Multimedia: The Tipping Point for Tipped Work

Watch this EPI panel discussion on why exempting tipped workers from the regular minimum wage creates unlivable conditions in the growing service industry.

The Economic Policy Institute hosted a July panel discussing David Cooper and Sylvia Allegretto’s report, “Twenty-Three Years and Still Waiting for Change: Why It’s Time to Give Tipped Workers the Regular Minimum Wage”, in which the analyst and economist argue that “no matter how you look at it, tipped work is low-wage work.”

In their summary of the report, Allegretto and Cooper say the federal minimum wage for tipped workers has been “stuck at $2.13 since 1991…over which time inflation has lowered the purchasing power of the federal tipped minimum wage to its lowest point ever.” Meanwhile, as the value of that $2.13 wage steadily decreases, the number of tipped workers is rapidly increasing: “Employment in the full-service restaurant industry has grown over 85 percent since 1990, while overall private-sector employment grew by only 24 percent.”

On the panel, restaurant worker Marcie Cooper shares about moving across the country to do a congressional internship in D.C. for her master’s program, then finding herself struggling to have enough money to buy a gallon of milk. So she went back into the service industry:

 I went to college to escape this exact kind of life…the really sad part is that despite my willingness to do whatever it takes to pay my bills, I still have a hard time making ends meet. And the worst part is, in the shifting seasons, you never know when the winds are going to change. My income depends entirely on how many people come into the restaurant.

Amber Grinden, a tipped server at the BWI Airport, is similarly suffering due to the unpredictable nature of her income:

Even though the industry is growing, our minimum wage has been stuck at $3.63. It is difficult to get by when you have to depend on tips. Tips are very seasonal. That means, for half the year, I feel I can take care of my family, and the other half of the year I feel like I can just scrape by. There is no security. I don’t know how much money I’ll make each week. Having to rely on tips limits my ability to plan anything in the future.

Take a look at this chart, which shows how tipped workers are twice as likely to live in poverty as non-tipped workers:

Allegretto and Cooper say that these wages can’t stay where they are: “It is certainly time to raise both wage floors, but given the dramatic differences in living standards for tipped versus non-tipped workers, we question whether there should be a two-tiered wage system at all.”

To dive deeper, check out this shorter series on the topic, also from EPI.

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