Unfinished Business

The Truth About Tipped Workers

By Gabriela Vasquez, a Summer 2014 Leadership Conference Education Fund Intern

The minimum wage for tipped workers has remained at $2.13 since 1991, a fact that is sometimes obscured in discussions about raising the federal minimum wage to $10.10 per hour. The Economic Policy Institute (EPI) and the Restaurant Opportunity Center (ROC) held a forum on tipped workers on July 23 to address the question of why tipped workers should receive the full minimum wage. And with 70 percent of tipped workers in the food industry, much of the conversation centered on restaurant workers.

Laura Fortman from the Department of Labor discussed the role the Wage and Hour Division plays in regulating wages of tipped workers. Fortman’s perspective was that the division should enforce the federal law that requires employers to pay $2.13 per hour to tipped workers who earn at least $30 in a month. The goal of the Wage and Hour Division, according to Fortman, is to “make sure that a fair day’s work results in a fair day’s pay.”

Since EPI recently released a report on tipped workers in coordination with the Center on Wage and Employment Dynamics (CWED) of the University of California at Berkley, the bulk of Wednesday’s forum focused on the findings of that report – “Twenty-Three Years and Still Waiting for Change: Why It’s Time to Give Tipped Workers the Regular Minimum Wage.” Sylvia Allegretto, CWED co-chair and one of the authors of the report, advocated for eliminating the tipped minimum wage altogether. Using the seven states that have no subminimum wage as an example, Allegretto claimed that the “restaurant industry does not hinge on paying tipped workers $2.13.” David Cooper of EPI, who co-authored the report, further explained several of the report’s findings. Cooper stated that the “vast majority of [tipped] workers are not doing that well,” but are doing much better in states where they are paid the full minimum wage. In fact, Cooper pointed out that the gender gap is smaller and poverty rates are dramatically lower for workers in these states.

Providing more personal perspectives were Marcie Gardner and Amber Grinden, who are tipped workers in the restaurant industry. Both women touched on the difficulties of having their income depend on customers’ tips. Imar Hutchins, owner of the Florida Avenue Grill, shared his views as a restaurant owner, pointing out that many people aren’t even aware of the existence of a subminimum wage for tipped workers.

While accomplishing reform nationwide faces many obstacles, it is clear that Cooper was right in saying that “the system needs to change.”