Some Miss Out on Minimum Wage

Many states have been following the push to increase the minimum wage, with the hope of increasing the standard of living, and make the minimum wage a “living wage.” Yet many workers are still missing out on wage hikes because they work for tips. Many state minimum wage laws provide some sort of exemption from workers who receive tips. There is a minimum wage, and a “tipping minimum wage,” where the minimum wage for employees whose income partially comes from tips is typically lower than the minimum wage for employees who don’t get tips. In fact, only seven states mandate that the “tipping minimum wage” be the same as actual minimum wage: Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington. Seventeen states, mostly in the south and mid-west, don’t have a minimum wage higher than that provided by the Fair Labor Standards Act (FLSA), which is $2.13 for workers who make tips. The final twenty-six states have a higher “tipping minimum wage” than the one provided by the FLSA, but these vary from state to state. In fact, the largest gap between the two minimum wages occurs in Washington D.C, and Massachusetts (of any state), both of which have high costs of living. The District of Columbia has put steps in place to increase the minimum tipping requirement. Even with increases in the minimum wage, many workers still miss out on the benefits and struggle to make a living wage.

On the other end of the argument, often the places with the highest costs of living are urban areas, many of which have been taking the lead on increasing minimum wage, making a state or nation-wide increase cause more harm than good for people who live areas with lower cost of living. Basic economics tells us that the higher the minimum wage, the lower the demand for labor. Automation is also making its way into restaurant industry, and it would be expected that areas that have higher wage costs would be the first to replace workers with automated waiting systems. It would be beneficial to our understanding of labor economics if there was data available regarding hiring waiting staff between states where the “tipping minimum wage” matches the general minimum wage and states where there is large gap between the two minimum wages, in order to determine the best policy to move forward with.

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