As restaurants reopen, workers step up fight to end tipped minimum wage

Since the 60s, restaurants in most states have paid tipped workers a lower wage than all other types of employees

Published July 10, 2020 8:12PM (EDT)

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Most people who live paycheck to paycheck can still usually plan in two-week increments, but Sarah May-Seward plans "shift to shift." She earns $40 per shift at a bar in White Lake Township in Michigan. Her days can last longer than 11 hours, but under state law she can be paid as little as $3.67 an hour. The rest of her income comes from tips, and that's where things can get unpredictable: If it's rainy and people stay home, if there's a big event going on elsewhere, if a customer is feeling cranky. All of it means less money. "It's all guess work, because there is no steady income," she said. 

But that was pre-pandemic. Following a brief period of unemployment after the initial shutdown, May-Seward returned to work after the bar reopened in early June. Beyond feeling exposed to Covid-19—the only protection, she said, is that rather than serving people drinks and food at tables, they have to order from her at the bar—a lot of her regular customers are staying home and the bar hasn't even hit 50 percent capacity. Things were tight before. They're worse now. "I'm only making half the money," she said.

She's not the only one forced to get by like this. Since the 1960s, restaurants in most states have legally paid their tipped workers a lower wage than all other types of employees. Efforts to eliminate the tipped minimum have had mixed results in recent years. 

After initial successes in Maine, Michigan, and Washington, D.C., lawmakers turned around and undid advocates' work. In 2019, New York Governor Andrew Cuomo eliminated the state's tipped wage for all tipped workers—except those in restaurants and bars. 

That same year, the Democratic-controlled House passed a minimum wage bill that would raise the federal minimum from $7.25 to $15 an hour and institute it for tipped and non-tipped workers alike, but the Republican-controlled Senate has yet to touch it.

Now, with the pandemic vaporizing jobs in restaurants and bars, advocates behind these campaigns, like the New York-based Restaurant Opportunities Centers United and the One Fair Wage campaign, are hoping that angry workers will mobilize to push through changes and that the owners may be willing to rethink business models already in tatters. They also are expanding their coalition beyond the traditional restaurant and bar servers to nail salon technicians, car washers, and even gig economy workers such as Uber drivers.

It's an uphill battle. Last year bills to get rid of the tipped wage were introduced in more than a dozen states, but while many of the legislatures raised their minimum wages, they kept leaving the tipped wage intact. 

A global pandemic and looming recession have made the fight that much more urgent. "This has been the most frustrating and scary time for me," May-Seward said. "We have zero control."

Theoretically, tipped workers are guaranteed at least the regular minimum wage because, by law, employers must make up the difference if wages and tips fall short of it. But when it comes to tracking and enforcing it, "The onus is on the employees," noted Diana Ramirez, One Fair Wage Fellow in Residence at the National Women's Law Center. And restaurants frequently flout the law. In a 2010-2012 compliance sweep of 9,000 restaurants, the U.S. Department of Labor found 1,170 tip credit violations.

The practice of tipping dates to feudal Europe, when nobles gave serfs and vassals a bit of extra compensation for a job well done. In the 19th century, American travelers who had been to Europe brought the practice back with them.

It was controversial for a long time. Six states even passed laws prohibiting tipping in the early 2oth century. Some argued "that it creates a different social class of … servants who need favors," Ofer Azar, a business professor at Ben-Gurion University of the Negev who has studied tipping, said in an interview. It was seen as undemocratic and un-American. But then during the period of emancipation, as tipped workers in restaurants and rail cars shifted from white men to women and formerly enslaved Black workers,  employers refused to pay a wage and instead wanted them to live off of customers' tips. "This comes down to the value of women, and particularly women of color, in the United States," argued Saru Jayaraman, who founded the Restaurant Opportunities Center and is president of One Fair Wage. 

In 1966, the federal minimum wage law was expanded to cover tipped restaurant and hotel workers, but that expansion came with a caveat: it allowed employers to pay tipped workers a lower wage so long as their tips made up the difference. Then in 1996 the National Restaurant Association struck a deal with President Bill Clinton: In exchange for a minimum wage increase, the tipped wage was frozen in place at $2.13 an hour, where it remains today. Beyond the obvious financial struggle of making such low wages, research has linked the tipped wage to higher levels of sexual harassment and poverty for employees.

Some states decided to go in a different direction. Beginning in 1975, seven states—Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington—would eventually abolish the tipped minimum wage and require all employees to be paid the same minimum wage. But action had stalled for decades until very recently.

One Fair Wage was launched in 2013 and has faced a powerful opponent at every turn: The National Restaurant Association, which represents some of the biggest names in food service, from places like TGI Friday's to fast food giants like Burger King, has waded into most of the fights, using its money and influence to push back against efforts to get rid of the lower tipped wage. 

It didn't respond to a request for comment, but in opposingthe House bill to raise the minimum wage to $15 an hour and eliminate the tipped wage, the association said the bill "would stifle new job creation, impose undue harm to our nation's small business owners, and harm those it proclaims to help." Shannon Meade, vice president of public policy and legal advocacy at the National Restaurant Association, said at the time, "The tip credit allows tipped-employees to earn far more than the minimum wage, while helping to reduce labor costs for restaurants and others that operate on thin profit margins." 

