Equal Pay/Fair Wage

Tipped Workers Hope for Hike in Sub-Minimum Wage

Monday, February 6, 2012

After decades of enduring frozen wages, the nation's 3.3 million tipped workers -- most of whom are women -- may receive a minimum-pay hike. This could alleviate what economist Sylvia A. Allegretto calls an under-appreciated factor in women's poverty.

waitress(WOMENSENEWS) -- Low-wage workers' advocates predict that 2012 will be a banner year for waitresses, retail clerks and other tipped workers.

After decades of enduring frozen wages, the nation's 3.3 million such workers -- most of them women -- may receive an increase in their minimum pay.

Amy Hanauer, executive director of Policy Matters Ohio, a nonprofit research group with offices in Cleveland and Columbus, says protesters in the nationwide Occupy encampment are helping this cause.

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"Thanks to the Occupy movement, more voters are aware of inequality and the terrible toll it takes on low-wage workers and their families," says Hanauer. "Support is growing for increasing the minimum wage of tipped workers who work hard, but have fallen farther and farther behind because their wages don't cover their basic needs."

The pay of tipped workers has languished because an obscure federal provision, called the tip credit, has established a sub-minimum wage for tipped workers: $2.13 per hour or $4,333 a year for a full-time worker. The federal full minimum wage is $7.25 per hour, or about $15,000 a year for a 40-hour workweek.

Raising the minimum wage may alleviate what researcher Sylvia A. Allegretto calls an under-appreciated factor in the poverty of women.

"The sub-minimum wage hits women hard because 72.9 percent of tipped workers are women compared to less than half the overall labor force," says Allegretto, co-chair of the Center on Wage and Employment Dynamics at the Institute for Research on Labor and Employment of the University of California, Berkeley. "The federal tipped minimum wage was originally 50 percent of the regular minimum wage, but it has eroded over time to just 29.4 percent of the current minimum wage for all workers because it has been frozen since 1991 unlike the federal minimum wage, which was raised in 2007."

Gender Gap in Tips

Allegretto's research shows that female tipped workers, overall, average 50 cents less per hour than their male counterparts because they are employed in lower paying sectors, such as food service and home health.

Among wait staff, the wage gap is even worse: women earn 83 cents less per hour than do men because they are more likely to be employed by fast food restaurants than fine dining establishments.

"Even in good times, tips are volatile," says Allegretto, who worked as a waitress for seven years. "The weather, the time of day and the customer's mood all affect the size of tips. During recessions, customers spend less, so tips plummet. Many tipped workers sink into poverty because they are less likely than other workers to have benefits, such as health insurance and sick days they can tap to get through an emergency."

Rep. Donna Edwards, a Maryland Democrat, introduced a bill in 2009 that would have increased the tipped minimum wage to 70 percent of the regular minimum wage by 2012. Opposition by Republicans and the restaurant and hospitality industry, which employs the largest number of tipped workers, stymied the bill. Edwards plans to reintroduce the bill this spring.

But advocates are looking past Congress and pinning more hope on the states, many of which have stepped ahead of federal lawmakers.

Over half the states and the District of Columbia have tipped credits that are higher than the federal standard. These range from $2.33 an hour in Wisconsin to $7 in Hawaii.

Washington is one of seven states that has no tipped credit law. Employees' tips are excluded from the calculation, so employers pay the state's full minimum wage, $9.04 an hour, the highest in the nation.

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I am relived that Congress is finally paying attention to this clearly obvious wage gap. I use to work as a waitress and it was a real let down when I became aware that I was making more money in a restaurant that exploits women for their appearance rather than a fine-dining establishment. However, the minimal wage level should not be the only thing that is considered when analyzing the wage gap. Men always do get better preference than women, particularly in dinning jobs. My co-worker, who was a male and has less experience than me used to get the better sections of the restaurant and used to be helped more often by the cleaning staff than most of the girl servers. This new look at wage legislation is only the first step.