For Tipped Workers, A Different Minimum Wage Battle The debate over the federal minimum wage, which raised to $7.25 in 2009, is playing out across the country. Meanwhile, the minimum wage for tipped workers hasn't gone up for 23 years.

For Tipped Workers, A Different Minimum Wage Battle

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ARUN RATH, HOST:

From the studios of NPR West in Culver City, California, it's ALL THINGS CONSIDERED. I'm Arun Rath. President Obama would like to raise the national minimum wage but he hasn't been able to get Congress on board since 2009 when it was raised to $7.25 an hour. But did you know there's another minimum wage for tipped workers - the majority of whom work in restaurants - it's just $2.13 an hour which makes sense, right? The money from tips should make up the difference and then some. But according to a White House report tipped workers are more than twice as likely to be below the poverty line as other workers and their minimum wage hasn't gone up in 23 years. How can tipped workers make a livable wage? That's our cover story today. Under federal law if tips don't bring employees up to the level of the standard minimum wage employers are required to make up the difference. But Saru Jayaraman, founder of the labor advocacy group Restaurant Opportunities Centers United, says it often doesn't work out that way.

SARU JAYARAMAN: Enforcement is not just difficult - it's practically impossible. For employers to have to count hour by hour to make sure that tips make up the difference for every worker for every hour they've worked - even if employers ensured that tips made up the difference. That essentially creates a system in which these workers are not living on a wage from their employer. They are absolutely living completely off the mercy and largess of customers. They are living almost entirely off their tips.

RATH: Saru Jayaraman's group advocates eliminating the federal minimum tipped wage so tipped workers earn the same as workers in other minimum wage industries. But Scott DeFife of the National Restaurant Association says that's far too much and could cost thousands of restaurant jobs.

SCOTT DEFIFE: There are consequences for taking the minimum wage and rising it up to a point that it's the standard wage for everyone. You will limit opportunity for young people and for people who are coming from difficult circumstances and need an opportunity to get a restart.

RATH: DeFife thinks the heavy hand of federal legislation is not the answer.

DEFIFE: Most people believe that state governments should be setting more appropriate wage levels for their local economy than one size fits all at the national level.

RATH: That's exactly what's happening right now. Some states have a tipped minimum wage higher than the federal standard of $2.13. And seven states have laws requiring tipped workers receive the same wage as other workers. The Secretary of Labor, Thomas Perez, says those states have demonstrated that you can raise wages for tipped workers without hurting the economy.

THOMAS PEREZ: If my friends in the Restaurant Association are correct then it would stand to reason that every time I fly to the state of Washington or if I fly to California it stands to reason that, you know, I should bring a bag lunch because restaurants are going to be very hard to find because they would have gone out of business as a result of having to pay this higher minimum wage. But in fact in the state of Washington which has had the highest minimum wage in the country over the last 15 years you look at job growth and it has been above the national average and payrolls at the state of Washington's restaurants and bars have expanded by 21 percent. And so it's hard for me when we have this actual controlled experiment across America.

RATH: Scot DeFife says the National Restaurant Association's own data tell a different story.

DEFIFE: We have some studies and research that show in Washington and Oregon that there are fewer employees per establishment than across the rest of the country.

RATH: It's pretty clear whose side the Obama Administration is on. But the administration can't act unilaterally. A democratic bill to increase the federal minimum wage to $10.10 an hour and peg the tipped wage to 70 percent of that was struck down in Congress this spring. But Secretary Perez says the issue is still on the table.

PEREZ: If at first you don't succeed we try, try again. That's really the mantra of the labor rights movement and the civil rights movement. And this president is persistent. And we're not going to give up because this is really an issue of fundamental fairness.

RATH: While the issue remains stalled at the federal level it's not just states that are making up their own rules. On Friday I had dinner at a restaurant that's trying something different. They have eliminated tipping entirely. Brand 158 is an upscale restaurant and the city of Glendale. You can't miss the notices on the menu - no tipping. Gabriel Frem is the owner.

GABRIEL FREM: I feel that our industry, legally, we abuse the labor. It's very abusive. When you actually take a person who is making so little and tell them, you know what you sink or swim on your own.

RATH: But Frem's approach isn't just about a feel-good philosophy. He says it works for his bottom line.

FREM: The savings you get as a business from paying the minimum end up costing you more in productivity, stability. And our experience has been the guests overall love it and the employees that we hire love it.

RATH: At Brand 158 a waiter takes our order on a tablet that wirelessly sends our selection and table number to the kitchen. Wait people barely need to leave the floor. There's no possessiveness over tables and tips. So any wait person can go to any customer who needs service. At least four people helped us over the course of our meal. Frem admits it's a leap to assume this model could work anywhere. Say in a less upscale area. Workers at his restaurant are paid $15 an hour, about $6 more than is California's minimum. But in a state where the bottom wage is at the federal minimum of $2.13 an hour - that could be a much bigger strain. But Frem thinks the approach makes sense no matter what your bottom line is.

FREM: When you have a stable staff, and you have a productive staff, and you have a consistent staff that all yields to savings. If you think you're just being a lower wage per hour but every three weeks you have a new staff - people are always leaving on slow shift peoples don't make their rent, they're distressed, it's going to translate to more cost.

RATH: Tess Marie Hudson is a bartender here.

TESS MARIE HUDSON: I mean I get stability here which kind of gives me more freedom outside of work, which is nice. I can plan my life accordingly. I can travel and know when I get back I'm going to work on a Monday and still make as much as as I would on a Saturday. So that - that's nice.

RATH: Customer Melody Cutolous (ph) was at Brand 158 for the third time and she brought along a friend.

MELODY KUTULAS: I love it. I think it's great and that's why I brought her here. I said, it's great. I said that it might be a little bit higher but you're not worrying about tips.

RATH: It feels a little strange to most people, not doing that calculation that involves both math and morality at the end of a nice meal. But trust me - it's very easy to get used to.

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