Our nation鈥檚 paltry federal minimum wage of just $7.25 an hour is rightly criticized as far too little to sustain a worker, let alone a family.
Chris Mills Rodrigo
That鈥檚 bad enough. But the floor is even lower for workers who receive tips on the job. The federal minimum wage for tipped workers is just $2.13 an hour 鈥 and has been for 30 years.
Theoretically, employers cover the difference if tips don鈥檛 raise hourly wages to the federal minimum. But some bosses fail to meet that requirement.
Eight states have eliminated a tipped minimum wage, ensuring that tipped workers receive the same minimum pay as others. In the other 42 states, bartenders, servers and hotel workers are constantly exposed to wage theft.
Not only do tipped workers often end up making less than the minimum wage, but their lower floor makes their livelihoods dependent on external factors, such as weather and customer traffic. It also exposes them to customer harassment, a massive issue for the of servers who are women.
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鈥淢any of my coworkers and I are pressured to tolerate inappropriate customer behavior because our livelihood depends on being likable,鈥 said Red Schomburg, a One Fair Wage campaigner who worked as a bartender in Boston. 鈥淭his especially harms women and contributes to the restaurant industry鈥檚 notoriously high rates of harassment.鈥
With that in mind, customers should keep tipping, because businesses and policymakers have essentially shifted to consumers the responsibility of ensuring tipped workers earn enough to make ends.
The public also should advocate for eliminating the tipped minimum wage and establishing one fair wage for all workers that鈥檚 far above $7.25 an hour. Until then? Tip.
Raising tipped minimums to the same level as other workers has been successful when it has been tried. Despite complaints from industry groups, restaurants and server jobs have boomed since the District of Columbia began increasing the wage floor for tipped workers.
This has not been the approach of our federal government. Instead, lawmakers have toyed around the margins of the real issue of insufficient pay.
During the 2024 presidential campaign, Donald Trump proposed exempting tips from federal taxes. Now a similar policy, allowing for tips to be deducted from taxes, was slipped into the Republicans' 鈥渂ig beautiful bill.鈥
At first, this policy sounds like it's pro-worker. But looking past the surface reveals a policy that would help Wall Street executives more than servers.
Many tipped workers in America 鈥 two-thirds, 鈥 don鈥檛 earn enough to have to pay federal payroll taxes in the first place. Some analysts also warn that hedge fund managers and lawyers could reclassify some of their income as tips to avoid taxes.
Removing taxes on tips will alleviate public pressure to raise tipped minimum wages and encourage more industries to treat their employees as tipped workers. No wonder the National Restaurant Association, which has long opposed wage increases for servers, endorsed no tax on tips.
Admittedly, tips have become the norm in many other places, such as in coffee shops, where employees do not receive sub-minimum wages. While frustration with paying an extra buck or two on top of an already expensive latte is understandable, focusing on tipping is misguided.
Instead, we should wonder why workers at global chains need tips to meet their basic needs despite working full-time jobs.
The solution to both problems is the same: Pay people the family-sustaining wages they deserve. Then no one will have to complain about onerous tips.
