Are you going out for a Valentine’s dinner? Be aware that some of the servers are being paid a sub minimum wage. Your tip goes to bring those workers up to the level of $7.25 (seven dollars and twenty five cents) an hour. In other words your tip is subsidizing the employer. Then if the tip pool is large enough the workers will get something.
This system dates from 1966 when the Fair Labor Standards Act was amended to include hotel, restaurant and other service workers but also introduced a new subminimum wage originally set at $2.13 (two dollars and thirteen cents) per hour. The theory was that the combination of tips and the subminimum would add up to the Federal minimum wage –currently $7.25 seven dollars and twenty five cents an hour.
As the Economic Policy Institute put it:.: QUOTE Whereas tips had once been simply a token of gratitude from the served to the server, they became, at least in part, a subsidy from consumers to the employers of tipped workers. In other words, part of the employer wage bill is now paid by customers via their tips.
But we are all subsidizing the employer as EPI point out “Due to their low wages and higher poverty levels, about 46.0 percent of tipped workers and their families rely on public benefits, compared with 35.5 percent of non-tipped workers and their families”
Individual states can raise the subminimum wage. Nineteen states set the Federal minimum or more as the minimum wage.
Wisconsin raised the subminimum from two dollars and thirteen cents to two dollars and thirty three cents per hour.
Listeners should be aware those in real terms both the subminimum and the minimum wage are lower in real terms today than in 1996
Thanks to the Economic Policy Institute for the information contained in this report.
Reporting Courtesy of Frank Emspak for Labor Radio
Photo Courtesy of Al on Flickr
