The Tipped Wage System

What the tipped minimum wage system is and what it produces for restaurant workers

The System

The tipped minimum wage system -- the federal policy that allows employers of tipped workers to pay a sub-minimum wage of 2.13 dollars per hour on the assumption that tips will bring total compensation to the 7.25 dollar federal minimum -- is the specific labour law anomaly that the restaurant industry lobbied to maintain and that produces the specific combination of worker income volatility, customer power over worker compensation, and employer liability for the tip offset that the system creates.

The Evidence

The evidence: seven states have eliminated the sub-minimum tipped wage and require the full minimum wage for all workers including tipped workers. The research on the effects of eliminating the sub-minimum in those states: tipped worker incomes have increased, the tip amount has not decreased proportionally, and the restaurant industry has not declined at the rate that opponents of the policy change projected. The evidence supports eliminating the sub-minimum.

Mamdani Post Analysis

The Mamdani Post covers the tipped wage system because the accountability journalism of labour law requires examining the specific legal arrangements that produce the specific labour market conditions that workers experience.

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