Yahoo Finance ‘An economy that works for all’: Calls to raise minimum tipped wage from $2.13 for first time since 1991
The federal minimum wage for US workers who rely on tips has not increased for three decades, leading to calls for reform.
US law mandates that tipped employees must be paid at least $2.13 per hour (£1.50) before tips from customers are accounted for.
Employers must make up any shortfall between the eventual total and the federal minimum wage.
But the $2.13 floor has not increased since 1991 and therefore has not kept pace with inflation, drastically reducing its buying power. A report released by the Obama administration in 2014 found its value had fallen 40 per cent in real terms over that time.
“Workers in predominantly tipped occupations are twice as likely as other workers to experience poverty, and servers are almost three times as likely to be in poverty,” the report added.
Data from the US Department of Labor shows that while some states require employers to pay tipped workers the full minimum wage before tips, and others set minimum hourly rates below that level but above $2.13, 15 states plus Puerto Rico do not.
Bernie Sanders, the left-wing Vermont senator, called at the weekend for “an economy that works for all of us, not just the billionaire class”.
Mr Sanders claimed that while the tipped wage had remained static since 1991, the combined wealth of the richest 400 Americans had increased from $288bn (£204bn) to $3.2 trillion (£2.3 trillion).
The same year Barack Obama’s White House published its report, a leading labour advocate told NPR that the topping-up process does not always work.
Saru Jayaraman, of Restaurant Opportunities Centres United, said: “Enforcement is not just difficult, it's practically impossible for employers to have to count hour by hour to make sure that tips make up the difference for every worker for every hour they've worked.”
Debating the issue on Twitter last week, Food Network chef Andrew Gruel wrote: “I am not a fan of ‘tipped wage’. I also am not a fan of eliminating tipping. I think there is a happy in-between.
“One of our franchisees didn't allow tipping (but paid a solid hourly wage). We got a ton of complaints from the guests because they wanted to tip. Interesting topic.”
It comes amid a wave of protests, walk-outs and other demands for better working conditions by low-paid Americans.
In May, a poster complaining of of “borderline sweatshop conditions” was fixed by Chipotle workers to a restaurant door and widely shared online, prompting a wage hike by the fast-food chain.
Nationwide, employees are campaigning for a minimum wage of $15, nearly double the current federal level.
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