Watch CBS News

​Are tipped workers getting left behind?

As the debate over raising the federal minimum wage continues, there's a significant segment of the low-paid workforce that advocates say are getting left out of the conversation: Tipped workers.

The federal tipped wage hasn't budged since 1991, with waitresses, hairdressers and other workers who rely on tips guaranteed only $2.13 an hour. And as some states raise their minimum wages, tipped workers are left with meager increases that leave them trailing far behind other employees.

Take Michigan, which on Tuesday became the eighth state to raise its minimum wage this year. While the baseline wage will raise to $9.25 an hour by 2018, tipped workers were given a small increase that will leave them earning just 38 percent of the regular minimum wage. While some argue that tipped workers make up the difference thanks to gratuities, research has found that tipped workers are more than twice as likely to live in poverty than other employees.

"In a lot of states, the tipped wage is getting frozen and left behind all together," notes Jack Temple, a policy analyst at the National Employment Law Project. "It's not as high profile as the attention that's focused on the $10.10 full minimum wage, and it's one of the more scandalous aspects of the debate."

When Connecticut and New Jersey passed a minimum wage hikes last year, tipped workers didn't receive increases. Meanwhile, other states, such as Michigan, have legislated small increases, but tip-reliant workers still are guaranteed far less in pay than other workers.

At the federal level, President Obama and Congressional leaders are proposing increasing the tipped minimum wage to 70 percent of the full minimum wage. If the latter rises to $10.10 per hour, that would mean waiters and waitresses could earn an hourly rate of about $7.07.

But efforts to raise both the minimum wage and the tipped rate are facing opposition from the National Restaurant Association (NRA), which argues that restaurants would be forced to cut hours, limit hiring and boost prices if the baseline wage is hiked.

"The legislation proposed by Senators Harkin and Miller would more than triple the current minimum cash wage for tipped employees under federal law," the NRA said in an emailed statement to CBS MoneyWatch. "This could significantly limit the entry-level opportunities businesses can provide, and as a result, hurt those without the skills or experience looking to enter the workforce."

The restaurant association also said that tipped workers are "among the highest-paid employees in the establishment, regularly earning between $16 and $22 an hour." The Bureau of Labor Statistics says the median wage for a waiter or waitress is $8.94 per hour.

Increasingly, the debate over the tipped wage is being framed as a gender issue, given that almost 73 percent of tipped workers are women, according to a study from the Economic Policy Institute.

That means women are "disproportionately impacted by the tipped minimum wage," according to a March report from the White House. Average hourly wages for people working in tipped occupations are about 40 percent lower than overall hourly wages, the report found.

"We have legislated a lower minimum wage for occupations primarily filled by women," Temple said.

Waitressing "is one of the most economically unstable jobs out there," notes Saru Jayaraman, co-founder and co-director of Restaurant Opportunities Centers United. The restaurant industry "has become the only industry on earth that says we don't have to pay wages, because the customer should pay our workers for us."

While employers are by law required to make up an employee's pay if their tips don't reach the federal $7.25 per-hour rate, that often doesn't happen, the White House report said. Failure to "top up" tipped workers' pay is "one of the most prevalent violations," the report noted.

View CBS News In
CBS News App Open
Chrome Safari Continue
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.