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In observance of Labor Day, Joe Biden took to Twitter yesterday to reiterate his commitment to paying all American workers more livable wages.
If Biden is elected president, and can maintain this promise, the end of the tipped minimum wage would have particularly hopeful implications for restaurant workers, whose wages are notoriously unstable and often dependent on factors far outside of their control.
What is the tipped minimum wage?
The tipped minimum wage is the amount tipped workers must be paid by their employers. It’s significantly lower than the regular minimum wage, since — at least in theory — workers at least make up the difference in tips.
So what’s the problem?
Take, for example, the case of one restaurant worker in Michigan, who told the New Republic she can only count on earning $40 per shift. “Her days can last longer than 11 hours,” the magazine reports, “but under state law she can be paid as little as $3.67 an hour.” In theory this is livable, because that’s only supposed to be a fraction of her income; the rest is supposed to come from tips. The problem is that tips depend on a number of factors, most of which are out of her control: whether it’s raining, whether it’s busy, whether her customers are in good moods, whether there’s a global pandemic. “It’s all guesswork, because there is no steady income,” she says.
Legally, tipped-minimum-wage workers are supposed to be taking home at least the equivalent of regular minimum wage, because employers are required to make up the difference if tips fall short. (The amount restaurants pay out to bring tips up to real minimum wage is called the tip credit.) But restaurants, the New Republic observes, are not especially known for their compliance: In a 2010–2012 sweep of 9,000 restaurants, the U.S. Department of Labor found 1,170 tip-credit violations.
Tipped minimum wages also exacerbate the pay gap between white men and … pretty much everybody else, according to a report from the nonprofit UC-Berkeley Food Labor Research Center and One Fair Wage, a nonprofit advocating against the practice. This, Eater notes, comes on the heels of mounting evidence that tipped minimum wages “encourage racism, sexism, harassment, and exploitation in the workplace,” largely because it means that workers are at the mercy of two paying bosses — the restaurant and the customers — and while restaurants are at least supposed to be governed by U.S. labor laws, customers are not.
And as the pandemic has put an ever-growing number of tipped employees out of work, a third issue has been brought into stark relief: Unemployment benefits don’t cover missing tips. Instead, it’s calculated based on the tipped minimum wage. In most of the country, One Fair Wage’s Saru Jayaraman told FERN that restaurant workers who are able to collect unemployment are getting it “based on $2 or $3 an hour.” (In New York City, it’s now $10.)
Is it everywhere?
No. There are seven states that don’t have a separate tipped minimum wage, but New York is not among them. In 2019, Governor Andrew Cuomo eliminated the tipped minimum wage for all tipped workers except those in restaurants and bars.
How does that make sense?
Well … it depends on whom you ask. According to a report in Amsterdam News, the labor advocacy group ROC United was “distraught” that restaurant workers were left out of the 2020 law, for all the reasons explained above.
Other industry groups, though, were “pleased” with the exemption. As Eater NY notes, the New York City Hospitality Alliance, which has long opposed the elimination of the tip credit, argued that hospitality is “fundamentally different than these other industries.”
The National Restaurant Association, which vigorously opposed a House bill last year to raise the minimum wage to $15 an hour and eliminate the tipped wage, said the proposal would “would stifle new job creation, impose undue harm to our nation’s small business owners, and harm those it proclaims to help.” The group maintained that the tipped minimum wage was, in fact, an all-around win-win, since it “allows tipped-employees to earn far more than the minimum wage, while helping to reduce labor costs for restaurants and others that operate on thin profit margins.”
Wait, is Joe Biden coming out against all tipping?
No. Eliminating the tipped minimum wage does not mean getting rid of tipping altogether. There could and likely still would be plenty of tipping at restaurants. It just means that servers and other tipped employees wouldn’t be dependent on tips to make minimum wage. California doesn’t have a tipped minimum wage, Jayaraman points out, and yet (for better or worse) tipping culture remains strong.
Even if he’s elected, could Joe Biden actually do this?
Well, he would need the support of the Senate, and with things the way they are now, he doesn’t have it. The Democratic-controlled House is already behind the policy — the proposal to raise the federal minimum wage to $15 and ditch the tipped minimum passed last year — but the current Senate isn’t. For this to pass, that would have to change.