Workers who rely on tips are subject to a special tipped worker minimum wage, which has remained frozen since 1991 at a meager $2.13 per hour. The result has been to drag down pay for tipped workers in many of our nation’s fast-growing service industries, such as restaurants, hotels, nail salons, and car washes, where millions today spend their careers. When it was created by Congress, the tipped minimum wage provided tipped workers an economic cushion and brought their pay closer to a living wage—something our economy badly needs more of today.
A 2009 report by the National Employment Law Project finds that the stagnant minimum wage for tipped workers is a key factor behind falling living standards and growing economic insecurity for workers in tipped industries. Since the tipped worker minimum wage was frozen at $2.13 in 1991, its value has fallen by 36% in real terms. As a result, waitresses and waiters—the largest group of tipped workers—have three times the poverty rate of the workforce as a whole.
A 2011 paper by the Economic Policy Institute details the history of the subminimum wage for tipped employees, the demographics of tipped workers, and the effect of subminimum wage levels on earnings and poverty rates.
The WAGES Act, introduced in Congress by Maryland Congresswoman Donna Edwards, would restore the base minimum wage for tipped employees to 70% of the federal minimum wage.
The Restaurant Opportunities Center United (ROC United) documents the impact of low wages and poor working conditions for restaurant workers.
ROC United's report "Tipped Over the Edge" documents gender inequity in the restaurant industry, showing that women who work in the industry face systematic discrimination, poverty wages, a lack of sick days, and five times more harassment than the general female workforce. One major cause of poverty for these working women is that restaurant lobbyists have succeeded in keeping the federal minimum wage for servers and other tipped workers frozen at only $2.13 per hour for the past 20 years. Read a Summary of the report, and the full Report "Tipped Over the Edge." For recent coverage of the legislative effort and policy proposals to raise the tipped minimum wage, see Dave Jamieson's recent article in the Huffington Post.
How much the federal minimum wage would be if it had kept up with inflation over the past 40 years. Instead, itís $7.25. Learn More
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