If You Don’t Tip Well, Your Server Probably Isn’t Making Minimum Wage

Restaurant workers will soon get a raise in New York state, adding to gathering momentum for higher wages across the country.

(Photo: Getty Images)

Feb 24, 2015· 3 MIN READ
Willy Blackmore is TakePart’s Food editor.

After working part-time during college, Ashley Ogogor graduated last year and moved from Texas to New York City. She lives in Brooklyn now, near the G train, and says that despite its reputation for a high cost of living, the borough’s rents aren’t all that bad.

But even with the reasonable rent, unstable wages make it difficult for Ogogor to make ends meet. She has two jobs: one as a bartender and one in a restaurant. “I work 100 percent off of tips—100 percent. If no one comes in, I don’t get paid,” she said. “I had to ask some friends for help last month to help me out to make up the total. It becomes really stressful toward the end of the month.”

Things could get better for her, thanks to New York’s new Wage Board—but she’ll have to wait until New Year’s Eve. That’s when the minimum wage for tipped workers will be raised to $7.50 for the 400,000 workers in New York state who depend on gratuities. The boost, announced Tuesday, gives restaurant servers and others who rely on tips the ninth-highest tipped minimum wage in the country. Currently, tipped workers in New York earn $4.90, $5, or $5.65 an hour, depending on the industry. In 17 states, restaurants are allowed to pay workers just $2.13 an hour, relying on diners’ generosity to bring an employee’s take-home pay up to $7.25, the federal minimum wage.

The state minimum wage in New York will also increase on Dec. 31, from $8.75 to $9, leaving tipped workers earning 16 percent less than their counterparts. So in case you needed another reason to always tip at least 20 percent, New Yorkers tipping yesteryear’s standard of 15 percent will be leaving their servers short of the lowest legal pay. Employers are supposed to make up the difference, but that, labor advocates and restaurant workers say, happens about as often as a toddler coming in and not making a mess.

“The place that I work at currently, they don’t even follow the tipped minimum wage thing, where if you don’t make a certain amount, the employer has to compensate you for that,” Ogogor said of her bartending job. In her late 20s, Ogogor is a member of Restaurant Opportunities Center United, a worker advocacy group that has pushed to abolish the tipped minimum wage. She’s well aware that what her employer is doing is against the law, “but when people do come in, it’s decent pay,” she added.

Sylvia Allegretto spent seven years working as a server. During that time, “no one ever said—ever—‘Are you earning the minimum wage?’ ” she said. Today she’s an economist at the Institute for Research on Labor and Employment at the University of California, Berkeley, where she studies wage issues. Her research on how low wages affect women—who make up 70 percent of tipped restaurant workers—provided much of the academic underpinning for President Obama’s recent push for a higher federal minimum wage.

While Allegretto believes New York state’s raise “will certainly help,” she, too, believes the two-tiered wage system should be done away with altogether. It’s just too easy to underpay workers who rely on tips. “It’s a very hard law to implement,” she said, even among employers who want to do the right thing. “And for those who aren’t such good actors, it’s very easy to ignore it.”

The system, Allegretto said, seems to put the onus on workers to demand a raise when tips and wages don’t add up to the minimum wage. “Are you going to go to your boss and say, ‘Hey, you owe me money’? ” she asked.

That power balance puts tipped workers at a serious economic disadvantage. According to a White House report, 1 out of 10 tipped workers say they’re earning less than minimum wage. A study published last year by the Economic Policy Institute, which receives some of its funding from labor unions, found that the average tipped minimum wage is $10.22 an hour—far less than the overall average wage of $16.48. Tipped workers rely on public assistance programs such as food stamps at twice the rate of the general workforce, moreover, and are three times more likely than minimum-wage earners to live in poverty. And there are more of them than ever before: According to the EPI report, coauthored by Allegretto, the years 1990–2013 saw an 86 percent jump in the full-service restaurant sector. The private sector as a whole grew by 24 percent over the same period.

But with numbers comes influence, and as the job market catches up with the economic recovery, workers are gaining momentum in demanding higher wages. News of the New York wage boost follows Walmart’s announcement that workers at the world’s largest retailer will soon earn a base pay of $9 an hour. States and cities across the country are considering minimum wage increases, and fast-food workers continue to put pressure on their employers to increase wages.

Employers who pay low wages, Allegretto said, “know they aren’t able to keep these workers. They understand that once the economy turns the corner and isn’t so weak, they won’t work for such low wages. They’re going to have to compete more and more with a labor market that’s paying more.”

Ogogor recalled attending one of the Wage Board’s meetings, at which she shared her experience, and seeing the “corporate people” make their case for why the restaurant industry couldn’t afford a raise of any sort.

“I thought, wow, this isn’t going to happen. Because it’s all about money and power,” she remembered. “And while I felt like I gave a compelling speech, I thought it might have fell on deaf ears.”

Instead, Ogogor and 400,000 others in New York are a little bit closer to escaping what she calls the injustice of “having to work for so little and having to depend on a stranger in order to pay for their rent.”