Charles Cottle —

I do not like tipping waitresses, waiters, hotel bell boys, car wash attendants, or any other employees who depend upon tips for their wages. I am not a tightwad, indeed much to the contrary. I tip generously, but I do not like tipping because it is a form of exploitation. It allows the employers to exploit workers, to place workers in a dependent position, and it forces customers to pay a large share of labor costs while it increases the profits of the employer. Tipping expands the profits of the employer by short-changing employees, and the customers are expected to make up the difference.

Although I tip generously, I know there are many people who do not. Consequently, the employee (most often the person who can least afford a pay cut) receives less than they should for the services rendered.

In a recent op-ed in the New York Times, Saru Jayaraman  calls into question the institution of tipping. Jayaraman points out that tipping allows employers to pay their employees less than they might because patrons are expected to make up the difference between the meager wage paid by the employer and the still low wage the employee might otherwise receive.

Jayaraman also addresses the two tiered system of wages created by tipping. In the United States this two tiered system is recognized by law. There is a federal minimum wage for tipped employees and a different minimum wage for non-tipped employees. Most people do not realize that whenever the federal minimum wage is mentioned, it is almost always a reference to the minimum wage for non-tipped employees. Currently, the federal minimum wage is $7.25 per hour. The tipped employees minimum wage is $2.13 per hour. The federal law states that in the event the tipped employee wage of $2.13 per hour plus tips received does not equal the federal minimum wage for non-tipped employees (currently $7.25), the employer is expected to make up the difference.

The enforcement of this provision of the law, according to Jayaraman, is non-existent. Whether the tipped employee receives, without problems, the difference between the tipped employee wage and the federal minimum wage depends upon the integrity of the employer. Given that the majority of tipped employees are women working in restaurants, and that they are dependent upon relatively low wages for survival, their position of dependency places “trouble-makers” in jeopardy.  Managers can easily create difficult working conditions for workers who create issues about wages.

Interestingly, the 50 states have a wide variety of state laws regarding tipped employee wages. Employers are expected to abide by the federal or state law, whichever pays the worker more. The requirements of the state laws for tipped employees are listed at the U.S. Department of Labor Web site. As can be seen, there are three basic groupings: 1) states that require employers to pay tipped employees the full state minimum wage before tips; 2) states that require employers to pay employees more than the federal minimum wage of $2.13 per hour, but not more than the federal minimum wage of $7.25 per hour; and, 3) states that require the employer to pay employees as little as the federal minimum wage for tipped employees.

Looking at the map below from the U.S. Department of Labor, we can see the best and arguably the worst places to be a tipped employee in the United States.

As indicated in the map, the states in purple require that employers pay tipped employees the full state minimum wage before tips. It turns out that Washington state is the best place in the country for tipped employees because they make $9.47 per hour plus tips.

The rest of the country is not so favorable to tipped employees, although green states are somewhat better than the blue states. In each of the green states the tipped minimum wage is above the federal minimum of $2.13 per hour, and in some of them (all except Idaho, Iowa, New Hampshire, North Dakota, Oklahoma, Pennsylvania, and Wisconsin), the full state minimum wage is above the federal minimum of $7.25 per hour. In those cases the employee must receive at least the state full minimum wage.

The blue states, along with the green state exceptions listed in the paragraph above, are the worst places in the country to be a tipped employee. Most of the blue states do not have minimum wage laws for tipped personnel, thus they follow the federal guidelines completely. That is, tipped employees must receive a minimum of $2.13 per hour and a balance in tips or pay to reach $7.25 per hour.

This is a bleak picture for the tens of thousands of tipped employees in the United States. For most of these employees there is no overtime pay or extra pay for working on holidays. Neither are there benefits. The yearly wage for $7.25 per hour is approximately $15,000, which is just below the current federal poverty line for a family of two. At this level of pay, working on holidays is a must. Spending holidays with the family is not an option.

This two tiered system of wages needs to be abolished. Defenders of the system point out that tipped personnel in high end restaurants do quite well, sometimes earning $40 to $50 per hour. This may be true, but the vast majority of wait personnel are not working in high end restaurants. They work in the Perkins, IHOPs, and Applebees of the world. Their wages are not fixed, but depend upon the generosity of the public.

What can we as individuals do to remedy the inequities experienced by tipped employees? Until the discriminatory two tiered system of minimum wages is eliminated, the least that most of us can do is be polite to those who wait on us, and tip generously.