The Trump administration plan to let bosses steal their workers’ tips would cost tipped workers $5.8 billion—and most of that would be taken from women. According to an analysis from the Economic Policy Institute, $4.6 billion of that $5.8 billion in tip theft would hit women.
White tipped workers would lose $3.5 billion, Latino tipped workers would lose $1.3 billion and black tipped workers would lose $480 million. Or, instead of “lose,” make that “be robbed of.” By their bosses. This isn’t a hypothetical. Tip stealing is currently illegal but it already happens all the time: “research on workers in Chicago, Los Angeles, and New York found that 12 percent of tipped workers had tips stolen from them by their employer or supervisor.” What do you think happens when it becomes legal?
The economic effects of this rule are as follows: (1) tipped workers will lose $5.8 billion a year in tips, (2) the take-home pay of back-of-the-house workers will remain largely unchanged, and (3) employers will get a $5.8 billion a year windfall. The $5.8 billion is 16.1 percent of the estimated $36.4 billion in tips earned by tipped workers annually and amounts to more than $1,000 per year on average across all tipped workers.
The Trump Labor Department is hanging its arguments for this rule on the claim that back-of-house workers will get a raise, but:
… basic economic logic dictates that it is highly unlikely that back-of-the-house workers will get more pay. There is currently no limit to what these workers can be paid, so employers are already paying their back-of-the-house workers what they need to pay to attract workers willing to work in those jobs. If employers do share some tips with them, it will likely be offset by a reduction in their base pay, leaving their take-home pay largely unaffected.
If legalized tip stealing reduces inequality between tipped workers and back-of-house workers, it will do so only by lowering what tipped workers take home. Meanwhile, bosses will pocket the difference. And women will be hit the hardest.