Keep tipping, but raise the $2.13 minimum for servers
To tip or not to tip. That is the question causing buzz among diners and restaurant staffs across the country after restaurateur Danny Meyer announced that he would end tipping in his 13 New York establishments. Meyer, whose plan made news from Manhattan to Australia, said he’d increase menu prices and use the proceeds to provide fair compensation to all workers.
Most New Yorkers find the move distasteful: 55% said it was “a bad idea” and just 36% favored it, in a Quinnipiac poll released Monday. Frankly, we agree. When you go out to eat this weekend, tipping will give servers more incentive to work for you and give you a way to reward good service. While a few restaurants in other cities have tried no-tip policies, the idea hasn’t caught on widely.
The real problem with tipping is the way it has been used as an excuse to pay abysmally low base wages to so many servers and bartenders. In reality, tips aren’t pats on the back. They’re a huge chunk of the compensation of servers, bartenders and others who work for tips in the restaurant industry.
Under federal law, restaurants can pay tipped employees a federal minimum wage of just $2.13 an hour — the same as it was 24 years ago and less than a third of the $7.25-an-hour minimum wage paid to workers.
The situation cries out for change, but the powerful restaurant industry jealously guards this government-sanctioned subsidy. If $2.13 an hour plus tips does not reach $7.25 an hour, the employer is supposed to make up the shortfall. But many don't.
In the past three years, for example, the Labor Department has concluded more than 10,000 investigations into restaurants and recovered nearly $83 million in back wages for more than 93,000 workers. Some violations involved restaurants failing to “top off ” tips to bring wages to $7.25.
Most reputable restaurants follow the law. But some clearly flout it, or find the rules so confusing that they fail to comply. Many workers don’t know the law, or are afraid to challenge bosses or report violations.
Historically, the “tipped minimum” was about half of the regular minimum wage. That changed in the 1990s, when the regular minimum went up but, in a huge victory for the restaurant lobby, the tipped minimum stayed stuck at $2.13. The time is long past to raise it to at least 50% of the minimum wage, index it to inflation and require both wages to rise in tandem.
More than 30 states have already set the “tipped minimum” above $2.13, some substantially. Seven states have done away with the dual system, requiring restaurants to pay tipped workers the standard state minimum wage.
The National Restaurant Association argues that “any increase to the current wage model will be felt across our industry” and will cost jobs. That conflicts with the headline on an association news release from March: “California, Nevada lead restaurant job growth.” Guess what? California, at $9, and Nevada, at $8.25, mandate some of the highest tipped wages in the nation.