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Study: Tipped minimum wage a persistent problem

8/17/2020

Study: Tipped minimum wage a persistent problem

Workers' advocates often point out that the federal minimum wage of just $7.25 per hour hasn't moved in more than 11 years, and just isn't adequate to meet people's needs in 2020. But for millions of Americans, even $7.25 isn't actually what they make, because they are tipped workers, and the minimum wage for such jobs is just $2.13.

Of course, those employees are supposed to have the difference between the tipped and full minimum wage made up by their employers, but that sometimes doesn't happen - and it's hardly the biggest issue tipped workers face.

For instance, a recent study from One Fair Wage that was based on the New York City restaurant scene found tipped workers tended to be separated into tiers. The highest-paid tipped employees were typically those working "front of house," such as servers and bartenders — referred to as Tier 1 — as well as hosts and bussers in a lower-paid second tier. Next came a tier for back-of-house workers involved in food preparation (chefs, sous chefs and line cooks), and finally a fourth tier of prep cooks, dishwashers and cleaners.

In all of the city's restaurants with tipped employees, white workers - and specifically white men - tended to make the most on tipped minimum wage jobs in the Big Apple: an average of $20.68. By contrast, the bottom of the spectrum, black women tended to make just $12.94 in tipped positions. Why? Men were more likely to work in fine-dining restaurants, rather than fast-casual establishments, and white applicants were twice as likely to be hired for jobs in those restaurants as people of color. While people of color make up 43% of all tipped workers in New York City, they make up just 32% of Tier 1 employees.

A more recent problem
As one might expect, people who rely on tips to earn even the most modest living have been hit particularly hard by the novel coronavirus pandemic, according to St. Louis television station KSDK. Indeed, federal data suggests unemployment for food-service workers surged from 6.2% at the end of January to 35.4% in April. Even after re-openings proliferated nationwide, more than 1 in every 5 restaurant workers were out of work at the end of July.

Moreover, those who do return to work are put in a position of potentially increasing their risk of COVID-19 infection significantly, forcing them to choose between a low-paying job and the health and safety of their family and themselves, the report said. More than 4 in 5 workers who earn a tipped minimum wage work in states where they are allowed to be paid less than the hourly minimum, increasing their financial precarity.

What can be done?
Seemingly recognizing the issue these workers face, a cadre of restaurateurs are pushing for change, according to Eater New York. That includes calling for the elimination of the tipped minimum wage and adding a 5% surcharge on restaurant bills to help ensure restaurants can reopen safely.

The more companies in any industry can do to ensure they provide their workers a livable wage, the better off they will be in terms of attracting and retaining talent.

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