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Restaurant, hotel workers neglected in minimum wage fix

State-level initiatives in New York and Rhode Island highlight the labor conditions of America's millions of tipped workers.
/ Source: ED Show

State-level initiatives in New York and Rhode Island highlight the labor conditions of America's millions of tipped workers.

New York state isn’t waiting for Congress to raise the federal minimum wage. Instead, lawmakers in Albany have crafted a deal that would raise the state’s minimum wage from $7.25 to $9 an hour. But not everybody will be getting a raise.

Under the current deal, approved by Democratic Gov. Andrew Cuomo but not yet signed into law, workers who rely on tips for a substantial portion of  their income will maintain an existing significantly lower minimum wage.

New York’s tipped employees—defined [PDF] by the U.S. Labor Department as those workers who make more than $30 per month in tips—earn a base minimum wage of between $4.90 and $5.65 per hour, depending on which industry they work in. The federal minimum wage for tipped employees is $2.13 an hour, with tips expected to bring them up to at least $7.25.

“Restaurant workers are the largest group of full-time workers living in poverty and they are being completely left out of this increase,”  said Saru Jayaraman, co-director of the restaurant workers coalition ROC United, in a statement. “We’re glad that New York state is taking action to improve conditions for low-wage workers by increasing the minimum wage, but excluding tipped workers from the proposed plan is a huge oversight and ignores the needs of millions of New York workers.”

On Wednesday, ROC United staged a “Twitter rally” in it encouraged sympathetic parties to tweet their support for a higher tipped minimum wage at various New York politicians.

The fate of workers who earn tips in New York could have national implications as the conversation around the minimum wage continues at the federal level.

ROC United has campaigned for a higher minimum wage for tipped workers on the federal level. Such an increase would affect millions of American workers. As of 2010, the Bureau of Labor Statistics estimates that some 2.3 million Americans were employed as waiters and waitresses alone–and about 73% of tipped workers are women, according to a 2011 report [PDF] by the Economic Policy Institute.

As the Economic Policy Institute points out, “Many tipped workers are unaware that their tips and hourly wages must add up to at least the minimum wage. At the same time, employers are unlikely to ensure that their workers are paid appropriately—it is up to the employees to know and understand this law.”

Tipped employees are also exceedingly vulnerable to wage theft, according to the National Employment Law Project (NELP). In a 2009 survey [PDF] of 4,387 low-wage workers, NELP found that 30% of tipped workers “were not paid the tipped worker minimum wage,” and 12% “experienced tip stealing by their employer or supervisor.”

Elsewhere in the Northeast, Rhode Island might soon pass legislation aimed at boosting tipped workers’ incomes. Democrats in both chambers of the state legislature have proposed laws which would ban employers from appropriating any of their workers’ tips. Currently, employers are free to deduct tip money from their workers’ incomes, so long as the workers continue to earn a legal minimum wage.

Joey DeFrancesco, a former hotel worker who now runs the worker advocacy site Joey Quits, explained why he is campaigning for the law in a statement.

“I experienced tip theft firsthand while working at the Renaissance Providence Hotel,” he said. “Through deceptive automatic service charges and by including themselves in our tip pool, the hotel and our supervisors were taking more than half the tip money customers thought they were giving us. I tried to bring the case to the US Department of Labor, but I discovered tip stealing is not covered by federal law. Rhode Island needs to end this terrible practice that’s robbing much needed money from our state’s lowest paid workers.”

The federal minimum wage increase proposed by Congressman Joe Kennedy, D-Mass., would increase the base wage for tipped employees from $2.13 to $5.08 per hour. Similar proposals in Missouri and New Mexico would also increase the tipped minimum wage, though a proposal to do the same in Maryland recently failed.