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Raising the Tipped Minimum Wage to Reduce Poverty for Women and Families

By Alex Berryhill, IWPR Research Intern

Two women at coffee shopWomen make up over half of the workforce in food preparation and serving related occupations in the restaurant industry – one of the fastest growing sectors today in terms of job creation. According to a recent report released by the Restaurant Opportunities Center (ROC) United, with research from the Institute for Women’s Policy Research and several other organizations, restaurant workers, and especially women in the industry, often face economic insecurity due to low wages.

These workers’ struggles illuminate the need to increase the minimum wage (currently $7.25) and the tipped minimum wage (currently $2.13). A full-time minimum wage position only provides an annual income of about $15,080. According to the Economic Policy Institute, that’s below the poverty line for a family of three, and just barely over the poverty line for a family of two.

Studies show that raising the federal minimum wage—which has not changed since 2009— to just $10.10 per hour would pull more than half of the nation’s working poor out of poverty. About 20 percent of those living under the poverty line actually hold full-time jobs.

These Americans live in poverty not because they are unemployed or unemployable, but because their jobs do not offer adequate benefits and wages to support a family —issues that are particularly prevalent in the restaurant industry.

The federal tipped minimum wage has stagnated at $2.13 an hour since 1991. During this time, inflation has increased the prices paid by wage workers for goods and services approximately 70 percent, according to the Bureau of Labor Statistics (CPI-W).

An employer is required by law to fill the gap when workers do not earn the minimum wage salary on the job between tips and the tipped minimum wage. But, employers frequently ignore this requirement and allow their tipped workers to earn less than $7.25 per hour, according to the ROC-United report. Among tipped workers surveyed for the report, 13.2 percent told of having their tips misappropriated by employers (for example, having the tips shared with managers).

“If you’re in the restaurant industry in a waitress role, then you depend on tips. If don’t get any tips, you can’t pay the bills,” said one woman surveyed in the ROC-United report.  “I make, on average, $90 a week, $125 on a good week. But, that’s not even making daycare.”

The burden of today’s outdated labor policies falls disproportionately upon women. Women make up 71 percent of the restaurant industry’s servers; 74 percent of tipped restaurant workers earning at or below the minimum wage; and 78 percent of tipped restaurant workers living in poverty.

Increasing the tipped and federal minimum wage would disproportionately benefit women. Research by IWPR in another recent ROC-United report shows that raising the tipped minimum wage to $5.08 would reduce the gender wage gap within the industry by a fifth.  Among the workers who would be lifted out of poverty by increasing the minimum wage to $10.10, about 54 percent would be women. About 82 percent of tipped restaurant workers who would be lifted out of poverty with an increase to the tipped minimum wage would be women.

The challenge of low wages is compounded by the lack of benefits in the restaurant industry – problems that particularly affect workers’ families. There are two million restaurant workers who are mothers, half of whom are single parents. Of those mothers surveyed in the report, the average spent about 35 percent of their weekly wages on child care. Over 90 percent did not receive paid sick days for themselves or their sick children, and about half reported losing much-needed income, and sometimes even their job, as a result of taking time off to care for a sick child.

Without benefits, nor scheduling flexibility, and often an income below the already low minimum wage,   restaurant workers are struggling. Today’s outdated labor policies hurt millions of families and hurt America’s future.

Alex Berryhill is a Research Intern at the Institute for Women’s Policy Research. She is presently a junior at the University of California, Berkeley, majoring in Political Economy and minoring in Public Policy.

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