If you thought that the federal minimum wage was rock bottom on the pay scale, think again.
There’s something called the subminimum wage for tipped restaurant workers, and it’s a staggeringly stingy $2.13. It’s no big surprise that poverty rates among tipped workers are three times that of the workforce as a whole.
The federal subminimum wage has not been raised since 1991.
In 1996, President Bill Clinton pressured Congress to raise the minimum wage for the first time in years. He ultimately won a 90-cent per hour increase, but the restaurant industry, led by the National Restaurant Association and its board chairman Herman Cain, who would later become the group’s president, successfully lobbied to have the minimum wage for tipped employees separated from the increase and kept at $2.13.
Until then, the subminimum wage had been pegged at 50% of the standard minimum wage: $2.13 to the standard $4.25. Since the two were decoupled, the minimum wage has been increased four more times to its current $7.25 an hour, while the subminimum has remained unchanged at $2.13, reducing it to less than one-third of the minimum. Meanwhile, the cost of living has continued to climb, effectively reducing the buying power of that amount to $1.28.
What about tips?
There’s nothing gratuitous about tips. They constitute the vast majority of a server’s earnings; rather than rewarding servers for good service, tips are essentially subsidizing the pittance paid by their employers. And the tips themselves are shrinking. Average ticket prices in restaurants have been sluggish for years as the prolonged recession takes its toll on individual spending habits and corporate travel budgets.
Restaurant business practices can further erode tips.
Employers love to keep payrolls down by naming more of their workers to the subminimum wage category. And when those workers aren’t in typically tipped positions, restaurants can institute mandatory tip-sharing pools and take a cut from the servers to subsidize the paychecks of non-serving employees. Restaurant owners can also deduct the tip-related portion of their credit card processing fees from the tips given to servers, cutting further into meager earnings.
People for the Ethical Treatment of Servers
We have a seafood watch list, fair trade labeled imports, and we know when the eggs are cage-free. How about looking at the sustainability of restaurant workers.
The Restaurant Opportunities Center United has released its 2012 National Diners Guide rating the working conditions in national and regional restaurants. It covers everything from higher-end dining rooms like Morton’s Steakhouses and Legal Seafoods to the Applebee’s, Cracker Barrels, and Cheesecake Factories that dot the nation.