The service industry was one of the first industries affected by the COVID-19 pandemic, with massive closures and layoffs last spring. Even as cities and states have started relaxing COVID restrictions and mask mandates — putting many in the industry back to work — tipped workers now face the challenge of enforcing mask requirements and other public health measures from the same customers on whom they rely for tips. Recent surveys indicate that Black tipped workers are particularly likely to face reduced tips and customer hostility for attempting to enforce public health protocols. Many workers also report a disturbing increase in sexual harassment during the pandemic.
The federal minimum wage for tipped workers is only $2.13 an hour — the idea being that tips will bring their income up to the minimum wage. The federal threshold to be considered a tipped worker is to regularly earn just $30 a month in tips. Almost seventy percent of tipped workers in the United States today are women, which is why the National Women’s Law Center focuses on pay equity for tipped workers as a gender justice, racial justice, and economic justice issue. The movement for One Fair Wage — requiring employers to pay the full minimum wage before tips — has been growing at the federal and state levels. We are in a moment of reckoning in the restaurant industry right now, and the old normal should be a thing of the past.
Racist Origins of the Tipped Minimum Wage
In order to understand how to combat the subminimum wage for tipped workers, we must first understand its history. The practice of tipping proliferated in the United States after the Civil War, when the restaurant and hospitality industry, exemplified by the Pullman Company, “hired” newly freed people without paying them base wages. The effect was to create a permanent servant class by shifting the responsibility for paying wages from employers to customers. The Fair Labor Standards Act did not ensure any base wages for tipped workers until 1966, when it was set at fifty percent of the regular minimum wage. At the time, the regular minimum wage was $1.25 an hour, so the tipped minimum wage was 63 cents an hour. Then, in 1996, the tipped minimum wage was decoupled from the regular minimum wage, leaving it at $2.13 an hour. The base wage for tipped workers has not gone up one cent in twenty-five years.
The restaurant industry has been able to maintain such low standards for employee wages and benefits because of the super-sized lobbying of the National Restaurant Association and, especially, the five largest, full-service restaurant companies: Darden Restaurants, DineEquity, Bloomin' Brands, Brinker, and Cracker Barrel. Darden Restaurants, parent company of Olive Gardens, LongHorn Steakhouse, Capital Grille, and others, is the dominant presence in the full-service restaurant industry, with about 150,000 employees. The company has been embroiled in numerous controversies over its labor practices, has paid out several million dollars to settle lawsuits, and has additional class actions pending. DineEquity is the parent company of IHOP and Applebee’s and employs about 200,000 workers. Bloomin’ Brands owns Outback Steakhouse and Carraba’s Italian Grill, among others. Brinker International is the parent company of the Chili’s Grill & Bar and Maggiano’s Little Italy.
One Fair Wage Is Gender Justice
Women make up over two-thirds of tipped workers, and women of color are particularly overrepresented in these jobs. More than 65 percent of tipped workers are above age 24; the median age is 30. Nearly half of tipped employees work full time. More than thirty percent of tipped workers are parents; more than one-third (36 percent) of women tipped workers are mothers, and nearly half of those mothers are single moms. Even before the COVID-19 pandemic, the poverty rate for women tipped workers was nearly 2.5 times the rate for workers overall. Women’s concentration in tipped occupations and other low-paid jobs is an important factor contributing to the persistent gender wage gap. This poverty-level wage means women tipped workers often can’t buy the same meals that they serve in the restaurant.
The subminimum wage leaves tipped workers vulnerable to both economic insecurity and sexual harassment. The customer leaves the tip — and the customer is always right. In a recent survey, 71 percent of women restaurant workers reported that they had been sexually harassed at least once during their time in the restaurant industry. This percentage is the highest of any industry reporting statistics on sexual harassment. While women restaurant workers experience harassment from customers, supervisors, managers, and restaurant owners, tipped workers were sexually harassed significantly more frequently, in every way measured, than their non-tipped counterparts. More than one-third (37 percent) of the workers interviewed described situations in which the harassment persisted for a month or more and occurred almost every shift.
