Report: Tipped Workers, Disproportionately Women, Experience Higher Poverty Rates


Low-wage women workers have been speaking out in recent months about how they are disproportionately affected by too-low minimum wages. The same disproportionate impact holds true for tipped workers—and a new report details how tipped workers experience unique challenges due to their separate “subminimum wage.”

The report from the Economic Policy Institute finds that the wage gap between tipped and non-tipped workers is the highest it’s ever been. The federally mandated minimum wage for tipped workers is now only 29 percent of the regular minimum wage, down from 50 percent in 1966. Tipped workers, two-thirds of whom are women, experience about twice the level of poverty as other workers (12.8 percent versus 6.5 percent). The median wage for tipped workers is $10.22 per hour, while it’s $16.48 for all workers. Tipped workers also rely on public assistance at higher levels than non-tipped workers.

The report spells out how customers are expected to subsidize most of the earnings of servers, bartenders, and other tipped workers, contrary to popular belief that tips are just “extra” money to reward good service. Since 1966, service workers who routinely receive tips have been guaranteed only a separate, subminimum wage that is 50 percent of the regular minimum wage. That wage has remained stagnant at $2.13 per hour since 1991, partly because President Clinton decoupled the two wages in 1996. That meant that even as the federal minimum wage rose, the federal tipped minimum wage was not required to rise in turn, and its purchasing power has gone down with inflation. Only seven states in the country mandate a tipped minimum wage that is equal to the regular minimum wage.

Customers’ tips are expected to make up more than twice of what employers pay, $5.12 and $2.13 respectively, which adds up to the federal minimum wage of $7.25 per hour. Employers are supposed to make up the difference if tips don’t reach that threshold—but that doesn’t always happen. Enforcement is difficult and spotty, and tipped workers are often subject to wage theft. Even good-faith employers can have difficulty on this front: It’s up to the worker, who may not know the law, to request that the difference be made up, and the federal wage standards are assessed on a fixed “workweek” basis that may not match service workers’ often-erratic schedules.

Contrary to popular perception, the report says, most tipped workers are not teenagers. They are disproportionately young compared to the rest of the workforce, but about 63 percent of them are over 25, and less than 13 percent are teenagers. Moreover, about 30 percent of women working in tipped industries have children.

Tipped workers also have generally poorer jobs when it comes to benefits. Workers in the accommodation and food service industry are offered paid leave, health insurance, and retirement benefits at a much lower level than the rest of the private sector. Meanwhile, from 1990 to 2013, the restaurant industry grew 86 percent while the rest of the private sector only grew 24 percent. So more people are taking service jobs, many of which rely on tips, and that fewer of those jobs have good benefits. 

Some states and localities are taking action to raise their minimum wages in the absence of congressional action, and a few are including tipped workers in the raises. But restaurant industry lobbying often succeeds in keeping the subminimum wage from rising, as in Washington, D.C., this year. The city council raised the minimum wage to $11.50 by 2016 and passed paid sick days for all workers, but left the subminimum wage for tipped workers at $2.77 per hour.

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  • fiona64

    When I worked in food service many years ago, it was most often the largest parties who tipped the worst. I actually followed a customer out to the car to return the paltry $1 he left as a tip on a bill of more than $100, that had me and two other staff dancing attendance on the large, noisy, very messy party, and told him he probably needed it more than the three of us who would have been expected to split it did. Believe me, that kind of thing sticks with you.

    I have left minimal tips, with notes as to why, and a subsequent complaint to a manager about the reasons. I have also left tips that were equal to the bill itself when service has been truly outstanding; on one memorable occasion, when I put money in the portfolio and told the waiter “no change,” he came back and asked if I had counted it right — because his tip was as much as my ticket. I told him, truthfully, that I had been having a lousy day and that his kindness had turned it around… and it was the best way I could thank him. However, I have never failed to leave something. I know how hard food service staff work, from experience.

    • BelligerentBruncher

      I hope the manager fired your ass for disrespecting the customers.

      • fiona64

        Sorry to disappoint, little Chris, but no.

        • L-dan

          lol. I know there are shitty managers out there, but every one I ever had in service was clear that we didn’t need the business of blatantly disrespectful customers. If they’re rude to the staff, you can bet they’re being rude to the other customers too, and you’re going to lose more of the decent ones who don’t want to be around the loud, rude asshats.

          But seriously, none of them would fire someone for tossing back a shitty tip like that. There’s a reason many places have a required gratuity built into the charges for larger parties. And frequently, they’ll argue about that too.

          • Shan

            Everybody should watch “Waiting”

          • kitler

            On my list!

          • Shan

            Trust me, if you have ever worked food service, you will love it.

            Everybody else who has NOT worked food service and ever intends to eat out again should watch it, too.

          • BelligerentBruncher

            Yeah, that is the movie fiona64 watched and copied her made up story.

            Interesting that in the movie, the moral when that happened (from the other employees) was “don’t do that.”

          • Shan

            Interesting. The message I got from that movie was “your food servers are human, too, so don’t treat them like shit” but I didn’t really need anybody to tell me that. If you still think tipping 1% is a nice thing to do, you missed the message.

            And you’re also still SO nice for calling Fiona a liar.

          • fiona64

            Yeah, he’s funny. Because, apparently little jerky-boy teens know everything someone experienced before they were even born.

          • fiona64

            There’s a reason many places have a required gratuity built into the charges for larger parties.

            Yep. Customers like the one I described.

  • StealthGaytheist

    It’s appalling how poorly tipped employees are paid. I go out of my way to tip well unless the service is terrible. I know how hard people work on these jobs, how crappy they’re treated, and how little many people tip.

    • Shan

      Same here. And we tip in cash, wherever possible.

  • BelligerentBruncher

    This article should be title “Women disproportionately choose to voluntarily enter into career fields that pay less”

  • Shan

    They were possibly in moderation because you’re new. It was like that for me at first, too. In case it helped get you “approved” I’ve been trying to upvote any posts I’ve seen that were shown as awaiting moderation but I might not have caught them all.

    • Shan

      Lindsey, your reply to me here is sitting in moderation as well, FYI.

  • Shan

    LOL! OMG…I forgot about that…

  • kitler

    You can try contacting a mod too.

  • Shan

    That $2.83 was the going hourly rate the summer before I started college and was thinking about waiting tables to make a bit of extra money first. I was horrified then and I can’t believe it’s still the same now (thanks to Herman Cain).

    Luckily, the interviewer flat out told me that she wouldn’t hire me because I was going away to college at the end of the summer and it wasn’t worth the time to get me trained up just to have me leave. It’s just as well, too, because I would have been a really crappy server. I have a shite memory, bad people skills, and get distracted easily.