Tipped workers make up a significant part of our low-wage workforce. The largest numbers are employed in food service, such as waitresses, waiters, bussers, bartenders, and food delivery workers. Others work as parking attendants, car wash workers, nail salon workers, baggage porters, and bellhops, for example.
Although technically, employers must make up the difference if a worker does not receive enough tips to bring him or her up to the full minimum wage, that requirement seldom kicks in because most tipped workers make slightly more than the minimum wage after tips are included. As a practical matter, the tipped-worker minimum wage is what employers pay their tipped workers, and at the federal level it has not increased since 1991.
Tracking tips is complex because tips fluctuate widely, are often paid in cash, and are frequently “pooled” or shared among staff. Under such conditions, even law-abiding employers can have trouble keeping track, and less ethical employers can take advantage to illegally keep a portion of the tips for themselves.
Although business lobbyists sometimes suggest that tipped workers don’t need a minimum wage because they earn decent incomes after tips are included, this simply isn’t the case for the vast majority of tipped workers. While a relatively small number of waiters, waitresses, and bartenders at high-end restaurants in major cities earn high incomes, the restaurant industry overall is one of the nation’s lowest-wage sectors. And the overwhelming majority of waiters, waitresses, and tipped workers in other industries (like car wash attendants and nail salon workers) earn very low wages. As a result, the family poverty rate for waitresses and waiters is nearly three times the average for all workers.