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Waiting Tables And Still Waiting for a Raise
Last month, many of our nation's low-wage workers got their first raise in a decade as the federal minimum wage inched up to $5.85 an hour. But millions more who are paid in part with tips - low-wage workers like waiters and waitresses, car wash attendants, and delivery workers - are still waiting. For them the minimum wage has been frozen at a meager $2.13 an hour for sixteen years. And the restaurant industry - which fights to block pay increases for tipped workers - has lobbied hard to keep it that way. It's time for Congress to stand up to this special interest and give the nearly three million Americans who work for tips a long overdue raise.
In the past, tipped workers weren't always excluded from minimum wage hikes. For decades, employers were required to pay them a base wage of at least half the federal minimum wage. This guaranteed a stable income that was automatically adjusted as the minimum wage went up. And it reflected changes in the cost of living and recognized that tips are notoriously unpredictable and can vary substantially depending on work schedules, seasons, and broader economic trends.
But in 1996, when President Bill Clinton shamed House Speaker Newt Gingrich and Congress into raising the minimum wage, Republican lawmakers sided with restaurant industry lobbyists and excluded tipped workers by permanently freezing their minimum wage at $2.13. This resulted in a tipped-worker minimum wage that is worth less and less every year, forcing them to rely almost entirely on tips to make ends meet. Ultimately, it's meant lower and less certain pay for millions of Americans.
Restaurant industry lobbyists defend their position by focusing on waiters and waitresses at high-end restaurants who earn a lot of money in tips. But such workers are the exception, not the rule. According to the Bureau of Labor Statistics, the average waiter or waitress in the U.S. makes just over $17,000 per year including tips - hardly enough to support a family, as many of these women and men struggle to do. And other tipped workers - like car wash attendants and delivery workers - make even less.
As Congress has refused to address this serious problem, thirty-one states ranging from Arkansas to Ohio to North Dakota have stepped in to establish minimum wages above $2.13 an hour for people who work for tips. In fact, seven states require that tipped workers be paid the full minimum wage, recognizing that they are struggling to keep up with the rising cost of gas, rent, and milk. None of these states have found that it hurts business to ask employers to pay tipped workers a fair wage. According to the National Restaurant Association, three of the states with higher minimum wages for tipped employees - Nevada, Arizona, and Florida - are projected to see the fastest growth in restaurant jobs and/or sales over the next ten years.
Congress should follow the states' lead and restore the tipped-worker minimum wage to its historic level of at least 50% of the federal minimum wage, or $3.63 in 2009. This would give full-time workers an extra $3,120 a year - which would make a real difference in the lives of millions of working Americans.
As a nation, we pride ourselves that people who work hard and play by the rules should earn enough to support themselves and their families. Our shocking $2.13 wage is an affront to this deeply held value and is hurting working families. It's time for Congress to stand up to the restaurant industry and fix this unfair vestige of the Gingrich era.
Raj Nayak is Counsel with the Economic Justice Project of the Brennan Center for Justice at NYU School of Law. The Brennan Center works with federal, state, and local policymakers to promote living wage jobs, workers' rights, and accountable economic development. The Brennan Center advised in drafting voter ballot initiatives in 2004 and 2006 that raised the minimum wage and tipped worker minimum wage in seven states.
16 Comments so far
Show AllWhy do we have "tipped workers" at all? When Europeans visit here, they are apalled at the US tip system - it's positively "third world". (and shouldn't be used there either)
As a Federal Wage & Hour investigator for 26+ years, I always thought it strange that restaurant customers were directly responsible for paying half of the restaurant workers' salaries with their tips. No other industry gets such a public subsidy.
When I joined the WH Division, the percentage of the minimum wage that restaurants were required to pay was 45% of the MW; this was phased up to 40% soon thereafter. The assumed end result would have been a phasing out of the "tip credit" in 5% increments until a restaurant employer was required to pay all his employees the full minimum wage. But then Reagan happened. He started a crackdown on "lost revenue" from tipped employees. While corporate tax loopholes were expanded, the Reagan administration had the IRS force restaurants to record a set percentage of their gross as tip payments, and the tipped employees were taxed on this percentage even if they DID NOT ACTUALLY RECEIVE the money in tips - voodoo economics in reality!
Reagan rolled the tipped credit back up to 50%, where it and the $3.35 minimum wage remained until a 1991 increase (the prior longest timespan without a MW increase). When the meager '96 increase went into effect, the Republicans, as detailed in this article, perversely capped the tip credit at 50% of the OLD MINIMUM WAGE in perpetuity. Thus, we currently have restaurant and other tipped employees being legally paid one-half of the 1991 minimum wage of $4.25. Since their tips legally must make up the difference, you and every other restaurant customer is paying them the difference between the employers' share and the full MW. In other words, while the restaurant owner pays his employees $2.13 an hour, you, the customer, are paying his employees their remaining $3.72 for every hour worked. No other business gets the federal break of having its customers directly pay 64% of its employees' wages. Time to roll the "tip credit" back to zero, as intended before Reagonomics intervened.
