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Tipped Over the Edge: New Report Reveals Wage Inequality in Restaurant Industry

by Jeff Hayes

On February 13, 2012, the Restaurant Opportunities Centers United (ROC-United) with IWPR and other national women’s organizations released a new report, Tipped Over the Edge: Gender Inequity in the Restaurant Industry. The date (2/13) demarcates the level of the subminimum wage ($2.13) that has not increased in more than 20 years. At the briefing, hosted by Rep. Donna Edwards, a restaurant employee and an employer both spoke on the need and possibilities for improved wages and working conditions in the restaurant industry. They also discussed the benefits more livable wages could bring for both workers and business owners—such as good worker morale and teamwork, as well as engendering reduced employee turnover and an experienced workforce.


The report describes how the restaurant industry employs more than 10 million workers in one of the largest and fastest-growing sectors of the United States economy, while also offering some of the nation’s lowest-wage jobs with little access to benefits and career advancement. The majority of workers in this huge and growing sector are women. For example, women comprise 71 percent of servers, the largest group of all tipped workers. According to the report, restaurant servers experience almost three times the poverty rate of the workforce as a whole and rely on food stamps at nearly double the rate of the general population.


Employers are allowed by law to pay $2.13 per hour to tipped employees as long as tips make up the difference between $2.13 and the minimum wage for all other workers, currently at $7.25. Survey and interview data gathered by ROC-United indicate, however, that employers frequently ignore this requirement—leaving workers without even minimum wage earnings at the end of the day. The federal subminimum wage for tipped workers has been frozen at $2.13 since 1991, losing 40 percent of its value in real terms.


To meet the needs of low-wage workers in the restaurant industry (and other tipped workers) Rep. Edwards has introduced the Working for Adequate Gains for Employment in Services Act (or “WAGES Act,” H.R. 631) in the House of Representatives. The WAGES Act includes step increases in the subminimum wage and links it to 70 percent of the minimum wage (or at least $5.50) within two years. Similarly, Senator Harkin has included minimum wage improvements in the Rebuild America Act (S. 2252) introduced at the end of March. Among many others actions, the Senate bill would raise the tipped minimum wage to $6.85 in steps over 5 years.


The Restaurant Opportunities Center was founded in New York following the tragedy of September 11, 2001 to help the families of restaurant workers killed and the displaced workers who survived, as well as workers throughout the city who suffered from the downturn in restaurant business after 9/11. ROC-United has more than 8,000 members across eight regional offices. In addition to advocating for improved wages for restaurant workers, they work with employers and legislators to improve the working conditions and advancement opportunities for restaurant workers. For example, they support a national standard that allows workers to earn at least seven paid sick days each year to be used to recover from routine illness, access preventive care, or provide care for a sick family member. They also seek job-training that would improve the advancement opportunities for workers and reduce sexual harassment in the workplace.

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