The Tipped Minimum Wage Has Been Stuck for Nearly 30 Years

Economic Justice Resources 02.13.20

At the end of 2019, social media users reflected on the past decade and what had changed since 2009 — and many who care about economic justice in America noticed this: between 2009 and 2019, the federal minimum wage did not budge from its current $7.25 per hour level.

And while this observation is true, it obscured a fact that many working people in America know too well: the tipped minimum wage has been frozen at $2.13 per hour for nearly 30 years.

A year ago last week, our president and CEO Vanita Gupta testified before the House Education and Labor Committee in support of the Raise the Wage Act, which would gradually eliminate the tipped minimum wage and replace it with one fair wage. Of particular importance during Black History Month, her testimony made clear that the origins of the tipped minimum wage are deeply entwined in our nation’s struggles with racial and gender inequality. The custom of tipping itself, Gupta noted, is rooted in the history of slavery:

The practice of tipping escalated in the United States after the Civil War. Before the Civil War, tipping was largely frowned upon in the United States. But after its end, the practice of tipping proliferated. At that time, the restaurant and hospitality industry, exemplified by the Pullman Company, hired newly freed slaves without paying them base wages. The effect was to create a permanent servant class, for whom the responsibility of paying a wage was shifted from employers to customers. An early 20th century southern journalist recounted being uncomfortable tipping White working people. As he observed in 1902, “one expects…Negroes [to] take tips…it is a token of their inferiority. But to give money to a White man was embarrassing to me.”

Having to depend on tipping kept African Americans in an economically and socially subordinate position. By 1880, 43 percent of all working people employed in hotels and restaurants were Black. By 1900, 25 percent of all Black working people engaged in non-agricultural labor were employed as servants and waiters, including the vast majority of Black women. In the early 1900s, it is estimated that five million working people in the United States — more than 10 percent of the labor force — were in tip-taking occupations. The Fair Labor Standards Act established a bare minimum floor for tipped wages only in 1966. The federal tipped minimum wage has remained at $2.13 an hour since 1991 and it is long overdue for an adjustment. Failing to raise the tipped minimum wage disproportionately hurts people of color and women.

Today, the tipped minimum wage continues to hurt people of color and women. Studies have shown that many restaurant customers discriminate against African-American servers, consistently tipping them less than White servers, regardless of the quality of service. And tipped restaurant servers are highly dependent on customers for their income and on management for good shifts, creating a power imbalance that makes people working for tips — many of whom are women (and disproportionately women of color) — particularly vulnerable to sexual harassment.

Congress is finally taking this issue seriously. In July 2019, the House of Representatives passed the Raise the Wage Act following Gupta’s testimony and advocacy by the civil and human rights community — including the international Fight For $15 and a Union movement. The legislation, in addition to gradually raising the federal minimum wage to $15 per hour and eliminating the tipped minimum wage, would also ensure that working people with disabilities and young workers are paid at least the full minimum wage.

But like virtually all of the civil rights and economic justice legislation passed by the House in the 116th Congress, the Republican-led Senate has not yet considered this bill. It has, for 210 days, been languishing in Majority Leader McConnell’s legislative graveyard.

At the 1963 March on Washington for Jobs and Freedom, one of our founders, Black labor leader A. Philip Randolph, noted, “Nor is the goal of our civil rights revolution merely the passage of civil rights legislation. Yes, we want all public accommodations open to all citizens, but those accommodations will mean little to those who cannot afford to use them.”

The civil rights community has long fought for higher wages. We’re not stopping now.

To learn more, read Bare Minimum: Why We Need to Raise Wages for America’s Lowest-Paid Families — a 2018 report from our sister organization (The Leadership Conference Education Fund) and the Georgetown Center on Poverty and Inequality.

Bare Minimum makes a case for raising wages that is grounded in history, economics, and movements across the country, but particularly in the lived experience of our nation’s lowest-paid working people. The report includes the stories of eight working people from across the country trying to make ends meet on incomes just above the federal minimum wage.