This is an outrage, this should be fixed immediately! The reverse Robin Hood Republicans should be exposed for the sadistic greed mongers that they are.
People deserve and are entitled to a living wage, where ever they are and what ever they do. We need to get rid of the two tiered economy where service workers are expendable.
Reagan said the the economic growth would be in the service sector and then set about to impoverish its workers. I guess the growth was for its owners and the market system was suppose to take care of the rest.
The only difference between America's wait-staff and China's Wal Mart "volunteers" is that we throw our servers a couple of bucks an hour, where as in China they do not - but they do hang giant signs that remind the cheapos to tip the slaves.
All American workers should have the right to earn at least a "survival wage," whether customers choose to reward their service or not. Maybe it's time employers stopped treating us as if we're utter morons and add the "gratuity" (i.e. the portion of wages he's unwilling to pay,) to the bill. At least that way, an employee can budget based on averages, as opposed to hoping that 4-top leaves at least 15% because the baby needs a new pair of shoes.
If someone decides to tip a McDonald's employee, is his salary immediately dropped to $2.13? What if I tip my bank teller - $2.13 for her, too? What food Nazi singled out one of the hardest working group of Americans for the royal screwing?
It seems like phony accounting to me. You pay a living wage and if the patron wants to tip for exceptional service then they can. I do not worry about the tax revenue lost on tips. Corporate welfare makes all of that look meaningless.
I have worked in the bar/restaurant business for 18 years. I'm one of the lucky ones. I'm a bartender, which in tip land is the top of the food chain. My employers also pay much higher than the norm at 5.75 per hour and they pay half of full time employees insurance. This is not the norm by any means though. The vast majority of waiters, waitresses etc. make the fabulous 2.13 and make a whole lot less in tips than I do. The notion that rich diners make up for the poor diners is misleading as well. The waitress down at the local greasy spoon doesn't have any RICH diners but she still has to pay taxes on the money she doesn't make. The minimum wage needs to be raised for tipped employees, 2.13 is ridiculous. That would mean BEFORE taxes a forty hour week would get you an 85.00 check. Does a steak cost the same as it did 16 years ago? LOL
OK, that the problem should be changed immediately appears to be the consensus. Now, try actually doing something about it. Good luck. Meaningful change is no longer possible, or hadn't you noticed?
I find it beyond belief that workers in the US hospitality industry rely on begging for their incomes. Yes begging: if you rely on the pity and goodwill of strangers for your income, you are a beggar. I think our system is quite a bit better: tipping is not required or expected, and workers get paid a decent wage.
Rabbis don't get paid. They work for tips.
Paul M, as a "beggar" myself I do take offense to your comment. There is nothing inherently wrong with tipping someone for good service as a "bonus". The problem is employers decided they shouldn't have to pay anything or next to nothing to people that do recieve them. In my line of work we put up with more BS than any other profession I can think of. EVEN IF my employer decided to start paying 10 per hour and cut out tips I'd laugh at them. I make 20.00 per hour before taxes on a good day, 3/4 of which is tips. I'm one of the lucky ones, most tipped employees don't come near that and you also have to keep in mind almost no hospitality job gives you any kind of benefits whatsoever. No sick days, no vacation, no insurance, no retirement....
If a tip can be considered a bonus, then let's just take the year end bonuses out of the executive paychecks that manage the service industries and see how they like that.
Those in Congress should be ashamed of themselves and the rest of us for accepting a corporate hack and weak willed actor to be our president.
No wonder the rate of homelessness became a national disgrace under Reagan's watch and continues today.
Everyone should be bumped up to a least 10 dollars an hour immediately regardless of whether or not they get tips.
I almost always tip 20% knowing how little service workers get paid. There's no need to do away with tipping if and when a living wage is enacted. And those workers shouldn't be taxed on that either.
What's next? Banning street musicians? Or making them report their income?
Slavery is an important part of the economy, but kept out of view and desensitized. With a casual "life just isn't fair" we can have cheerful adults pouring coffee and working much harder then their lap topped peers driving BMWs. Lay on a layer of so-called religious convictions and righteousness and the topic doesn't come up at all. Someone has to pour the coffee, build things, go without health insurance. Billions need to be spent elsewhere, to keep our airports Bin Laden free, for example.
Actually, I have been a fulltime waitress for 30 some odd years, still going strong at 50. I am pretty satisfied and really have to defend the tip system. Tipping is actually just a commission on the food you sell. Many sales people from shoe salesmen to car salesmen make the bulk of their salary on commission. The difference with the restaurant tip is it is voluntary. In Europe you are still tipping but it is just automatically added on the check. However, I do live in the ny area, best tippers in the world so it might be different elsewhere.
But on the other hand you don't have to tip the illegal immigrant dish-washer. It is the same story in Europe as well. Where would we all be without the dish-washers and the sweepers.