There’s a referendum in Washington, D.C., to end the tipped minimum wage and make sure tipped workers get the full minimum wage. Restaurant groups are fighting hard and spreading misinformation, so the Economic Policy Institute sets the record straight. A lower wage for tipped workers disproportionately affects women and people of color—it “perpetuates racial and gender inequities, and results in worse economic outcomes for tipped workers,” especially given research showing that white people get higher tips.
Tipped workers in states where they get a subminimum wage experience higher poverty levels than in equal treatment states—a difference of 18.5 percent poverty vs. 11.1 percent poverty. And while restaurant owners are threatening that if the tipped minimum wage goes up, tips will go down or go away:
The data show that tipped workers’ median hourly pay (counting both base wages and tips) is significantly higher in equal treatment states. Waiters, waitresses, and bartenders in these states earn 17 percent more per hour (including both tips and base pay) than their counterparts in states where tipped workers receive the federal tipped minimum wage of $2.13 per hour. There is no evidence that net hourly earnings go down, such as from customers tipping less, when tipped workers are paid the regular minimum wage.
Finally, giving tipped workers the full minimum wage is not going to devastate the restaurant industry:
The restaurant industry thrives in equal treatment states. In one of the most comprehensive studies on the minimum wage, researchers aggregated the results of over four decades of studies on the employment effects of the minimum wage. They concluded that there is “little or no significant impact of minimum wage increases on employment.” Affected businesses are typically able to absorb additional labor costs through increases in productivity, reductions in turnover costs, compressing internal wage ladders, and modest price increases. Furthermore, research specific to the tipped minimum wage also found no significant effect on employment.
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