Tipped wages transfer business risks to workers

Added July 29th, 2015 by Peter Ruark | Email This Entry Email This Entry
Peter Ruark

Do you tip your server generously when you dine out?

Hopefully you do, because your server may earn less than you think. Restaurants are only required to pay their servers $3.10 per hour in Michigan, which is 38% of the minimum wage for non-tipped professions. (This will rise concurrently with the regular minimum wage to $3.52 by 2018, remaining at 38% at each wage step.)

The tipped employee minimum wage enables restaurants to keep their menu prices low while allowing patrons to voluntarily subsidize their servers’ low wages, in effect passing the risk of slow business or stingy customers onto the workers.

With Michigan’s recent economic struggles, more people have turned to service industry jobs. In fact, tipped work is one of the fastest growing occupations and one of the lowest paid, and low tipped wages are inordinately hurting women and people of color.

To narrow the wage gap for all workers, Michigan should eliminate the tipped employee wage, and require restaurants and other employers to pay tipped workers no less than the regular minimum wage. There are currently bills in the Michigan Legislature—House Bill 4720 and Senate Bill 373—that would do that. If more politically feasible, raising the tipped wage to a higher percentage of the regular minimum wage (i.e., 65% rather than the current 38%) would be a positive step. But in the current political climate, no help for low-paid tipped workers seems likely; the restaurant lobby will surely fight any proposal to raise or eliminate the tipped minimum wage.

In many countries, tipping is not expected. Some restaurants in the United States have already eliminated the tipping tradition and advertised themselves as tip-free restaurants, by either adding on a gratuity to the meal checks or by raising their menu prices. Diners pay roughly the same amount as they would if they were expected to tip, but the servers’ take-home pay is not put at risk by slow business days or customers not following the tipping protocol.

One thing concerned diners can do is find out which restaurants pay their servers a tipped wage higher than the minimum required, and which have eliminated the tipping system altogether. Those would be good restaurants to support next time you are hungry.

You can also contact your legislators and urge them to support one fair wage for all workers and end the tipped wage income gap.

 — Peter Ruark

One Response to “Tipped wages transfer business risks to workers”

  1. […] the Michigan League for Public Policy has written before, having such a low wage floor for wait staff and other tipped employees passes the risk of slow […]

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