Unlike in Europe, tipping is still a ubiquitous practice in the United States. With most states allowing employers to pay tipped workers a sub-minimum wage, the practice has increasingly become a source of controversy.
Restaurant employees are some of the lowest-paid workers in the country and activists have waged a decades-long struggle against the restaurant industry to bring tipped wages up to par with the federal minimum wage.
Thanks to the Federal Labor Standards Act, employers in most states are allowed to take a tip credit toward the federal minimum wage of $7.25 per hour. Depending on the state, the tip credit is usually $5.12, meaning employers can pay their tipped workers as low as $2.13 per hour. The minimum wage for tipped workers has remained unchanged since 1991.
The subminimum wage doesn’t just mean lower wages for tipped workers, it relieves restaurant owners of responsibility for paying their staff, leaving workers at the mercy of the customers they serve.
Harassment in the Workplace
The tip credit also leads to higher rates of sexual harassment one report found, since workers more reliant on tips are less likely to speak out when guests harass them. According to the Economic Policy Institute, nearly 70 percent of servers and bartenders in the U.S. and tipped workers are substantially more likely than non-tipped workers to rely on food assistance programs.
The Restaurant Opportunities Center (ROC) is a non-profit organization that advocates in favor of wage increases with offices in locations around the country. The organization was founded by Immigration Lawyer Saru Jayaraman in New York after 9/11 with the aim of organizing all unorganized restaurant workers in New York City. ROC is the nation’s largest restaurant worker organization and represents about 130,000 restaurant workers, employers, and consumers, according to Jayaraman, who is still the group’s president.
“When you earn a $2 or $3 wage, as it is in most states, your wage is so low…you’re living completely off of tips,” Jayaraman said. “You have to put up with whatever a customer does to you — however they touch you, treat you or talk to you because the customer pays your bills, not your boss. The customer is always right because they are the ones who feed your family.”
Aubrey DeBoer is a former server from Washington D.C. and described how the subminimum wage made her more vulnerable to harassment in the workplace.
“It skewed the customer relationship because I always needed their money,” DeBoer told The Globe Post. “It also made me feel vulnerable because if I was in an interaction where I was getting hit on by a man to whatever degree of aggression he was, it was like ‘I can’t say anything.’”
The Origin of Tips
Echoing statistics from the National Restaurant Association (The other NRA) Jayaraman said the restaurant industry is one of the largest and fastest-growing in the country, with over 15 million Americans currently working in restaurants and over $800 billion in sales projected for 2019. Jayaraman also explained how the practice of tipping and two-tiered wages has roots in Reconstruction-era racism.
“At emancipation, the restaurant lobby demanded the right to hire newly freed slaves, not pay them anything and have them live on this new concept that had just come from Europe at the time called the tip,” Jayaraman said. “Tipping originated in feudal Europe and was something aristocrats gave to serfs and vassals, but always an extra or bonus on top of a wage, it was never intended as a replacement for a wage. Of course, that was mutated in America thanks to slavery and our ugly racial caste system.”
The State Level
Not every state in the U.S. uses the tip credit, however. In California as well as six other states, it’s illegal. Workers get the same minimum wage regardless of tips.
In April 2016 Former California Governor Jerry Brown signed legislation to raise the minimum wage to $15 by 2022. The minimum wage in California today is $12 and is set to increase to $13 starting in January of 2020.
“Here in California we actually have the fastest-growing and largest restaurant industry in the country,” Jayaraman said. “All seven states (which have eliminated the tip credit) have the same or higher restaurant industry job growth rate as the 43 states with a sub-minimum wage for tipped workers and higher tipping averages. San Francisco actually has the highest tipping average of any city in the United States.”
The Federal Level
That’s not much different from the Raise The Wage Act, legislation in Congress which would gradually raise the minimum wage to $15 an hour over six years and tie it to the median hourly wage after seven years. The bill would eliminate the tip credit and put all workers on the same minimum wage representing a more than 700 percent wage increase for tipped workers. Its passage through the House of Representatives in July means the tip credit is threatened at a federal level for the first time.
The NRA is the restaurant industry’s corporate lobbyist and has a long history of working against wage increases and earned sick leave at the state and local levels since its founding in 1919. In 2019, the NRA has spent nearly $1.6 million in food and beverage industry lobbying, much of which went to fighting the Raise the Wage Act according to the center for responsive politics.
While the NRA has been a longtime opponent to minimum wage increases and elimination of the tip credit, the founding of the nonprofit, Restaurant Workers of America(RWA) added a new wrinkle to the battle over wages playing out across the country. Joshua Chaisson sits on the board of RWA and is a longtime server from Portland, Maine where he worked “tirelessly” to reinstate the tip credit in Maine after a ballot measure ended it in 2016.
“We started an aggressive email and phone campaign as well as hosting small town hall kind of meetings with state legislators and invited them in to listen to us explain why the tip credit and the tipped wage system works well for us … and what eliminating the tip credit would do to cripple the restaurant industry across our state,” Chaisson told The Globe Post. “The tipped wage system allows us to be the commission-based salespeople that we consider ourselves to be as servers and bartenders.”
It’s disheartening to see another Dem turn their backs on #wetheworkers. Instead of listening to tipped workers when we tell legislators that we have no appetite for #oneunfairwage, Tlaib and others choose to listen to labor activists. #savethetipcredit #86OFW #86ROC https://t.co/TDvnScFKFq
— Joshua Chaisson (@MrTipCredit) July 26, 2019
Chaisson described ROC as RWA’s main opposition and said RWA expanded from Maine to other parts of the country to create a “national voice” to preserve the tipped wage system.
“Until 2016 we were fighting this fight everywhere and the NRA would show up as the opponent in every state,” Jayaraman said. “[RWA] started in Maine and if you look at the origins of that group, it was started by restaurant owners even though they call themselves ‘Restaurant Workers of America.’ They’ve been pretty ineffective. In places like Michigan, Pennsylvania and Massachusetts where people just don’t make that much in tips, they have not managed to actually mobilize any workers in opposition to raising their own wages.”
As things stand, raising wages for tipped workers is sure to be a contested issue going forward. Most states still keep the minimum wage at $7.25 an hour and have yet to eliminate the tip credit. To complicate things further, The Raise the Wage Act means federal elections in November 2020 could have significant consequences on the wages of restaurant workers depending on who controls the Senate and the White House in January 2021.