Introduction
Many Americans are unaware that in most states, there is a subminimum wage specifically for tipped workers. Under federal law, workers can be classified as a tipped worker if he or she receives at least $30 per month in tips. Since 1991, the federal minimum wage has risen five times, but for tipped workers it has remained frozen at just $2.13 an hour—a rate now less than 30 percent of the full minimum wage.
Currently, an estimated 4.3 million people work in predominantly tipped occupations in the United States. Restaurant workers make up the majority of them, but many other professions are represented, including car wash workers, nail salon workers, valet parkers, and airport attendants, just to name a few. Women constitute two-thirds of all workers in predominantly tipped occupations—a fact that many feel makes the subminimum tipped wage a form of legislated pay inequity.
Worker advocates, including the AFL-CIO, Restaurant Opportunities Center United, the Economic Policy Institute, the National Employment Law Project, and others, have called for the gradual elimination of the subminimum tipped wage to improve the economic outcomes of tipped workers and advance fairness. This fact sheet, which relies significantly on a comprehensive report by the University of California’s Sylvia Allegretto and the Economic Policy Institute’s David Cooper, serves as a primer on the tipped minimum wage and what it would mean to eliminate it.