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The Terrible Tipped Minimum Wage

The way to fix tipping isn't to abolish it. Instead, it's time to do something about the minimum wage for tipped employees.
(Photo: Mikhail Hoboton Popov/Shutterstock)

(Photo: Mikhail Hoboton Popov/Shutterstock)

Last year saw a renewed interest in the evils of tipping, spurred in part by a smattering of high-end eateries deciding to abandon the practice. Articles came from both sides of the labor/management divide (including Noah Davis’ piece on this very website), starting with a piece in Slate by a San Diego restaurateur and another in The New York Times (where no workers were quoted). Everyone agreed that tipping is terrible, the remedies varied, although the kindness of customers and owners was often highlighted as an immediate solution.

As Sarah Jaffe of In These Timesnotes, this question looks very different depending on which side of the table you’re sitting. “Though we universally acknowledge tipping to be problematic,” writes Jaffe, who is a former server, “the odds of restaurants paying servers a comparable wage if tips are eliminated seem pretty slim without some major changes in law and practice.” One person’s technical labor issue is another’s income, unreliable as it may be.

Concerns over tipping in America are over 100 years old, and almost as old is the divide between concerned reformers who don’t receive tips and the workers who dislike but depend on them. Tipping today still gives the served too much power over the livelihood of the server. The institution of a federal tipped minimum wage all but made that imbalance a law, and now neither the wage, nor practice itself, provide a reliable income.

FOR THE FIRST HALF of the 20th century, tipping faced persistent opposition, and, if legislative action is any judge, anti-tipping forces were far more powerful than they are today. From 1909 to 1918, eight legislatures passed laws against the practice, although most were subsequently vetoed or undone by unfavorable court rulings.

The terms of this Progressive Era debate were more grandiose and moralistic than those employed by today’s Slate contributors. A 1916 book published by the University of Pennsylvania, The Itching Palm: A Study of the Habit of Tipping in America, denounces the custom in fevered terms. The author quotes Milton, lists condemnatory Biblical passages, contains a comparative chapter on the practices of Barbary pirates, and places the fight against tipping in the same reformist tradition as abolitionism. One passage reads: “The moral wrong of tipping is in ... the rigid class distinctions it creates in a republic; in the loss of that fineness of self-respect without which men and women are only so much clay—worthless dregs in the crucible of democracy."

One person’s technical labor issue is another’s income, unreliable as it may be.

Action on the legislative front seems to have wound down thereafter, presumably because the courts of the day were inhospitable. (State-level minimum wage laws were rolled back by the judiciary in the 1920s too.) The practice was cemented by the Fair Labor Standard Act’s (FLSA) establishment of a measly minimum wage—far lower than the national minimum wage—for tipped employees. But “As late as 1951, the Illinois state legislature considered a bill subjecting anyone who tipped to fines that ranged from $5 to $25,” according to Dorothy Sue Cobble’s book Dishing It Out: Waitresses and Their Unions in the Twentieth Century.

Before the 1940s, and specifically the enshrinement of tipping in the FLSA (passed 1938), the practice was most prominent in hotels and fine restaurants. Afterward, it became the norm in all dining establishments, as owners took advantage of their legal ability to pay less than the newly established national minimum wage. Popular sentiment against tipping remained strong, as evidenced by numerous adversarial op-eds, editorials, and studies. The July 15, 1946, edition of Life published an editorial that condemned the custom and praised union efforts to eliminate tipping from their wage negotiations (many food servers and bartenders were organized, at least in industrialized areas), calling it a "laudable notion ... to get proprietors of service industries to include proper pay for their help in stated prices, lifting their employes [sic] above the whim or meekness of the spending public."

Despite that support, the New York Hotel Trades Council was unsuccessful in fighting for a fixed service charge, instead of tips, in their negotiations with the city’s Hotel Association, while San Francisco hotels stayed adamant in their opposition to the unions’ 1942 attempt to “do away with the process of tipping entirely in favor of a guaranteed minimum wage.” If unions couldn’t defeat tipping in New York or San Francisco—two deeply entrenched strongholds for organized restaurant and hotel workers—they couldn’t defeat it anywhere. By 1945, according to the January edition of Catering Industry Employee, as Cobble mentions in her book, the workforce already felt stuck in the conundrum Jaffe describes above: “[They] did not like the tipping system ... but many would not say a word lest it should be replaced by another system that would mean a financial loss to them.”

BY THE 1950S, FOOD servers were receiving more of their income from tips than in wages. As the federal tipped minimum wage stands at $2.13 an hour, every restaurant worker I’ve ever talked with faces the same, bleak reality. Wages have stagnated as unions have lost membership, and the food service sector is no exception. Today, the political power of employees is practically non-existent: The tipped minimum wage hasn’t been increased since 1991 as USA Today noted two weeks ago. Aside from exceptions in a few major cities, and hotels and casinos in labor strongholds like New York or Las Vegas, unions are unheard of in the industry.

But if tipping is to be eliminated, or reformed, it cannot be a top-down process. Back in 2005, the New Yorker was writing about crazily expensive Manhattan restaurants scrapping the concept of tips in favor of the “fixed service charge that’s common in Europe.” It’s great that more fancy bistros are doing the same, but wealthy business owners do not a progressive policy revolution make. Call me when the owner of Olive Garden starts paying a reasonable wage before tips.

Although there is a nationwide campaign to increase wages, tipped workers are often left out. In Chicago, a $15 minimum wage will be put to a ballot test this March, while Washington, D.C., and its two Maryland-side counties will raise the minimum wage to $11.50 and index it to inflation by 2016. The tipped minimum does not appear to be affected in either case. In New York, the Democratic governor Andrew Cuomo has refused to raise the tipped minimum wage while increasing the statewide baseline.

These policy choices hurt people. According to Restaurant Opportunities Centers United (ROC), a national- and state-level food-service-worker advocacy group, poverty rates for tipped workers are three times higher than for their non-tipped counterparts.

Expecting business owners to correct this is foolish and worker power is currently negligible, so public policy seems like the most workable solution. I’m not suggesting we return to Progressive Era reforms that often sought to punish tippers or the tipped. We don’t need to abolish tipping, just the tipped minimum wage. There’s precedent for that: Washington State doesn’t allow for a separate tipped minimum. (I’ve lived in Seattle and there was absolutely no discernible difference in the quality or frequency of service, and customers still tipped.) ROC-New York is making a similar demand. The rest of us should do the same.