Keep churning the water

Minimum federal hourly pay for tipped workers is low, just $2.13 an hour. But of course that is not the full story.

Most states have a much higher minimum. In addition, the real minimum wage is the federal $7.25 or the applicable state minimum for all workers. If the $2.13 plus tips doesn’t equal the regular minimum, the employer must pay the difference. So the $2.13 is pretty irrelevant.

That doesn’t stop those with an agenda from pushing their cause by misleading people. “Tips to survive?” A tad dramatic don’t you think. Who says depending on tips is that bad – except perhaps if you work in a really cheap restaurant with low prices.

As a result, these workers depend almost entirely on tips to survive—while their employers pay rock-bottom prices for labor.

Economic Policy Institute

Rock bottom prices for labor? Apparently so does Congress🤣

Another example of generalization presented as the norm. Many restaurants already pay above the federal minimum wage – plus tips. Server income will vary greatly by type of restaurant, especially menu prices, customer volume, etc.

Hey a servers job is no picnic. I’ve never done it but observing how some customers and employers treat them tells me it’s quite stressful and demanding. Some servers look very unhappy, others have a very different attitude.

The U.S. system of tipping is quite unique. Other countries don’t tip or build a service charge into your bill and have a minimum wage several times the U.S. There is good reason for that. Many European countries rely heavily on payroll and other taxes to support their social structure and cash tips tend to go unreported. The IRS estimates 84% of tips are not reported as taxable income.

I’m just guessing, but I suspect a restaurant knows that servers are the face of their establishment and they want them happy and customer oriented. They don’t want high turnover. To me that means fairly paid. Your local greasy spoon may be the exception.

I wonder if all servers would like to give up tips for a higher hourly wage? 🤑

In any case I always tip 20% and if the server is pleasant and efficient often more.

7 comments

  1. I am a 20% tipper but I hate the fact that I got to tip in order for the worker to make minimum wage. I also try to tip in cash so that the employer doesn’t take the money. I know that most places that I would go probably pay closer to the minimum wage. However, I want my tips to go for great service not for making up the difference to make minimum wage.

    I suspect that is this part of the reason that the IRS wanted to know about all transactions over $600 before they raised the proposal to $10k. What most workers who work under the table or work in cash don’t know is that even though they are saving themselves from paying taxes (if they do not report their earning to the IRS) that they are robbing themselves of the chance to earn a qualifying quarter for Social Security and Medicare purposes. Now I don’t where or what states follow the federal minimum wage and allow waitresses to be paid only $2.13/hr but at that reported rate if you work 40 hours for 13 weeks, you still will not make a qualifying quarter; unless their employer is taxing them at federal rate $7.25/hr whether or not they actually got that much money.

    I have also been in some very fine restaurants that just by what they charge for the meal and the drinks, the waiters and waitresses are making some very large tips even if you were cheap and tip10%.

    I am not a big fan of minimum wage. I can argue both sides of the issue. But that is for another blog. I also have some tipping stories to tell for another blog that makes press the case for no tips.

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    1. Not sure, but even if it’s added to credit card, I’m not sure if or how it may be reported. I always tip in cash though because some employers are unscrupulous in given the employee the money.

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  2. Taxes explains the issue. The IRS estimate of unreported, and therefore tax free income perhaps explains why of all those lamenting the plight of the servers, none of them are servers. I’m with you on tipping generously.

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