For Juneteenth, Let’s Abolish the Subminimum Tipped Wage

Unsplash | Dan Smedley

This Sunday, the country will commemorate the end of slavery in America by celebrating its newest federal holiday, Juneteenth. This is an important day for Black communities across America to gather and celebrate, but it’s also a moment to reflect on how far we still have to go. Black Americans still have significantly less wealth than white Americans, earn less income, and are held back by federal policies that disadvantage black families and workers, perhaps most importantly, the subminimum tipped wage.

Since 1991, the subminimum wage has remained just $2.13 an hour, meaning that in most states, restaurant servers, bartenders, hairdressers, ride-share drivers, or any other worker who receives tips will have to rely almost exclusively on those tips for survival. This leaves millions of workers of all races in a highly precarious financial position, but it disproportionately affects Black and Brown workers. Eliminating it is absolutely crucial to begin reversing the effects of decades of policy rooted in systemic racism.

48 percent of workers in tipped industries are people of color despite making up only 37 percent of the total labor force. Women of color and immigrants are particularly overrepresented among the population of tipped workers. This shouldn’t come as a surprise, given the racist history of tipping in America. From its start, economic exclusion was the goal of tipping, not an unfortunate side-product. 

During Reconstruction, employers began offering formerly enslaved people no-wage jobs with the promise of tips. Using this exploitation method, employers could give a legal excuse to avoid paying black Americans for their labor. In the late 1930s, Southern Democrats refused to accept the Fair Labor Standards Act, which would implement a wage floor for African Americans. As a result, the bill that Congress eventually passed included exceptions for occupations with a significantly African American labor force and did not address tipped workers. This opened the door that allowed the Supreme Court to count workers’ tips as wages when determining their minimum wage. 

This often-overlooked racist past has severe repercussions for millions of American workers today. Restaurant servers are 2.7 times as likely to be in poverty than other workers, and the poverty rate for people of color working for tips is higher than that of their white counterparts – 17 percent versus 14 percent. Even when accounting for tips, tipped restaurant workers are twice as likely to live in poverty and rely on food stamps as the general workforce. 

While employers are supposed to make up the difference if tips do not bring workers to the full minimum wage, more than 1 in 10 tipped workers report wages that fall under the federal minimum wage. The Department of Labor released a study that found that 84% of restaurants surveyed had committed wage theft against their tipped workers. Compared to states that have the same minimum wage for both their tipped and non-tipped workers, women of color experienced 25 percent higher poverty rates in states with a tipped minimum wage of $2.13 per hour. 

This system also has tangentially adverse effects: A workforce that depends on tips for their income is more likely to face bias and harassment in the workplace. External factors such as race, gender, and age, become inextricably linked to income. The Center on Poverty and Inequality made the case that the two-tiered wage system “normalize[s] inappropriate behavior (e.g., women and people of color feeling compelled to tolerate inappropriate comments or racist behaviors) and disproportionately affects the most marginalized working people due to their financial status.” 

All of these systemic problems facing tipped workers stem from perpetuating a two-tiered economic system rooted in discrimination based on race (and gender). Paying tipped workers only $2.13 an hour makes them dependent on the tips given at the discretion of their customers and leaves them poorer and less financially stable. 

Abolishing the subminimum-tipped wage would improve the lives of millions of workers and take a step toward rectifying decades of policy that has systematically disenfranchised black and brown communities.

Over 150 years ago, this country decided that slavery must end – it’s time we do the same for the subminimum-tipped wage. Every worker deserves to be able to support themselves and their families. No business model rooted in human suffering, racism, and exploitation should be allowed in our modern economy.

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