Your Waitress Really Needs that Tip

>>waitress-600x400BY SABINE SCHOENBACH     During the month of March, Women AdvaNCe is taking a closer look the minimum wage and its impact on North Carolina women and families. From myth busting to examining the potential impact of raising the minimum wage, every Wednesday is devoted to a different aspect of this fundamental labor standard. Today, we take a closer look at the tipped minimum wage.

In 1991, a loaf of bread cost 71 cents. That cost >>has doubled in the last 23 years along with >>median household incomes. What hasn’t changed since 1991 is that under federal law, in full-tip credit states like North Carolina, employers still pay tipped workers a base wage of only $2.13 an hour.

“I last worked as a server in 1999, and I made $2.13 an hour back then,” Pamela B. >>told NC MomsRising last year. “I am appalled that that is still the server minimum.”

Pamela’s surprise is not unusual. While the minimum wage has received extensive media attention since the introduction of the >>Fair Minimum Wage Act of 2013 and President Obama’s call to raise the wage in his >>January State of the Union Address, the existence of a two-tiered minimum wage often gets buried in the discussions around raising the wage floor.

This lesser known step-sibling of the minimum wage has been around for a while. Since 1966, employers have been required to pay tipped workers a proportion of the federal minimum wage, usually between 50 to 60 percent (as long as tips make up the difference between the tipped wage and the regular minimum wage). This link broke in 1996 when the Minimum Wage Act of 1996 raised the minimum wage from $4.25 to $4.75 an hour, but froze the tipped wage at $2.13. Since that time, minimum wage has been raised multiple times without an increase in the tipped minimum wage.

Waiters and waitresses make up the largest proportion of tipped workers and advocacy groups like the >>Restaurant Opportunities Center (ROC United) are working hard to bring the tipped wage back into the spotlight. Half of the US population eats out at a restaurant at least once a week. >>ROC United’s entertaining video reminds us that “we all have a crazy restaurant story,” but that the craziest part of the restaurant industry is its stagnant tipped minimum wage.

Living Off Tips

Women working for tips and living in poverty

Employers are still required to make up any shortfall between $2.13 an hour and the regular minimum wage, so you might think that a lower base wage makes no difference. But tipped workers in our state bring home >>almost $5 per hour less than non-tipped workers. >>National data show that almost 1 in four tipped workers live in poverty. In North Carolina, 27 percent of tipped workers live at or below the poverty line.

When we talk about minimum wage workers, we are talking in the most part about women. As >>this National Women’s Law Center infographic starkly shows, women have a ridiculously higher chance of earning minimum wage rather than of becoming a CEO at a fortune 500 company. Not surprisingly, women also make up the majority of tipped workers. In North Carolina, the most recent data available shows that >>almost 8 in 10 tipped workers are women.

Women generally dominate >>the lowest tiers of the restaurant industry, typically as wait staff and hosts. Only 1 in 5 women in the North Carolina restaurant industry earn higher wages as chefs or head cooks.

Low wages may be the tip of the iceberg

“Not only do we make a mere $2.13 per hour, which means we never get an actual paycheck (the taxes eat up that small amount), but we work in an industry that has no benefits – no health insurance, no 401k, no nothing,” says Myra, a North Carolina mom at >>NC MomsRising.

Myra speaks the truth. Retirement plans are almost unheard of in tipped occupations, and 9 out of 10 restaurant workers lack employer-provided health insurance and earned paid sick days. More women than men report going to work, preparing and serving food while sick—often because women take on the bulk of childcare responsibilities. Although 4 out of 10 tipped workers are working mothers, a >>recent survey found that childcare affordability, accessibility, and a lack of career mobility makes working in the restaurant industry unsustainable for many working moms. Affording childcare on low wages is one thing, but erratic schedules and last-minute shift changes create almost insurmountable childcare barriers for many.

Meanwhile, national surveys have found that >>wage theft runs rampant in the restaurant industry. Wage theft – or the illegal withholding of wages – is often hard to measure. In North Carolina, >>“eating and drinking places” ranks second in the list of industries with the highest numbers of wage theft cases. Last year, >>a Cary restaurant paid its workers $145,000 in back wages for tip violations.

Taking the high road

A low tipped wage system relies on gratuities to make up the majority of a tipped worker’s salary.  Instead of rewarding servers for good service, restaurant patrons are essentially subsidizing legally mandated wages.

Some states have taken action in the wake of federal inaction to raise the wage. >>Thirty-one states currently mandate a higher tipped minimum wage and seven states have no tipped minimum wage at all. But in half of states – including North Carolina – the tipped wage remains stuck at $2.13 an hour.

The federal >>Harkin-Miller Act proposes raising the tipped minimum wage to 70 percent of the regular wage. That’s a great start. The minimum wage is far from a living wage, but acknowledging the disparate treatment of tipped workers and raising the wage of our lowest earners would certainly be a >>step in the right direction for local communities and the economy.

Here’s a tip to policy makers – it’s time to raise the wage. We need an economy that works for all.




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