The fight for a nation-wide living wage stagnated in March 2021 when the Senate parliamentarian ruled that a $15 federal minimum wage hike couldn’t be part of the Biden-Harris Administration’s $1.9 stimulus package. Mainstream media outlets however, largely failed to report on the provision of the Raise The Wage Act that would have put an end to the lower federal minimum wage for tipped industries, which is a legacy of slavery and has been frozen at $2.13 per hour since 1991 (oh, and you can thank Herman Cain for that).
Currently, seven “equal treatment” states have already done away with the subminimum wage altogether (also sometimes called the tipped minimum wage or the “tip credit” for those wishing to make it sound like a rosy perk of the industry, which it certainly is…for employers). Despite the continued existence of both restaurants and tipping in all seven equal treatment states, the National Restaurant Association and its regional affiliates, various astroturf-y advocacy groups claiming to speak for all tipped workers, and many business-friendly media outlets take a hard stance against raising tipped workers’ wages. They vigorously defend a racist, sexist practice that is seen in no other industry in the US (though other employers would dearly love to use tips to subsidize wages, especially in the gig-economy).
What follows is a quick breakdown of some of the most common, often bad faith, and sometimes completely dishonest talking points put forth in subminimum wage propaganda and, most importantly, how YOU can respond to them. As an industry we have to push back against this misinformation, educate our coworkers and demand better for our colleagues. This applies to any state that still pays us less than other workers, but especially in the 16 states where tipped workers still earn just $2.13 an hour.
A common misconception — that propagandists are happy to encourage — is that raising the subminimum wage to the same level as the regular minimum wage would also eliminate tipping as a practice, thereby limiting service industry workers who might otherwise make much more per hour with tips. The NRA itself explicitly makes this claim in an official statement on the Raise The Wage Act and prominently presents the “tip credit” as being the same as “tipping” on it’s website.
Let’s be real, real, real clear: The practice of tipping doesn’t disappear when you raise the tipped workers’ base pay. Anyone who’s ever dined out in California, Washington, Nevada, Alaska, Montana, Minnesota, and Oregon (also Guam!) could easily tell you this. And while some people do argue for abolishing tipping, and have done since it was first imported into the US as a practice, there is no current proposal to abolish tipping. Raising the subminimum wage would merely require employers to stop using customer tips to subsidize wages.
If a particular bartender, say, makes tons of money in tips, pulling down a couple hundo a night in a packed bar or high-priced, high-volume establishment — that’s great for them! They’re special! Very unusual in fact! So much so, that their high-earning experience cannot reasonably be taken as the norm, as most of their colleagues across a huge, diverse industry are experiencing much less security. That high-rolling mixologist the media love to interview is vastly outnumbered by employees at, say, Denny’s, Applebees, or IHOP. Compared to the national poverty rate for non-tipped workers (about 6%) tipped workers are twice as likely to be in poverty (12-13%), and in subminimum wage states the rate is almost three times as high for servers and bartenders (around 18%).
Our industry is disproportionately made up of women and people of color, and the gender and racial pay gaps shrink significantly in equal treatment states. When the media trots out a high-earning, white male bartender to paint a picture of the industry, it erases the majority of our coworkers. Maybe a posh New York City bartender doesn’t need the raise, but a mother of three working at a diner and living near poverty could use it, and I would like to hear from her.
You could talk to anyone you know who has worked in both submnimum and equal treatment states (like yours truly) and they will tell you, people tip the same! There’s always variation among customers but I’m here to tell you, in case you were unsure, overall people tip the same out here in California (where I’m making $13/hr) as they did when I worked in Washington, D.C. (where I made $3/hr). I just have a consistent paycheck now.
But, since anecdotal evidence is weak and should be treated with suspicion (see talking point #2), we here at The Dish want to give you precious data to back it up! Servers and bartenders in equal treatment states make 17% more per hour (inclusive of tips) than tipped workers in $2.13/hr states. There’s no evidence that overall earnings decrease, or that tip percentages overall decrease when employers pay their workers a normal minimum wage.
No one likes to see prices going up, especially since it’s what prices pretty much always do, almost without fail. But you can look at any national chain to see that the exact same business can operate successfully in equal treatment states without significant (or sometimes any!) changes in menu prices. In fact, Denny’s and McDonald’s have even come out and said as much; they’ll “do just fine.”
An increase in some menu prices, which is likely, is also a reflection of the fact that they’ve been kept artificially low for years – decades in states still paying $2.13 plus tips. We would think it irresponsible if an employer was still paying someone the same dollar amount now as they were 30 years ago, but that’s what’s happened to tipped workers in subminimum wage states. A meal out shouldn’t be subsidized by the workers’ poverty. And if we allow wages to rise gradually in future, we won’t have to face this kind of steep increase again.
This is a favorite, and relies on this tidbit of “conventional wisdom:” that if labor costs more, people will hire fewer people. But conventional wisdom is often wrong, and as The Atlantic points out “there is no obvious relationship between the minimum wage and unemployment.” A very thorough study of decades of wage rises found that businesses adjusted to the new labor costs in various ways, like “reductions in labor turnover; improvements in organizational efficiency; reductions in wages of higher earners (“wage compression”); and small price increases.” Some of the widely-touted scary statistics on job losses make headlines, but wilt a bit under scrutiny.
Debates about how higher wages kill jobs too often focus only on one side of the equation as well: the cost to the employer. But higher wages also create employees who can buy more, who can save more, keeping capital within their local economy (and their own industry in our case!). More workers who can afford to eat out at restaurants are good for restaurants and their workers.
Hopefully the arguments outlined above will help you and your co-workers look at the debate in new ways. We should all try to be aware of arguments we encounter in the media, and who we’re hearing them from! As potential organizers this can help us all learn how to respond to business owners, restaurant association groups, and maybe even our own coworkers when they insist that less than minimum is the best tipped workers can hope for.