Women make up nearly 74% of tipped restaurant workers in Massachusetts.(1) And under current law, these women earn only $3.75 an hour, and depend on customer-paid tips—and the co-workers and managers who distribute them—for the vast majority of their pay. This makes women twice as vulnerable to sexual harassment than they are in states with One Fair Wage, such as California, Nevada, Washington and Oregon.(2)
THE TIPPED MINIMUM WAGE PERPETUATES GENDER-BASED INEQUITY AND DISCRIMINATION
Nearly two-thirds of the six million tipped workers nationwide are women, 36% of whom are mothers. The sub-minimum wage for tipped workers is in effect legislated pay inequity for a predominantly female workforce, perpetuating the gender pay gap and leading to higher rates of poverty.
- Female servers earn only $0.80 for every dollar their male counterparts earn. (3) For African American female servers the disparity is even greater; they earn only 69% of what male servers overall are paid, costing them more than $400,000 over a lifetime. (4)
- Servers are nearly three times as likely to live in poverty as the overall workforce, and this is compounded for women. More than 20% of female servers live in poverty, compared to 14% of male servers, and seven percent of male workers overall. (5)
THE TIPPED MINIMUM WAGE FACILITATES WORKPLACE SEXUAL HARASSMENT AND ASSAULT
The restaurant industry is the single largest source of sexual harassment claims in the United States. Tipped workers earning a sub-minimum wage are almost entirely dependent on the generosity of customers for their wages. As a result, they consistently tolerate inappropriate behavior from customers, and are vulnerable to sexual harassment and assault from coworkers and managers who make decisions on how tips are distributed.
THE TIPPED MINIMUM WAGE WORSENS POVERTY AND NEGATIVELY AFFECTS CONSUMER SPENDING
Tipped workers in states with a sub-minimum wage are more than twice as likely to live in poverty — and nearly twice as likely to rely on food stamps as the rest of the workforce.
Because tipped workers are predominantly female, this poverty burden falls disproportionately on women.
- In the seven states that have eliminated the tipped minimum wage, the poverty rate among tipped workers is lower by one quarter: 12.3% compared to 16.5%. The reduction in poverty is most significant for workers of color – over 18% of tipped workers of color in states with a sub-minimum wage live in poverty, compared to only 13.4% in states without a sub-minimum wage. (6)
- The restaurant industry is the fastest growing industry in the nation, and the largest employer of minimum wage workers (1 in 11 Americans). Putting more money into the pockets of the growing number of low-income tipped workers, who will spend their additional earnings at local businesses, boosts the consumer spending that drives our nation’s economy.
- American Community Survey (ACS), 2012-2016 merged five-year sample. Calculations by Restaurant Opportunities Centers (ROC) United examining data for tipped workers, servers and the overall workforce. IPUMS-USA, University of Minnesota, www.ipums.org.
- ROC United and Forward Together, 2014. The Glass Floor: Sexual Harassment in the Restaurant Industry.
- ROC United analysis of ACS (2016). IPUMS-USA, University of Minnesota, www.ipums.org.
- Restaurant Opportunities Centers United, 2012. Tipped Over The Edge: Gender Inequity in the Restaurant Industry.
- See supra note 3.
THE ECONOMIC REALITY OF TIPPED WAGES
Despite what some may claim, we do not have to accept this system that perpetuates gender inequity and discrimination, facilitates workplace sexual harassment and assault, and worsens poverty. In fact, seven states have successfully adopted “One Fair Wage” policies that ensure equal treatment for tipped workers. In those seven states:
- Sexual harassment is lower than in Massachusetts and other states that maintain an unequal minimum wage scheme for tipped workers
Wages, including tips, are unambiguously higher than in Massachusetts and the 42 other states that maintain an unequal minimum wage scheme
- Restaurant sales are higher. In 2017, One Fair Wage states projected a 5.1 percent increase in sales, compared to a 4.3 percent increase in Massachusetts. One Fair Wage States also outperformed Massachusetts in sales per Full Service Employee.
- Restaurant employment rates are equal or higher in One Fair Wage states, with growth rates of more than 20% from 2011-16 in full service restaurant employment (FSRE), where tipping is concentrated
- Full Service restaurant establishment growth is equal or higher in One Fair Wage states, where full service restaurants have grown by almost 9.5% in the last five years
- Poverty rates, especially for workers of color, are much lower than in subminimum wage states like Massachusetts