Today is 13 February. For millions of Americans, it's an especially important day. Across the country, advocates are organizing, rallying, and speaking out in support of raising the US tipped minimum wage of $2.13.
Yes, you read that right. Tipped workers include parking lot attendants, bellhops, baggage porters, manicurists, and barbers. They also include many people in the restaurant industry – waiters, waitresses, and food deliverers. They haven't seen a raise since 1991. For decades, tipped workers received roughly 50% of the federal minimum wage. But in 1996, Congress abandoned the 50% rule, and raised the minimum wage without increasing compensation for tipped workers. Nearly 20 years later, the minimum wage has risen to $7.25, while the tipped wage has remained frozen at $2.13.
The disparity is even more stark now that President Obama has signed an executive order making the wage for federal contract workers $10.10 an hour. That means the people who work in the cafeterias and concessions stands of America's federal buildings and parks will soon get a nice raise.
Workers who rely on gratuity have been pushed to the brink. Restaurant employees use food stamps at twice the rate of the general US workforce, and are three times more likely to live below the poverty line. In real terms, $2.13 in 1991 is worth $1.24 today.
Women have been disproportionately affected. Women constitute nearly two-thirds of all tipped workers, and 70% of restaurant servers. Many are adult mothers, who don't make enough to support themselves, let alone a family.
In theory, tips are supposed to make these employees whole. But that often doesn't happen. For starters, many Americans don't know who to tip. Food deliverers and wheelchair attendants at airports, for example, make $2.13 an hour but often receive only a pittance in gratuity.
Tips also fluctuate widely. This is especially true in the restaurant industry, where weather, time of day, geography, and general economic trends are all important. On a snowy day in an economic downturn, there might be no tips to count. This lack of predictability puts workers in an impossible position. How can they pay fixed monthly expenses, when their income is so uncertain? In the event that tips are lacking, employers are required to top-off wages so that they reach the federal minimum of $7.25. But that, too, doesn't always happen. Many employees don't know their rights, or are afraid to exercise them. Low-wage workers – many of whom live paycheck to paycheck – sometimes choose silence rather than claiming what's rightfully theirs. There's also the prospect of employer misconduct. Indeed, stories of employers stealing tips, and lawsuits alleging wage theft, are legion. In one famous report, the New York State Department of Labor audited a random sample of car washes, and found tip abuse at 21% of car washes statewide (pdf).
The Fair Minimum Wage Act of 2013 would gradually increase the minimum wage to $10.10, and the tipped wage to 70% of the full minimum wage. Both amounts would then rise annually with inflation. This badly needed legislation would help restore dignity and value to a vital component of America's workforce.
Critics argue that increasing the tipped wage would hurt employment and small businesses. However, many states have independently raised the tipped wage, and not seen a concomitant loss in business. California, for example, has a universal minimum wage of $8, and its restaurant scene has flourished. Moreover, in the most comprehensive study to date (pdf), a group of economists analyzed 16 years of data, and compared counties where the minimum wage increased to neighboring counties where it didn't. They found no negative impact on employment. Studies that have focused exclusively on the restaurant industry have reached a similar result.
Some economists have even suggested that a wage increase would stimulate business. They contend that raising the wage would increase worker productivity, reduce employee turnover, and add money to the economy.
The plight of tipped workers has an all too familiar explanation: special interest politics. The National Restaurant Association, the "other NRA", employs nearly 1 in 10 Americans, and spends millions safeguarding its members' profits. It has strong ties to both political parties, and is largely responsible for the continued erosion of the tipped minimum wage. But behind the money and rhetoric lies a shameful reality: the very people who feed us, often can't feed themselves.
