Subminimum Wage Plus Tips Don’t Add up to a Living

(WOMENSENEWS)–You’ve probably heard that Maria Shriver is partnering with Marriott to encourage visitors to tip hotel housekeepers.

Critics have seized on this “Envelope Please” campaign to make the fundamental argument that hotel workers should not depend on the mood, largess and mindfulness of guests. They should have a livable wage and not have to rely on tips.

The same goes for restaurant workers.

My first job in high school was as a waitress. I continued waitressing while attending college and into adulthood when I left a community organizing job and was volunteering to gain experience as a women’s anti-violence advocate.

It wasn’t until the job turned into my main livelihood that I realized that tips accounted for most of what servers live on. It was the start of an education that’s important to share with those who only go to a restaurant to eat. I particularly want to share it with the legislators who will be seeing proposals to increase the minimum wage in Congress and dozens of other states and cities around the country.

The first thing I learned was that as a tipped worker under federal law my employer did not have to pay me the full minimum wage, but a subminimum wage, which at the time was 50 percent of the minimum wage. The tips I received from customers, when added to the subminimum wage, were supposed to equal at least the minimum wage. If they did not, the employer was supposed to make up the difference. But that’s not as easy as it sounds. By the time the paycheck arrives with all of the deductions, and tips calculated minus what was shared with other staff, it is difficult to know how much the employer should be paying.

So waitresses mostly rely on the tips, usually but not always in the 15 percent to 25 percent range. How much you get often depends on how much the customer likes you.

Need to ‘Play Along’

In my experience, it was based on how much you flirted or laughed at their crude or sexist jokes. I figured this out the first time a customer left me a one-cent tip after I did not play along. (He asked me what the fun things were to do in town, and apparently wasn’t interested in miniature golf).

Thirty-seven percent of sexual harassment complaints to the Equal Employment Opportunity Commission come from the restaurant industry, finds an Oct. 7 report by the Restaurant Opportunities Center United.

But I never complained because I considered it part of the job, and there were other customers to wait on.

While the federal minimum wage, currently at $7.25 an hour, has increased over the years, the subminimum tipped wage has remained at $2.13 since 1991.

In 1996, the National Restaurant Association, under the leadership of one-time Republican presidential hopeful Herman Cain, convinced Congress to increase the minimum wage but freeze the tipped minimum at $2.13. This is not even 30 percent of the current minimum wage. There was an 84 percent non-compliance rate from 2010-2012 in employers not making up the difference between $2.13 and what servers did not earn in tips in order to meet the full minimum wage, according to the Economic Policy Institute.

Women are two-thirds of tipped workers, 87.4 percent are between 20 years of age and older and they have a poverty rate nearly twice that of other workers as their wages fall in the bottom quartile of all U.S. wage earners. Across family income levels, 30.5 percent of workers are in families that earn less than $40,000, while this amount is the total family income for 49.9 percent of waiters and bartenders.

7 States the Exceptions

There are seven states that do not have a subminimum tipped wage. In Alaska, California, Minnesota, Montana, Nevada, Oregon and Washington tipped workers earn the full minimum wage of the state – and the poverty rate among tipped workers has been reduced by a third; 14 percent compared to 20 percent in states with the $2.13 subminimum.

The workers in these seven states still receive tips — most customers are not aware they are not earning a subminimum wage — and the minimum wage that restaurant servers earn is still between $7.25 and $9.32, depending on the state.

Can restaurants afford to pay workers the full minimum wage? The restaurant industry in the seven states without a subminimum wage projects a higher employment growth over the next decade than in states with a subminimum wage, according to the Restaurant Opportunities Center United’s report “Recipe for Success: Abolish the Subminimum Wage to Strengthen the Restaurant Industry.” These seven states have also experienced above-average employment growth.

In states that have a subminimum tipped wage that is higher than $2.13, the center’s “Recipe for Success” reports that sales increase as the tipped minimum wage increases. All of this growth could be a result of increased worker productivity, customer satisfaction, reduced turnover and hiring costs or a combination of all of those elements.

In legislative proposals to increase the minimum wage at the federal and local levels, the subminimum wage is being proposed to rise as high as 70 percent of the regular minimum wage. That still means that servers would rely on tips from customers to earn a living, and employers would benefit by not having to pay the full minimum wage.

Should the subminimum tipped wage be abolished altogether? Yes. It’s time to let servers concentrate on doing their jobs for a fair wage instead of having to rely on the kindness of strangers.