the same world of white privilege

as you were. Everyone else, who doesn't measure up to you and your standards are willfully or lazy.

I hope that reincarnation turns out to be a reality for you and you get to come back living among the poor and disenfranchised and that you get to hear someone like yourself just now pontificating about what they can't even conceive of and you punch his lights out.

11:00AM PDT on Apr 14, 2014

Eric L. said "Raising the minimum wage will fix nothing and can only lead to higher unemployment hurting smaller businesses and low skill workers the most."

Conservatives have been saying that since the minimum wage was established in 1938. It wasn't true then, it is not true know.

It is telling that the people who oppose the minimum wage are the rich folks? And they keep saying "hey, it is really going to hurt you people to pay you better wages?"

Of course what they are really saying is "Hey, we want to keep that money for ourselves. How dare you expect a decent wage for your labor?"

10:31AM PDT on Apr 14, 2014

Well, Eric L, you'd lose the bet. According to http://www.dollartimes.com/calculators/inflation.htm, $7.25 in 2008 dollars equals $8.04 in 2014 dollars, and the inflation rate during that period has been 1.75% annually, which is not a high rate, historically speaking.

So like everyone who gets his news from Fox and believes Barack Obama is to blame for everything, you are simply starting from incorrect assumptions, and you shoot your mouth off about it without checking your facts.

You're wrong about inflation; why should we take your argument about raising the minimum wage seriously, when - again - study after study shows that raising it doesn't cause job losses?

And while Obama should do more to remedy income inequality, if you think he's responsible for the transfer of wealth to the 1%, you are delusional.

Finally, some people wait tables because they can't FIND a minimum wage job.

8:13AM PDT on Apr 14, 2014

Just read a comment from a server living in Canada and it appears that servers in Canada DO earn less than minimum wage. I wasn't aware of that but it likely varies from province to province. I also agree with another comment... pay servers a decent wage (like they do many European countries) and tipping wouldn't be necessary.

8:01AM PDT on Apr 14, 2014

Wow!! It hardly seems fair to me that tipped workers make less than minimum wage per hour. I'm from Canada and minimum wage is minimum wage - doesn't matter what job you're in. Those that work in professions where tipping is the norm, work hard for the minimum wage that they do make, which is barely enough to scrape by on. If they're good at what they do, then it gives them the opportunity to improve their lifestyle through their hard-earned tips. I generally tip 15% provided the service is good and I don't have a problem with that. I just build it into the cost of dining out.

4:39AM PDT on Apr 14, 2014

Why would anyone wait tables then if they were not at least making more than what they could make at a minimum wage job?

The real issue is not the minimum wage, the real issue is inflation which is destroying the purchasing power of the dollar. I would bet a worker in 2008 making $7.25 an hour had more purchasing power than a worker today making $10.10 an hour. Obama has supported the inflation created by the FED QE program that has transferred wealth to the 1% and wall street.

Raising the minimum wage will fix nothing and can only lead to higher unemployment hurting smaller businesses and low skill workers the most.

1:36AM PDT on Apr 14, 2014

Get rid of the tip system and pay all workers a decente wage.

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