Research shows that eliminating the tipped minimum wage will generate billions to the national economy.
Written by Matt Murray for the NH Labor News
On Tuesday January 19th the New Hampshire House of Representative will be holding public commentary on HB 1346, a bill to eliminate the tipped minimum wage. If passed New Hampshire would join the seven other states including California, Montana and Minnesota who have already eliminated the tipped minimum wage in an effort to raise the wages of workers, mostly women, who are struggling to support their families.
As if the minimum wage of $7.25 an hour in most states is not bad enough, 43 states have a special, sub-minimum wage for restaurant and tipped workers. The majority of these states have kept their tipped minimum wage at $2.13 an hour. New Hampshire is slightly better at $3.27 an hour or 45% of the minimum wage.
The sub-minimum wage was created to allow employers to pay newly freed slaves a lower wage than white workers, creating an instant racial-economic gap.
Working for tips is not the lucrative career some might imply. Opponents of raising the tipped minimum wage, especially the “Other NRA,” the National Restaurant Association, like to highlight servers who work in high-dollar restaurants making over a thousand dollars a week in tips.
The truth is the overwhelming majority of tipped workers work in places like Applebee’s and IHOP, where sales and tips are low, not high dollar establishments.
Nationally the average income for a tipped restaurant workers is $14,596, just below what a full time minimum wage worker would earn annually. In New Hampshire it is even worse. The average tipped restaurant worker in New Hampshire earns $13,012 a year.
Here are just of few of the facts about tipped restaurant workers here in New Hampshire (US averages in parenthesizes):
- 51% of tipped restaurant workers are older than 25 (66% nationally and 25% are above 45 years of age).
- 81% of tipped restaurant workers are women (66% nationally).
- 25% of the tipped restaurant workers are working moms (31% nationally).
- 7% of tipped restaurant workers use food stamps, costing taxpayers $8,731,954 in public assistance [Food Stamps and Medicare].
Another myth about eliminating the tipped minimum wage, perpetuated by “the Other NRA,” is that eliminating the tipped minimum wage will destroy the local restaurant industry. The fact is that the seven states that eliminated the tipped minimum wage and raised their state’s minimum wage are now doing better those states with a sub-minimum wage.
States that have eliminated the minimum wage are growing at a rate of 10.5% annually. This is a full 1.5% higher than the average of the other 43 states at 9%.
Saru Jayaraman, Co-Founder of the ROC United and Director of Food Labor Research at Berkley recently opined why we should completely move away from tipping.
“It (tipping) has created a two-tiered wage system with deep social and economic consequences for millions.”
Because workers in the restaurant industry are forced to rely on tips to survive the industry is rife with sexual harassment.
“Women restaurant workers living off tips in states where the sub-minimum wage for tipped workers is $2.13 per hour are twice as likely to experience sexual harassment as women in states that pay the same minimum wage to all workers,” stated ROC United.
The wage gap between men and women has become one of the hot button issues of the year and one of the easiest ways to help reduce the gender wage gap is to eliminate the tipped minimum wage. Not only will it help women close the gender wage gap it will boost sales and generate billions to the economy.
Eliminating the tipped minimum wage and raising the minimum wage to $12 would result in an economic stimulus of an estimated $19.4 billion that would go right back into our local economy. ROC United is working to eliminate the tipped minimum wage nationally and making this economic boost a reality.
Just in case you need one more reason why we should eliminate the tipped minimum wage listen to Adam from College Humor explain why tipping should be banned.