Let’s say you are a waitress or waiter. Let’s say you worked the night of Jan. 28. And let’s imagine that somewhere in your restaurant a big-screen television beamed President Barack Obama’s State of the Union address while you were taking orders, delivering food and busing dishes. Like millions of other Americans, you would be among the most underpaid employees in the country’s economy: tipped workers. While you may have been pleased to hear the president’s executive order to raise the minimum wage for federal contract workers from $7.25 an hour to $10.10 an hour, you would know this move is irrelevant to you. And you would know that during the 1 hour and 5 minutes it took him to deliver his promises — on everything from making health care affordable to boosting the economy — you would have earned $2.30.
For those who are not tipped workers, the idea that these workers are only guaranteed a paltry $2.13 an hour might come as a shock. But the reality is that millions of tipped workers take home much less than the federal minimum wage, which has excluded them for more than 20 years. The National Employment Law Project crunched the numbers and found that the value of the tipped minimum wage, in real terms, has fallen 36 percent since it was frozen in 1991. A 2012 study by Restaurant Opportunities Center United (ROC-United) found that waitresses and waiters, who make up the lion’s share of tipped workers, suffer three times the poverty rate as the general workforce and that tipped workers rely disproportionately on food stamps.
So, while Obama is to be praised for pledging to raise the federal minimum wage for some, worker advocates are urging him to do more. (Keep in mind the increase covers only those federal workers — about 10 percent — who do not already make $10.10 an hour or more. It also does not take effect until the end of 2015, and then only on new contracts.)
One of the most important things the president could do is use his platform to support those in Congress who are taking a stand for workers (including Sens. Elizabeth Warren and Tom Harkin) and encourage Congress to pass the Fair Minimum Wage Act (FMWA). If the bill (PDF) is passed, the minimum wage for tipped workers will increase — for the first time in 23 long years — from $2.13 per hour to 70 percent of the regular minimum wage. Such a law would “immediately lift millions of hardworking Americans from poverty,” says Saru Jayaraman, a co-founder and co-director of ROC-United.
The president could also use his power to ensure that the national conversation about the minimum wage includes all workers. ROC-United is doing its part to raise awareness about the plight of those trying to live off tips. Some might assume these workers will close the gap this way, but the reality of making ends meet when you never know how much you are going to take home from work is quite different. As one testimonial on the ROC-United website’s Living Off Tips section reads, “Living off tips is like gambling with your bills. Will you make enough to cover electricity this week? ... Employees deserve some sense of security in the money they’ll be making, not ‘cross my fingers and pray I make enough for rent and food this time.’”
The tipped minimum wage has been stuck for so long in part because of aggressive lobbying by the restaurant industry against any increase. The National Restaurant Association — which lobbies on behalf of such corporate members as the restaurant group Darden, the parent group of restaurant chains Olive Garden and Red Lobster, and such fast-food companies as McDonald’s — argues that any increase would place “yet another financial burden on business owners who are already feeling the pressures of a weak economy and additional costs and regulatory complexity associated with the Affordable Care Act.”
Despite what the trade association says, the industry can afford to pay its workers more. Even if restaurants passed along all the costs of the wage increases proposed in the FMWA to consumers, an analysis from ROC-United found that the average American household would only pay 10 more cents a day. Plus the restaurant industry is actually bearing a huge cost right now as a result of its low-road approach: High turnover, for instance, could be mitigated if restaurants invested in their workforces through better wages and benefits. Darden finds a way to pay its top five executives more than $16 million a year. Can it really not afford to pay its workers more than $2.13 an hour?
“The corporate restaurant industry can absolutely afford to pay its workers better,” says Jayaraman, “but won’t do so voluntarily. Tipped workers are counting on their government to hold the private sector accountable to livable wages.”
Polling shows that most Americans, when provided with the facts about pay, believe workers deserve better and want to see policies that reflect that. One poll found a resounding 80 percent of Americans support a minimum-wage increase to $10.10. If more people knew that the real minimum wage for tipped workers is just $2.13 — and that the restaurant industry has been lobbying hard to shut tipped workers out of any minimum-wage increase — I think they would be stunned.
Congress might be gridlocked, yes, but policy change is not hopeless, especially when the policies being pushed (and kept) on the table reflect what most Americans want. Leadership from the very top — in making sure the minimum-wage conversation stays on target and does not leave out those who need it most — would be a step toward convincing Congress to change the status quo on wages in this country. What say you, Mr. President?