As the economic struggles of the pandemic continue to take their toll in the U.S., more states are stepping up to the plate to ensure that workers in the tipped service industry are being compensated justly.
For tipped workers, such as restaurant wait staff, the current federal minimum wage is $2.13 per hour, with tips making up the difference to bring them to the regular federal minimum wage of $7.25 per hour. While the federal minimum wage has been stagnant for over a decade, states have the power to set their own minimum wages according to their respective laws.
As of 2021, fifteen states and the District of Columbia have passed laws to eliminate the tipped wage minimum and require employers to pay the full minimum wage to all employees. Additionally, the new federal “Adverse Effects Wage Rule” requires employers to pay a minimum wage of $4.95 to tipped employees in the seven states that have no state minimum wage law.
However, more states are considering legislation to end the tipped wage in 2021. Connecticut, Illinois, New York, and Pennsylvania are all considering legislation to end the tipped wage and require employers to pay the full minimum wage to all employees. These measures would largely benefit female employees, which make up nearly two-thirds of tipped workers in the U.S.
The move to end the tipped wage would have broad positive implications for workers. Studies have shown that eliminating the tipped wage has led to increases in wages, job stability, and job security for tipped workers. Additionally, it has contributed to fewer unexplained income differences between tipped and non-tipped workers, as well as reduced racial and gender-based compensation differences.
Though the tipped wage is not without its critics, its elimination in more states is a step in the right direction toward strengthening the wage floor in the U.S., and providing more stability and security for millions of workers.
