Food for Thought: Subminimum Wage and the Restaurant Industry

Food for thought: In eleven states, servers, bartenders, and other “tipped employees” are paid just $2.13 an hour – the current federal subminimum wage. For these employees, earning a living is a gamble; if it’s a slow shift, going to work can cost more than what is earned. And according to a recent study by the Restaurant Opportunities Centers United (ROC), women in the restaurant industry are faced with the harsh reality of surviving on subminimum wage more often than their male counterparts.  (“Tipped over the Edge – Gender Inequality in the restaurant industry” )

Employers are allowed by law to pay $2.13 per hour to tipped employees so long as tips make up the difference between $2.13 and $7.25. However, ROC contends that this requirement is frequently ignored by employers and thus servers and other tipped employees are earning well-below minimum wage standards.

As ROC notes, the restaurant industry is unique in the sense that it is one of the only sectors where predominately male positions have a different minimum wage than predominately female positions. Non-tipped workers, who are 52 percent male, have a federal minimum wage of $7.25. Women meanwhile, comprise 66 percent of tipped employees and are paid the $2.13 subminimum wage. Servers, 71 percent of whom are female, rely on food stamps at almost double the rate of the general population.  Meanwhile chef positions, which are among the highest paid in the restaurant industry, are heavily staffed with men. According to the Bureau of Labor Statistics, only 19% of chefs were women in 2010.

Although gender inequalities in earnings exists in several industries, the gap present in the restaurant industry is particularly troublesome because in light of the low wages, the gap represents the difference between those earning below the poverty line and those who are at, or above the line.

The burden faced by low-earning tipped employees is further aggravated by a lack of benefits offered by their employers.  According to ROC, a survey of over 4,300 restaurant workers from across the country revealed that 90 percent of workers lack any paid sick days, and 90 percent do not receive health insurance through their employers.

The federal subminimum wage for tipped workers has not changed since 1991 and it is long overdue for an increase. Tipped-employees need to be able to count on more than just good luck when it comes to working in a restaurant, and employers should be the ones providing some additional financial security for them. In the meantime, be kind to your server and never order more than you can afford (or care) to tip on. After all, would you work for $2.13 an hour?