Tipping Point for Minimum Wage Increases?

Elections Minimum Wage Policy Voting

           New Orleans      I get emails from a coalition called One Fair Wage, largely because our now shuttered Fair Grinds Coffeehouses were members of ROC, the Restaurant Opportunity Centers, which drives that alliance.  In a recent bulletin they were heralding a front-page article in the New York Times and taking credit for feeding the reporter the facts between the lines and providing some of the workers quoted who they identified as their activists.  The issue at hand was whether or not there is finally a move towards justice and equal treatment for tipped workers in the service industry, who can legally be paid a subminimum wage under the Fair Labor Standards Act, if, and it’s a critical “if”, their tips bring them over minimum wage.

Historically, this subminimum wage or tip credit, as it’s called, was won through fierce, but effective, lobbying by the National Restaurant Association and its members, back in distant memory when Congress and the administration regularly engaged in legislative battle to increase the minimum wage.  In 1966, the compromise on an increase at that time created a tip credit at 50% of the federal minimum wage.  Then pay was something like $1.65, if memory serves, when I was working in the oil fields offshore and thought $2 per hour was good pay, since I would make tons of overtime every 14-day stint working on the platform.  The fight in 1992 set the wage at $2.13 per hour, and even though the federal minimum wage has been stuck at $7.25 per hour for more than a dozen years now, the tip credit subminimum has been frozen effectively for 30-years, which is frankly horrifying to imagine and has been devastatingly effective in impoverishing tipped workers.

Advocates are hoping this is a tipping point with several ballot measures before voters in November, as the Times reports:

In the District of Columbia, a measure on the November ballot would ban the subminimum wage by 2027. A ballot proposal in Portland, Maine, would ban subminimum base pay and bring the regular minimum wage to $18 an hour over three years.  Employers in Michigan are bracing for increased expenses in February, when the state tipped minimum of $3.75 an hour is set to be discontinued and the regular state minimum wage will rise to $12 from $9.87.

Oh, how I wish it were true for numerous reasons, including the way that employer dissembling has been absorbed by way too many service workers, dividing the ability of service workers to organize collectively.  In truth it’s nothing more than a subsidy that workers provide to their employers, although often masked as a guarantee to consumers of better service.  There’s no rational way to justify this in public or labor policy, so its long life is all about political ideology and power.

Adding injury to insult, the provision is rarely enforced by a totally understaffed DOL Wage and Hour Division.  Workers and lawyers routinely report never being compensated for the times they work under the minimum.  When we were organizing HOTROC for hotel and hospitality workers in New Orleans, the stories of wage theft were commonplace.  My bulletin included this observation,

One Fair Wage President Saru Jayaraman shared with The New York Times that, for the first time in her 20 years of work on the issue, we are seeing more than half of all tipped workers report that they are regularly not earning enough in tips or wages to bring them to the minimum wage — which is why so many millions are leaving the industry!

If her statement, belling the cow, had ever been in the Times’ article, it didn’t survive long enough to make the online version.

There are eight states that don’t use the subminimum tip credit.  Michigan will make nine, and with more luck and hard work, maybe Maine will be the 10th, and the District will do right as well.  Unfortunately, that won’t end the tipped credit for most of the estimated five-million workers yoked to that wage.  The only thing that can change that is finally amending the FLSA to end the long-needed increase in the federal minimum wage and get rid of this employer subsidy at the same time.  Looking at the mid-term elections and the silence of the very pro-labor Biden administration in so many other areas, I wouldn’t bet on that happening anytime soon.