Tipped workers often face different minimum wages

Brian Tumulty | USA TODAY

WASHINGTON — Without tips to supplement her $6-an-hour income, Erin Leidy would often be unable to pay her bills.

Leidy delivers pizza and chicken wings for a restaurant in Ithaca, N.Y., where most of her tips come from students at Cornell University and Ithaca College.

"It obviously only works for a certain type of lifestyle — if you don't have kids or a mortgage,'' said Leidy, 35, a Cornell graduate who is single. "We have to pay for gas and insurance before we even start work.''

Advocates for low-wage workers say minimum-wage laws shortchange employees such as Leidy.

The federal minimum wage for tipped workers hasn't increased since 1991.

Tipped workers — who wait on tables in restaurants, serve guests at hotels, cut hair in salons and park cars at garages — also have been overlooked at the state level.

New York Gov. Andrew Cuomo hasn't acted on a recommendation the state Legislature made in the spring to convene a minimum wage board to hold hearings on tipped wages, according to Mark Dunlea, executive director of the Hunger Action Network of New York State.

"They are just stalling on it, and we're not happy,'' Dunlea said.

New York sets different hourly minimums for various types of tipped workers, including $4.90 an hour for workers at resort hotels, $5 for food service workers and $5.65 for service employees.

"The idea then is you are supposed to make tips on top of that to make the minimum wage that everyone else has,'' said Joann Lum with the National Mobilization Against Sweatshops based in Manhattan. "But as every bicycle delivery worker will tell you, you never know how much you are going to make in tips. On top of that, there are some restaurant owners who will take a portion of the tips, which is illegal, and they are left with even less."

Lum's group and other advocates for low-wage workers say New York should rescind the millions of dollars in tax credits it offers employers for hiring teenagers and use the savings to better enforce existing wage laws.

"We should be putting more money into enforcement of the law so that any kind of increase in the minimum wage is real,'' she said. "We have many delivery workers who make only $3 an hour or $4 an hour, which is under the current minimum wage for delivery workers.''

The news is better for workers who don't depend on tips.

On Jan. 1, 13 states will raise their minimum wage for those workers. New York's increase of 75 cents — to $8 an hour — will be the largest and will benefit an estimated 293,000 workers. Overall, an estimated 1.4 million workers in the 13 states will get a raise, according to the Economic Policy Institute, a liberal-leaning Washington think tank.

Washington state will have the highest minimum wage in the country when its 13-cent increase brings it to $9.32. Oregon won't be far behind, with a 15-cent increase to $9.10 an hour.

After the increases, 21 states and the District of Columbia will have an hourly minimum wage above the federal minimum of $7.25. And more than half the nation's low-wage employees will work in states with a minimum wage above the federal minimum, according to analyst David Cooper of the Economic Policy Institute.

"It shows a very broad and growing recognition that the federal minimum wage is far too low,'' Cooper said, predicting pressure will grow on Congress to increase the federal minimum wage.

Senate Democrats have promised to take up the issue early in 2014 with a bill that would raise the federal minimum wage to $10.10 and gradually raise the minimum wage for tipped workers from $2.13 per hour to 70% of the regular minimum wage. That would mean tipped workers would eventually earn a minimum $7.07 an hour.

The National Restaurant Association estimates only 5% of restaurant employees earn the minimum wage.

"Those who do are predominantly working part-time jobs and nearly half are teenagers,'' association spokeswoman Christin Fernandez said in an email. "The restaurant industry has been a bright spot during the economic recovery, but drastically higher wages in the past have led to higher prices and job losses in the restaurant industry — and that is a consequence our economy cannot afford right now."

Brian Tumulty writes for the Gannett Washington Bureau.

Where minimum wage is going up

On Jan. 1, the minimum wage in 13 states will increase to these amounts.

State New minimum wage Arizona $7.90 Colorado $8.00 Connecticut $8.70 Florida $7.93 Missouri $7.50 Montana $7.90 New Jersey $8.25 New York $8.00 Ohio $7.95 Oregon $9.10 Rhode Island $8.00 Vermont $8.73 Washington $9.32

Source: Society for Human Resource Management