The Root of the Tipped Wage

August 22, 2016
By Yanique Redwood
roc

Saru Jayaraman, of ROCUnited, speaks to a crowd at a rally for One Fair Wage. Photo taken from forbes.com.

What is at the Root of the Tipped Minimum Wage?

Staff members from the Consumer Health Foundation and the Meyer Foundation along with our shared grantee partners and other nonprofit organizations were recently trained by the Western States Center to use a racial equity impact assessment tool to analyze and develop policy solutions. In light of recent minimum wage wins that left out workers who earn their living through tips, I’d like to use this blog to analyze our local tipped minimum wage policies using a few questions from the tool.

Describe the Issue, Policy, Regulation, Program or Budget:

The federal tipped minimum wage is $2.13 per hour. According to the Economic Policy Institute, tipped workers are more than twice as likely to fall under the federal poverty line, and nearly three times as likely to rely on food stamps, as the average worker. Tipped wages are unreliable as a source of income because they may change from shift to shift or from season to season. Advocates in many parts of the region are working to ensure that tipped workers achieve a minimum wage consistent with other minimum wage workers.

Parts of the Region Tipped Wage/Hour Minimum Wage/Hour
Washington, DC $2.77 $11.50
Virginia $2.13 $7.25
Prince George’s County, MD $3.63 $9.55, increasing soon to $10.75
Montgomery County, MD $4.00 $10.75

Are people of color disproportionately and adversely impacted by this policy?

Yes. Tipped workers are primarily concentrated in the restaurant industry, and the restaurant industry is the single largest employer of people of color. Women of color are especially impacted as they make up the majority of tipped workers.

If there is a proposal under consideration to address this issue, does it surface a clearly discriminatory or oppressive issue that leads to racialized outcomes?

There are proposals to increase the federal tipped minimum wage to match the federal minimum wage. Advocates in the D.C. region have also been working to increase the tipped wage. However, we often fail to lift up the roots of the tipped minimum wage. According to labor activist Saru Jayaraman, the idea of tipping the servants of hosts came about in the mid-1800s by European aristocrats. It was then embraced by the restaurant and rail industries in the United States to allow them to save money by hiring newly freed slaves to work for tips alone. Therefore, a whole class of workers, called tipped workers, was created out of racist and classist practices that denied full wages to previous slaves.

If the federal tipped minimum wage is increased to match the federal minimum wage, what backlash might we expect?

An article in Mother Jones accounted some important history: In the early 1900s, there was a wave of bans on tipping in several states; however, by 1926 this was repealed. By the 1960s, the tipped wage was set to increase in tandem with the minimum wage; however, the leadership of the National Restaurant Association convinced Congress to decouple the two wages leaving the minimum wage at $2.13. We can therefore expect industries like the restaurant industry and associations that represent them (e.g., Chambers of Commerce) to fight against policies to increase the tipped minimum wage.

If there is a proposal under consideration to address this issue, does it address the root causes (both historical and contemporary) that have led to inequities and challenge traditional ways of coping with racial injustice?

I am not sure. While I would support the increase of the tipped minimum wage, there is more that we need to do. The root causes are many: the outsized role of industry in our democracy, our cultural values and norms about people who serve others, the lack of worker autonomy and ownership in the workplace and the concentration of people of color and immigrants in the tipped worker category. What if restaurants were incentivized by local governments to convert workers to worker-owners? What if we adopted new narratives about the value of the work of all people, including those who serve? What if we limited the role of industry in our democracy by reforming campaign finance? These are the kinds of systems changes that, if fought alongside raising the tipped minimum wage, would lead to equity in the outcomes that we seek.

If you are interested in using a racial equity impact assessment tool to better assess and develop policy solutions, contact me at president@consumerhealthfdn.org.

 

Leave a Reply

Your email address will not be published. Required fields are marked *