Getting fellow progressives on board has also been difficult. Jayaraman said her group has fought alongside organizers demanding a $15 minimum wage. But in the end keeping the tipped wage in place was always the concession to get an increase for everyone else.

That has made progress challenging. In November of 2016, Maine voters approved a ballot measure to eliminate the tipped minimum wage. But the following June, the legislature undid the measure, voting to reinstate the tipped wage. 

Next up was Michigan, where voters faced a ballot measure that would have gotten rid of its tipped wage. But before the vote, the state legislature took action itself, passing a law to increase the state minimum wage to $12, but then amending it to leave out tipped workers.

In Washington, D.C., a ballot measure to bring the tipped minimum up to the $15 floor for other workers passed in the summer of 2018 with 55 percent of the vote, with the highest support from wards with high shares of Black and poor residents. But that fall, after a series of high-profile hearings, the city council voted to repeal the measure. 

Part of the challenge is that the kind of workers who are most likely to benefit from eliminating the tipped minimum wage—those at casual restaurants who aren't making hundreds of dollars in tips a shift—are also the ones who have the least bandwidth for activism. They are the kind of workers "who can't take time off," Ramirez said. "If they have extra time, they're going to be at home with their families … or they're working two or three jobs." Others have language barriers or concerns about their immigration status. "We were definitely overshadowed by the higher-earning white, male bartenders in D.C.," she said.

Trupti Patel is one of those who found her voice during the D.C. ballot fight. During the 2009 financial crisis, she lost her job and started working in the service industry."When you live on tips, you're living on constant economic anxiety," she said. It's "economic roulette." Not to mention that it gives customers control, she said. They "use it as a way to be nasty to you." For her, ending the tipped minimum wage became "a social justice issue."

But speaking out can come at personal cost. After she started advocating in favor of the D.C. ballot measure, Patel said her shifts were reduced from three or four a week to one. The hostility over the debate throughout the city made some workers feel unsafe about speaking up.

On the other side of the debate was a group called Save Our Tips, which purported to represent the city's servers and bartenders opposed to getting rid of the tipped wage, but was largely funded by the National Restaurant Association. Save Our Tips warned that ensuring a full minimum wage for servers and bartenders would mean losing tips. But that's not what has appeared to happen in states that don't have a tipped wage. There, servers and bartenders earn17 percent more per hour than those in all the other states, including not just base pay but also tips, according to research by the Economic Policy Institute, a progressive think tank. 

Going up against the National Restaurant Association was "like David and Goliath," said Dia King, who worked as a valet driver in Washington. "Those that have the money and power, they were able to get their message out more than we were."

As the battle raged in the nation's capital, organizers were pushing forward in the country's largest city, too. Seven years ago, they started demanding that New York abolish its tipped wage. In late 2017, Cuomo announced that his department of labor would study whether to get rid of the tipped wage. 

They finally tasted some victory at the end of last year, when Cuomo announced that the state would eliminate the tipped minimum wage for nail salon technicians, hairdressers, valet attendants, car wash workers, and others. But there was a big caveat: He exempted hospitality workers, including those in restaurants and bars, the "largest group of subminimum wage workers in New York," said Gemma Rossi, an organizer with One Fair Wage. 

"Our fight continues," Rossi said. If Cuomo doesn't act on his own, the legislature may do it for him: State Senator Alessandra Biaggi introduced a bill to get rid of the tipped wage for all workers, including food service employees, on May 22. 

While her job was shut down during the pandemic, May-Seward immediately applied for unemployment insurance but was told she made too little to qualify.  Some 60 percent of the restaurant workers applying to the One Fair Wage relief fund report they haven't been able to access unemployment insurance, Jayaraman said. If anyone worked for cash tips that weren't officially reported through payroll, they appear to make too little to get benefits.  Although May-Seward was eventually able to enroll for unemployment, she ended up being two months late on her bills, racking up late fees while she sorted it out. 

The experience prompted her to get involved with One Fair Wage, and others have similarly found their way to advocacy. The double whammy of struggling to get benefits and then being called back to work for barely any tips has a lot of them "getting angry and mobilizing," Jayaraman said. Even those who are doing takeout and delivery may still be making a lower tipped wage without getting much in gratuities. 

Some restaurant owners are changing their minds, too. 

Dan Simons, who co-owns the restaurant Founding Farmers in Washington, opposed the ballot measure to eliminate the tipped minimum. But he says that with the pandemic shutting restaurants down and forcing them to completely reconfigure their businesses, there's "an opportunity to reimagine wages and prices and payments." Ideally, he said, he'd like to see legislation requiring a full minimum wage for tipped workers so that all restaurants are operating on the same playing field.

Certainly not all restaurant owners will support higher wage mandates. Their businesses operated on thin margins before the pandemic and they are now trying to struggle through with sharply reduced revenues; raising labor costs further will be a nonstarter for many. Still, given that employees' tips have fallen drastically, Simons is one of "literally dozens" of restaurant owners, Jayaraman said, who have told her that they have changed their minds about the tipped wage. 

May-Seward doesn't plan to stop fighting to end the tipped minimum wage, either. "We can't just quit because everything's going back to the status quo," she said. "Hopefully if my grandkids decide to become servers, I can tell them, 'Granny worked really hard for you to have a fair wage.' "

By Bryce Covert

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