One Fair Wage Is Economic Justice
In June 2019, the House of Representatives voted for the first time in history to give tipped workers the same cash minimum wage as other workers as part of the Raise the Wage Act, which also included an increase in the minimum wage from $7.25 an hour to $15 an hour by 2025. Under the Raise the Wage Act, one in four working women — including 34 percent of Black working women and 31 percent of Latina workers — would get a raise. The Raise the Wage Act was included in President Biden’s COVID relief bill, where it was again approved by the House but stripped from the bill on a procedural rule in the Senate.
States and cities have taken action to support working families through higher wages. In 2021, a total of 74 cities, counties, and states will raise their minimum wage, many to $15 per hour or more. These raises are a result of new minimum wage laws passed in 2020, scheduled increases from previous laws, and cost-of-living adjustments. However, these raises do not provide pay equity for tipped employees.
There are seven states that do have One Fair Wage for tipped workers: Alaska, Oregon, Washington, California, Nevada, Montana, and Minnesota. Pre-COVID data shows that tipping was actually higher in states with higher wages — in amounts and rates. Twenty-six more states and the District of Columbia also have a higher tipped minimum tipped wage than the federal rate of $2.13 an hour — but most are still less than $5. Women in states with One Fair Wage face a smaller gender wage gap and a lower poverty rate when compared with states that have a $2.13 hourly tipped minimum wage. For women working in tipped jobs, the poverty rate is thirty percent lower — and for Black women in tipped jobs, the poverty rate is 34 percent lower.
Popular Support
Across party lines, most Americans support raising the minimum wage and requiring employers to pay the full minimum wage to tipped workers, before tips — and support has grown since the pandemic began, particularly among Republicans. In the last few years, there have been several citizen’s initiatives calling for One Fair Wage due to the lack of action from legislators. Ballot measures passed in Maine in 2014, Flagstaff, Arizona, in 2016, and the District of Columbia in 2018. In DC, the ballot initiative received more votes than the legislators on the same ballot. However, legislators in both Maine and DC overturned One Fair Wage, bowing to pressure from the restaurant association. In Flagstaff, the restaurant association tried, unsuccessfully, to overturn the proposition for a $15 minimum wage with One Fair Wage; voters protected the $15 wage for everyone. In Michigan, organizers gathered enough signatures to qualify a One Fair Wage initiative for the ballot. However, the lame duck legislature passed the initiative language to prevent it from going to the ballot, then gutted it at the beginning of the next session. A $15 minimum wage for all workers, including tipped workers, is a non-partisan issue that is overwhelmingly supported by voters nationwide. It would behoove legislators to start listening to their constituents.
Centering Women and Communities of Color
As we look to rebuild an economy that works for all of us, we must ensure that tipped workers are not left behind. Until 2019, campaigns for raises in the minimum wage had mostly left tipped workers out — because they are not represented by organized labor, because organizations leading the campaigns did not have many members who were tipped workers, because local elected officials were against it, and because organizers didn’t want to draw the attention of the mighty National Restaurant Association. Ballot measure campaigns are expensive and legislative campaigns are time-consuming; organizers have too often been compelled to get the quickest win. But a minimum wage campaign that does not center tipped workers is not centering women of color, and a minimum wage campaign that does not center women of color is not building long-term community power. Organizations like One Fair Wage, the Restaurant Opportunities Centers United, and policy advocates across the country have focused on uplifting stories of women tipped workers and unmasking the National Restaurant Association’s astro turf efforts across the county. The movement for One Fair Wage has gained popularity and support thanks to the organizing of tipped professionals who demand professional wages, high-road restaurants who want to do right by their employees, consumers who demand justice for their beloved servers and bartenders, and culture and narrative change, including high-profile celebrities calling attention to the issue and a recent documentary about the fight for One Fair Wage.
Women, and especially women of color, make up a disproportionate share of workers who have to depend on tips to get by — leaving them and their families at risk of living in poverty and perpetuating racial and gender pay disparities. These disparities have only worsened in the wake of the COVID-19 pandemic and ensuing recession. Raising the minimum wage to at least $15 per hour nationwide — and ensuring that tipped professionals receive the full minimum wage before tips — can advance equal pay for women, ensure economic security for their families, and protect public health.
