Minimum-wage increase excludes tipped workers

McClatchy Newspapers

WASHINGTON — Friday’s increase in the federal minimum wage left Leanne Foti feeling a little hollow.

A single mother of two, Foti works as a waitress at the Bridgewater Diner in Bridgewater, N.J. So her base pay of $2.13 per hour didn’t budge Friday when the federal minimum wage went from $6.55 to $7.25 an hour.

Foti, 34, is one of roughly 146,000 Americans — many of them restaurant, hotel, car wash and nail salon employees — who are paid mainly through customer tips and therefore earn a lower federal minimum wage, $2.13 an hour.

That federal floor wage for tipped workers has been stuck at $2.13 hourly for 18 years in many states. So Foti didn’t take it well when the standard minimum wage increased for the third time in three years Friday.

“It’s completely and totally unfair,” she said. “These other people that make the [$7.25 an hour] minimum wage, they know they’re gonna get their money, but we got to kick butt to get good tips, and we have to put up with a lot of abuse from customers. If you don’t fill their coffee cups fast enough, they’re not gonna leave anything. I think we should be treated like any other worker in New Jersey and America.”

So do the folks at the National Employment Law Project, a pro-labor advocacy group in New York. They’ve just released a report, “Restoring the Minimum Wage for America’s Tipped Workers,” that calls for increasing the $2.13 rate and improving protections against “tip stealing” by employers and managers.

Congress established the tipped-worker minimum wage in 1966 as a fixed percentage of the full minimum wage, but it dropped the provision that linked the two rates in 1996.

Thirty-two states and the District of Columbia already have raised their minimum wages for tipped workers above the federal rate, and in 2010, 22 of these states will pay tipped workers at least 60 percent of the full minimum wage.

However, the 18 other states, including New Jersey, still pay tipped workers the $2.13 hourly rate.

Even with their frozen base wage, most tipped workers still earn several dollars more than the standard minimum wage when their tips are included. Further, if tips alone don’t bring their earnings to the standard minimum-wage level, employers, by law, must make up the difference.

In an economic recession, however, when business slows, tips can fluctuate wildly and make it hard for workers such as Foti to maintain their budgets.

Before the recession, Foti typically cleared $150 in tips during a six-hour shift on a decent night, she said. Now, that same shift nets her $40 to $60 in tips.

“People that used to leave $15 on a $30 check are leaving $5. Everything was going down before the recession started, and it’s gotten 100 times worse ever since.”