On Friday, September 6, 2013 12:36:21 PM UTC-7, ImStillMags wrote:

Tips and Poverty
By THE EDITORIAL BOARD NY Times
Published: September 14, 2013


When The Times’s restaurant critic, Pete Wells, recently called tipping “irrational, outdated, ineffective, confusing, prone to abuse and sometimes discriminatory,” he was referring mainly to mid- to high-priced restaurants that are considering an end to the practice in favor of surcharges or service-included pricing.

In the diners and other more “value oriented” restaurants that employ most of the nation’s burgeoning ranks of waitresses (the vast majority of servers are female), tips are all that and more. They are part of a parallel economic universe in which employers are allowed to pay sub-minimum wages, with predictably devastating results. According to census data, servers are far more likely than other workers to live in poverty.

It is a national disgrace when hard work, in any industry, leaves workers in poverty. But falling living standards and economic hardship among tipped workers signal prolonged stagnation throughout the economy. That’s because employment growth in restaurants and bars has outpaced growth in nearly all other sectors in recent years, including health care, manufacturing, retail and financial services. If wages in food-service and other service jobs are not lifted, it is hard to see where adequate consumer demand will come from to generate and sustain a real recovery.

It is not tipping that most needs to end, however. What needs to change is the federal law that sets the minimum wage for tipped workers at $2.13 an hour, compared with an already measly hourly minimum of $7.25 for other workers. Under the law, as long as $2.13 an hour plus tips works out to at least $7.25 an hour, an employer is in compliance with national labor standards.. In effect, a tip for the waitress is a wage subsidy for her employer.

In recent decades, the situation has become increasingly unfair. The sub-minimum “tipped” wage was first instituted in 1966, when it was set at 50 percent of the minimum wage. At the time, that was an improvement. Until then, the restaurant industry had successfully lobbied Congress to deny tipped workers any minimum-wage protection, leaving them to live on tips alone. Over the next 30 years, the tipped wage sometimes rose as high as 60 percent of the minimum wage, but it never fell below 50 percent, reaching its current level of $2.13 an hour in 1991.

Then, in 1996, the Republican-led Congress agreed to raise the minimum wage, but on the condition that the tipped wage remain frozen. It has not budged since, and today it is 29 percent of the minimum wage.

Fortunately, seven states — Alaska, California, Minnesota, Montana, Nevada, Oregon and Washington — have rejected the notion of a separate tipped wage and require instead that tipped workers be paid at least the full minimum wage, which is often higher on the state level than on the federal level.

California, for example, has just passed a bill to raise its state minimum wage to $10 an hour by 2016, and the governor is expected to sign it soon. Many other states have set their tipped wage higher than the federal level, but still allow some of a worker’s tips to be counted toward fulfilling the minimum-wage requirement. An additional 18 states continue to follow the federal law, with its tipped wage of $2.13 an hour.

Congressional Democrats have introduced a bill to raise the federal minimum wage to $10.10 an hour and to set the tipped wage at 70 percent of the minimum. That would be a step in the right direction, not only in raising the living standards of a growing segment of the labor force, but in re-establishing Washington’s leadership, long abandoned, in setting and promoting fair wages.