Debate Over the Tipped Minimum Wage

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Debate Over the Tipped Minimum Wage

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The recent debate about whether to raise the federal minimum wage has overshadowed the debate about whether the tipped minimum wage also should be increased, according to a recent story on NPR.

Since 1991, the federal tipped minimum wage for tipped employees has been $2.13.  The tips received by the employees, along with the tipped minimum wage, should add up to the federal minimum wage, which is currently $7.25 an hour.  (In New York, the tipped minimum wage is $5.00 an hour, and the minimum wage is $8.00 an hour).  Under the FLSA, if a tipped employee does not make enough tips to cover the difference between the federal minimum wage for non-tipped employees and the tipped minimum wage, then the employer must pay the difference.  But, tipped employees often do not receive that compensation and, according to a White House report, these employees are twice as likely than other employees to experience poverty.  Both state and federal legislatures have attempted to address this issue.  A Democratic Senate bill, which was introduced last year but failed to pass, would have increased the federal minimum wage to $10.10 per hour and would have made the tipped minimum wage 70% of that increased minimum wage.  States also have different tipped minimum wage rates – or none at all – and some argue that wage levels should be set by state government rather than by the federal government.  Proponents of passing an increased tipped minimum wage point to states with higher minimum wage – such as the state of Washington – as examples of increased job growth.  Opponents, however, argue that eliminating or increasing the tipped minimum wage would cost thousands of entry-level restaurant jobs.

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