Restaurant Owners Fight Rise in Minimum Wage for Tipped Workers

Tuesday, January 28, 2014
(photo: Paul Sanoya, AP)

After factoring for inflation, the federal minimum wage for workers receiving tips is a little more than $1 an hour—and yet, the restaurant industry is adamant that Congress should not approve a raise for these workers.


The last time lawmakers approved an increase in the minimum wage for waiters and waitresses was 1991: $2.13. That wage has stood since then, even though inflation has robbed nearly half its value. Today, the $2.13 is really more like $1.24.


President Barack Obama and other Democrats argue that it is time to raise the federal minimum wage for all workers, including those earning tips.


Senator Tom Harkin (D-Iowa), who is championing the cause in the Senate, says studies show many restaurant workers live below the poverty line because of the $2.13 hourly minimum.


That’s why Harkin and others want to raise the wage (for non-tipped workers) from $7.25 an hour to $10.10 an hour. For waiters, the wage would go up by 95 cents a year until it reached $7.10 an hour, and then rise annually with inflation.


But the National Restaurant Association is fiercely lobbying Congress to not change the law, claiming, as it has before, that raising the minimum wage will put a burden on restaurant owners who will have no choice but to hire fewer waiters and pass on the higher labor costs to customers in the form of pricier dishes.


The industry also claims waiters are really doing quite well financially, citing figures based on Bureau of Labor Statistics (BLS) data that show the median pay in restaurants ranges from $16 to $22 an hour.


Under current law, however, restaurant owners are required to pay a minimum of $2.13 an hour, unless a waitress or waiter’s tips results in them earning less than $7.25 an hour, in which case owners must pay more to make for the difference.


At the state level, 19 states use the federal $2.13 tip wage, while 24 states pay more. Seven states actually require waiters’ base pay to be at least the state minimum wage.


There are 3.3 million tipped workers nationwide, two million of whom are waiters and waitresses, whose median salary is $9.22 an hour including wage and tips, according to University of California, Berkeley, economist Sylvia Allegretto, who cited data from the BLS’s household survey.

-Noel Brinkerhoff


To Learn More:

Proposal to Raise Tip Wages Resisted (by Steven Greenhouse, New York Times)

Tipped Workers Often Face Different Minimum Wages (by Brian Tumulty, USA Today)

Minimum Wages for Tipped Employees (U.S. Department of Labor)

Minimum Wage for Tipped Workers Hasn’t Changed in More Than 20 Years (by Noel Brinkerhoff, AllGov)


Leave a comment