There is disagreement among economists, business leaders, and labor activists regarding whether the tipped wage should be higher and whether tipped employees should receive a different wage than non-tipped workers. Proponents of a different wage for tipped and non-tipped workers point out that the law guarantees tipped employees the same minimum wage that other workers receive. They argue that because restaurants have very thin margins, an increase in the minimum wage could lead to higher prices for consumers and fewer jobs available for potential employees. A 2011 study suggested that 2011's WAGE Act, which would have raised the minimum wage for all tipped employees in The United States, would have led to a cumulative decrease in 11 million hours worked by tipped employees. The same research found that each 10% increase in the cash wage paid to tipped employees tends to decrease hours worked by the affected employees by 5%. A 2012 study found that eliminating the tip credit tends to decrease employment in the U.S. restaurant industry. Others express fear that eliminating the tip credit would result in fewer tips. Some argue that eliminating the tip credit exacerbates income inequality by benefiting the more well-paid servers at the expense of the non-tipped back-of-the-house staff. In Massachusetts, where the tipped minimum wage is $2.63, the average income of tipped waiters and waitresses is $12.88. In Washington State, where the minimum wage for wait staff is $9.47, the average wage is $13.25 after gratuity. Of the five states where wait staff earn the highest average income per hour, four have a tipped minimum wage below the non-tipped minimum wage. It is important to note, however, that these figures relate only to tips reported to the government for taxes, and that real tips may be significantly higher. Opponents of the current minimum wage for tipped employees point out that the tipped minimum wage has remained stagnant since 1991 despite increases in the cost of living and in the standard minimum wage over that same time. The minimum wage for tipped employees represented 50% of the standard minimum wage in 1968. By 2010, it was 29% of the non-tipped minimum wage. They also contend that, while employers are required to ensure that all employees receive the minimum wage after tips, the current system makes it possible for some employers to illegally coerce employees to over-report tips or dock their pay so that their final income is below the minimum wage. Others argue that because tips often represent 50–90% of a waiter's income, workers’ incomes are unfairly vulnerable to fluctuations in customers’ generosity.
Advocates One such advocate is called
Restaurant Opportunities Centers United (ROCUnited). This group is a non-profit organization who stands for those within the restaurant industry and calls for changes to be made. They talk about the demographics within the restaurant industry such as 54% of those who work in the restaurant industry are women Employees have no control over how much they are tipped, as that is based on the customer's discretion. This research also shows the breakdown of who and what job position is in the category for making less than minimum wage and those that are making minimum wage. This group believes that if minimum wage were to increase for every employee, then restaurants would be forced to raise the prices on their menu which could lead to restaurant closure. The NRA argues about how the increase of minimum wage would affect those restaurants after the ending of the pandemic. Most restaurants in a study by the NRA stated that they would not be able to financially recover after the hit of the pandemic and the struggles that they already had to deal with because of the lockdowns. Employee benefits would also be in jeopardy of being cut and changed. Research from the NRA regarding the Federal Reserve Bank in Minneapolis states that in 2018 and 2019, full-service and limited-service restaurant jobs declined by 12% and 18%. Also, that worker earnings decreased 8% and 11% at full-service and limited service restaurants. This economic impact is within a year or two of a law being passed that increased the minimum wage in 2017. Minnesota, where Minneapolis is located, is one of few states that currently has state minimum wage as the standard for tipped restaurant workers. ==See also==