Tipped Workers and the Minimum Wage Fight

In my opinion the single most pressing problem for our economy and our Democracy as a whole is the festering cancer of income inequality that has arisen in the last few decades. To me, it is not that hard to see that if a very few people are the only ones who have any spare money to spend it will be very bad for the economic well-being of our country as a whole. Combine the fact that the top 1% continue to be allowed to horde all our nation's wealth to the top with the disasterous Citizens United ruling and it is not hard for anyone to see where the biggest threat to freedom in America is coming from. It stems from the fact that in America it is beginning to look like one very small group of people are always going to have the best government they can buy.  
And while there are numerous issues that need to be addressed It seems as if it would be easy for average working families to figure out the best place to start since it would benefit them. Raising wages for Americans that work and are not paid enough to make ends meet and have anything left to contribute to the economy. Many of them are just lucky to have a job at all. Unfortunately for many of us the idiocy of outsourcing the middle-class for the greed of the very few has resulted in dependency on service industry jobs to make a living for ourselves and our families.

That is why the Rebuild America Act introduced by Tom Harkin earlier this year is so important. It would do something that would immediately raise wages and living standards for tens of millions of people. Raise the minimum wage to an acceptable level and tie it to inflation in the future. As David Cooper at Economic Policy Institute has shown gradually raising the minimum wage to $9.80 an hour by 2014 would improve the lives of over 28 million working people:

As Table 1 shows, increasing the federal minimum wage in three steps to $9.80 per hour, as described in the Harkin bill, would raise the wages of 28 million Americans. About 19.5 million workers whose wages are between the current minimum and the proposed $9.80 rate would be directly affected. Another 8.9 million whose wages are just above the proposed minimum would also see a pay increase through "spillover" effects as employers adjust their overall pay scales.


In fact, not only would raising the minimum wage help millions of us that are already working, but indeed it would help currently unemployed Americans by creating desperately needed jobs over the next three years:

Furthermore, low-wage workers tend to spend rather than save an additional dollar earned, often because they have little other choice. The additional  household consumption generated by this boost to low-wage workers' paychecks would benefit the labor market as a whole, because  the resulting economic activity translates into job growth. After controlling for a reduction in corporate profits resulting from the minimum wage increase, and assuming some of the business expense of paying higher wages is passed on to consumers, the net effect of the proposed minimum wage increase is an increase in economic activity of over $25 billion over the next three years, which would generate roughly 100,000 new jobs.

Many of us realize the common sense behind raising the minimum wage. However there continues to be one group of workers that as a whole are ignored in most states and the country. Tipped workers. While the Harkin bill does address the tipped minimum wage that remains set in most states at $2.13 an hour it does not solve a simple problem. There should be no tipped minimum wage and tipped workers should be entitled to the full minimum wage whether they recieved tips or not.

Research by the National Employment Law Project has shown a few things. Because of the erratic nature of tips, tipped workers still live in poverty or just above:

Even after accounting for tips, the vast majority of tipped workers are still barely getting by. According to our analysis of Current Population Survey data

from 2005-2007, tipped workers nationwide earn a median wage of $8.23 per hour including tips, or just $17,118 annually (in 2007 dollars). Waitresses and waiters earn slightly more, but still only $9.00 per hour including tips or $18,720 annually-barely more than the poverty level for a family of three and less than the poverty level for a family of four.32 As a result, a sizeable percentage of waitresses and waiters live in families below the poverty level-and the rates are even higher for black and Hispanic waitresses and waiters.


In the few states where they are guaranteed a living wage, it has made a real impact on their lives providing an instant boost to income:

Wage data from states with higher tipped worker minimum wages show how such protections boost incomes and improve economic security for tipped workers. For example, in the seven states that provide tipped workers the full minimum wage, plus Hawaii, which has just a nominal 25 cent tip credit, the median wage for waitresses and waiters is $10.00 per hour- $1.00 higher than the median in the other 42 states.

And despite the arguments that the same folks within the Republican Party and Corporate America recite like gospel one simple truth remains. A fair wage for all workers does absolutely nothing to hurt the economy or job growth:

For example, a 2006 study by the Fiscal Policy Institute examined job growth between 1998 and 2003 in the ten states and the District of Columbia that had minimum wages higher than the federal rate at that time-Alaska, California, Connecticut, Delaware, Hawaii, Massachusetts, Oregon, Rhode Island, Vermont, and Washington. The study compared job growth in those states with the forty states that did not have higher minimum wages. All ten of the high minimum wage states examined in the study also had tipped worker minimum wages higher than the federal $2.13 rate. In fact, four of the ten guarantee tipped workers the full state minimum wage and Hawaii allows tipped workers to be paid just 25 cents less. The study found that these ten states actually had faster job growth among small businesses than the other forty states. This experience highlights how job growth is driven overwhelmingly by other factors in a state's economy-not by how high or low the state's minimum wage is.

Although they would never admit it, even the National Association of Resteraunt's own studies have shown that higher wages for tipped workers will not result in job losses:

Even the National Restaurant Association's own analysis of industry trends projects that four of the five fastest growth states for restaurant jobs over the next decade will be states that mandate high minimum wages for tipped workers: Arizona ($4.25), Florida ($4.19), Nevada ($6.85), and Alaska ($7.15).

Now, Americans should think to themselves just who these tipped workers are. Waitresses and waiters work in a fast paced, high stress environment with little margin for error. Bartenders must deal with the some of the most difficult folks on earth. Pizza delivery drivers work a job that is consistently one of the most dangerous in America. They use their own equipment and fuel and are rarely compensated fairly for their risks.

The fact is these workers deserve the full protections of the minimum wage along with any tips that come from excelling at their jobs. These jobs place wear and tear not only on their bodies but in many cases equipment they invest in themselves. The only real reason for not paying them the full minimum wage is the same reason our country as a whole is suffering. The simple greed of the very few and the fact that so many Americans are misinformed and will not fight against monied interests for their neighbors or even themselves.

It is time we reversed these disturbing trends in the American workplace and society as a  whole.  

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