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Monday, February 28, 2011

Tipped employees minimum wages frozen since 1996, is it time for a raise?

Waitresses at the counter at Elmo's Diner in D...Image via Wikipedia
The Federal Minimum Wage of @2.65 for
tipped professional employees have not
 increased since 1996, even though it should
be  50% of the regular min. wage of $7.25 per

Since the mid 1990’s professional restaurant servers and other tipped workers in Michigan have earn $2.65 per hour. This a bit higher than the national sub-minimum wage of $2.13 per hour, but much less than Michigan's minimum wage of $7.40 per hour.

The reasoning behind this difference in pay is that the tips received by employees such as servers, in addition to the sub-minimum wage, should equal the minimum wage. 

Unfortunately, during these difficult economic times when consumers are watching dollars, servers and other tipped employees might not receive enough earned income, to earn the hourly minimum. With this, many in tipped professions and other believe it is time for these workers to receive a raise.

For the history surrounding the minimum wage for tipped workers, the Minimum Wage Increase Act of 1996 signed into law by President Clinton, increased the federal minimum wage from $4.25 to $4.75 an hour. The same act for tipped employees, froze the tipped minimum wage at $2.13 per hour.

“The $2.13 rate, originally instituted in 1991, has now been in place for about two decades. In 1996 and 2007, Congress passed legislation increasing the minimum wage but, not the tipped minimum wage. Inflation has eroded the purchasing power of the tipped minimum wage; as a result, the real value of the tipped minimum wage is at its lowest level since it was established in 1966”, according to the Economic Policy Institute (EPI).

Back in 1996, when sub-minimum wage was frozen at its current level, it was 50 percent of minimum wage. Today, it's just 29.4 percent of minimum wage.

Today, there are approximately 3.3 million tipped workers in the United States. With many workers falling back into tipped professions to pay bills in the current unemployment and underemployment crisis, numbers have grown steadily.

According to the EPI report, tipped workers are more than twice as likely (with waiters/waiteress almost three times as likely) to fall under the federal poverty line.

"With regard to poverty, the benefits of a high minimum wage for tipped workers are clear: poverty rates of tipped workers and waiters fall steadily as the tipped minimum wage increases."

In an attempt to provide a solution to this inequality, a bill has been introduced by Rep. Donna Edwards (D) of Maryland that would increase the federal sub-minimum wage from $2.13 to $3.75 this year and $5.50 by 2013.

The legislation is endorsed by Restaurant Opportunities Centers United—a national restaurant workers’ organization. For the bill to have the greatest chance of success, a number of supporters in the Republican lead U.S. House of Representatives would have to vote for the measure. It is questionable with the GOP demands to cut the Federal Budget and history of opposing any minimum wage increase, if the legislation would pass the body.

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