Sub-Wage Little Help

A new report by the Economic Policy Institute and the Center on Wage and Employment Dynamics evaluates the subminimum wage for tipped workers—72.9 percent of whom are women. The federal tip credit allows employers to pay tipped workers just $2.13 per hour as long as this wage, combined with the workers’ tips, reaches the federal minimum wage of $7.25 per hour. But most tipped workers are unaware of this requirement, and the Department of Labor found that it was frequently ignored by employers. Tipped workers are more than twice as likely to fall below federal poverty lines, and women tipped workers earn on average $0.50 less per hour than male tipped workers. Waitresses earned on average $0.83 per hour less than waiters. The report’s authors endorse the WAGES Act, which would incrementally increase the minimum wages for tipped employees over the next three years to 70 percent of the regular minimum wage.

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