The federal minimum wage has been stuck at $7.25 since 2009, while the tipped minimum wage remains $2.13 per hour. As a result, employers of tipped workers can rely on customers to pay $5.12 per hour — roughly 70 percent — of the business’ wage obligation to tipped staff. Even as most states have now enacted minimum wages above the federal $7.25 per hour, many still maintain exceptionally low tipped minimum wages.
For instance, in Delaware, Nebraska, and Rhode Island, the regular state minimum wage is scheduled to reach $15 per hour in the coming years, yet the tipped minimum wage in each of these states remains less than $4 per hour. Who is on the hook for this growing share of tipped workers’ wages? Customers, not employers.
Across the country, tipped workers are paid at least a third less than the median worker overall — which translates to over $9 less nationwide. It bears mentioning that poverty rates for tipped workers are 2.3 times higher than poverty rates for non-tipped workers, and states that pay the lowest tipped minimum wage allowed by law ($2.13 per hour) have the highest poverty rates overall.
Relying on customers to pay the bulk of tipped workers’ wages exposes workers to tremendous instability of income, as pay can vary dramatically day-to-day and week-to-week. Employers are legally required to ensure that on a weekly basis tips (the “tip credit”) cover the gap between the tipped minimum wage and the regular minimum wage.
If they do not, employers are responsible for making up the difference. In practice, this requirement is exceptionally difficult to enforce. As a result, tipped workers — who are already paid low wages — are particularly vulnerable to wage theft.
From low pay to high poverty rates, to wage theft, sexual harassment, and workplace discrimination, the injustices tipped workers face are not equally shared across demographic groups but are concentrated among workers of color and women.
Hispanic, Asian-American and Pacific Islander (AAPI), foreign-born, and women workers are overrepresented in the tipped workforce, while white workers and men are underrepresented. The tipped workforce nationwide is nearly two-thirds women, and disproportionately composed of women of color. When it comes to geography, more tipped workers live in the South — the region with the largest Black population — than any other region.
From emancipation, the racist practice of tipping prevailed in low-wage industries — disproportionately composed of Black workers, workers of color, and women — before subminimum wages were enshrined into law, creating a two-tiered system for wages that has been preserved as a means of racial and economic control.
To address the discriminatory treatment of tipped workers in the South and across the country, lawmakers must eliminate the tipped subminimum wage and give tipped workers the same basic protection afforded to other workers in almost all other jobs — a minimum hourly wage, regardless of tips.
