In the EPI research arcticle, “Twenty-Three Years and Still Waiting for Change-Why It’s Time to Give Tipped Workers the Regular Minimum Wage,” they discovered customer tips paid more to employees than their employer. Check out their interactive map:
The shocking facts below and the fact that we've become a service industry economy is reason enough to raise wages now:
The subminimum wage for tipped workers has remained at $2.13 since 1991. In 1996, it was decoupled from the regular minimum wage, such that the tipped wage remained at $2.13 even as the regular minimum wage was increased. At that time, the tipped minimum wage was equal to 50 percent of the regular minimum wage; today it is only equal to a record low 29.4 percent of the regular federal minimum wage of $7.25.
Customers’ tips pay the $5.12 difference between the federal tipped minimum wage and the federal regular minimum wage … customers provide a subsidy to employers of tipped workers worth more than twice the wage these employers are required to pay their tipped staff.
The restaurant industry … more than 60 percent of tipped workers employed in food service. The full-service restaurant sector has grown about 86 percent from 1990 to 2013, while overall growth in the private sector was up 24 percent.
Tipped workers are predominantly women (66.6 percent) and disproportionately young; however, the majority are at least 25, and over one in four are at least 40 years of age.
Poverty rate of non-tipped workers is 6.5 percent, tipped workers have a poverty rate of 12.8 percent.
About 46.0 percent of tipped workers and their families rely on public benefits, compared with 35.5 percent of non-tipped workers and their families.
Paying tipped workers the regular minimum wage has had no discernable effect on leisure and hospitality employment growth in the seven states where tipped workers receive the full regular minimum wage. In fact, sector growth in these states has been stronger since 1995 than in the states where tipped workers are paid a subminimum wage.