By Kevin Frazzini
Two workers, two very different attitudes about raising the tipped wage.
That’s the wage, currently at $2.13 per hour, that federal labor law allows employers to pay tipped workers as long as their total earnings, with tips, add up to at least the $7.25 hourly minimum wage. If they don’t, employers must make up the difference.
NCSL’s Jackson Brainerd examines these and other subminimum wages in this month’s State Legislatures magazine.
Both of the workers wait tables, but one says her daily take-home pay is so unpredictable that a higher minimum wage would be sweet relief when she’s planning her budget.
“Some nights I do well,” she says, “and there are some nights I don’t make the minimum wage, even with my tips.” For her, it’s no way to live.
The other worker is convinced that if the tipped wage were raised, most patrons at his restaurant would stop tipping, reducing his take-home pay.
“Some people may still tip,” he says, but “I still wouldn’t make what I was making before.”
For him, a low tipped wage is the only way to go.
Those in favor of low tipped wages claim they help keep mom-and-pop stores and restaurants in business and keep total wages strong for servers who make more than the minimum wage when tips are factored in.
Others just aren’t convinced and advocate increasing subminimum wages or eliminating tipped wages altogether. They say the federal tipped or cash wage of $2.13 has eroded over time, even more than the regular minimum wage, which has been raised several times.
They also point out that tips are an easy target for tax evaders. The IRS estimates that 40 percent of all tips go unreported. This alone has spurred some states to consider eliminating or reducing the tip credit.
Read the full story to find out how lawmakers are attempting to strike a tough balance: putting more money into workers’ pockets while avoiding an increase in consumer prices.
Kevin Frazzini is the assistant editor of State Legislatures magazine.