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Ending the Subminimum Tipped Wage Will Lift Up Black Workers and Benefit All Workers

"If we are committed to ending systemic racism in the workplace, passing a living wage bill for tipped and non-tipped low-wage workers is essential to reducing inequality," says racial justice champion Tanya Wallace-Gobern.

While employers are technically supposed to make up the difference if workers don’t earn enough in tips to reach the current $7.25 federal minimum, this rule is largely unenforced. And studies have long found a racial bias in tipping. (Photo: Getty Images)

While employers are technically supposed to make up the difference if workers don’t earn enough in tips to reach the current $7.25 federal minimum, this rule is largely unenforced. And studies have long found a racial bias in tipping. (Photo: Getty Images)

President Joe Biden’s Covid relief proposal would raise the wage floor for all U.S. workers and give a particularly long overdue raise to restaurant servers, taxi drivers, manicurists, and other tipped workers.

For Black worker advocate Tanya Wallace-Gobern, getting rid of the subminimum wage for tipped workers is a matter of racial justice.

“If we are committed to ending systemic racism in the workplace, passing a living wage bill for tipped and non-tipped low-wage workers is essential to reducing inequality,” she said in a recent briefing.

As the Executive Director of the National Black Worker Center Project, Wallace-Gobern oversees a network of eight centers across the country that aim to build power and transform working conditions for Black workers. The subminimum federal wage for tipped workers, which has been stuck at $2.13 since 1991, is a clear barrier to their goals.

While employers are technically supposed to make up the difference if workers don’t earn enough in tips to reach the current $7.25 federal minimum, this rule is largely unenforced. And studies have long found a racial bias in tipping.

A survey by One Fair Wage found that prior to the pandemic, Black tipped workers’ income, including tips, was already substantially lower than their white counterparts’ earnings, with 60 percent of them reporting earning less than $15 per hour, compared to 43 percent of white workers. Since the pandemic, 88 percent of Black tipped workers, compared to just 68 percent of all workers surveyed, have seen their tips plunge by half or more.

The legislative vehicle for the Biden plan, the Raise the Wage Act, would boost the federal minimum wage for tipped workers to $4.95 this year and then by $2 per year until it is equal to a $15 federal minimum wage by 2026. The overall federal minimum wage would increase to $15 by 2025. The Economic Policy Institute estimates that 31 percent of all Black workers would get a raise under the bill

Eliminating the subminimum tipped wage would also eliminate a shameful relic of slavery. Tipping became prevalent in the United States after the Civil War, when restaurants and railway companies embraced the practice because it meant they didn’t have to pay wages to recently freed slaves.

Rebekah Entralgo

Rebekah Entralgo is the Managing Editor of Inequality.org.

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