Tipped Off!

It's 1991. Congress just granted authorization to the US to use military force to liberate Kuwait, the Dow Jones Industrial Average saw moments above 3,000 for the first time ever, Michael Landon dies, George Sr. occupied the White House, and tipped service workers made $2.13 an hour.

Fast forward to 2009. We elect our first black president, Walter Cronkite passed away, news reports talk of American's first and second currently active wars, public money is thrown at banks to correct their greediness, and tipped service workers make $2.13 an hour.

Today celebrates the third installment of the increase in the federal minimum wage. After decades of offering themselves gracious salary increases that kept up with the rate of inflation, finally decided to substantially increase the federal minimum wage. While it's a moment to celebrate, there are two important things to remember.

1.) INFLATION!! The American dollar is worth less....real wages have actually been decreasing.

2.) Tipped workers are going to see no raise whatsoever. They will be left to struggle and rely entirely on the generosity and socially prescribed gray laws of tipping. Generally a tipped worker walks out the door with on average $8.23 an hour-wage + tips.

Quick Math-what does this mean in annual dollars, assuming the individual works 40 hours a week AND all 52 weeks of the year (which is unlikely), these individuals would make a little over $17,000. Federal Poverty line for a family of 4 is $22,050. Tipped workers are overwhelmingly women, women supporting families. The $2.13 in real terms has dropped 36% since 1991. Dry facts.

So what?

Well, shouldn't Congress raise the minimum wage for tipped workers too? Isn't this just another method of subsidizing business? The Hotel and Restaurant business is projected to be the the 12th fastest growing industry between 2006 and 2016. Pay for these workers is erratic and based on the economic stability of their customers.

While the employer is supposed to fill in the gap between hourly wage and minimum wage, if the employee does not reach minimum wage, there are absolutely ways for the employer to abuse the system and not actually pay what is federally mandated. The system is easily exploited and typically benefits the employer. Due to these abuses, it is estimated that the American Hotel and Motel Administration saves about $1 million dollars a day.

This is a good day. Minimum wage workers will see a difference in their pay check, they will spend money, bolster the economy. However, we cannot forget that some of the workers that on a daily basis improve and directly effect our quality of life, will not see a cent.


For more information on this subject, please the National Employment Law Project report "Restoring the Minimum Wage for America's Tipped Workers."