We have been talking a lot about the importance of the minimum wage here at the CAHS Blog. Past posts have tackled the issue of who really earns low wages (parents, not just teens), whether a raise hurts business (it doesn't!), and how taxpayers subsidize big corporations when companies fail to pay workers a living wage.
Today we wanted to discuss another group of low wage workers -- tipped workers. According to state and federal law, if an employee receives more than $30 a month in tips their employer is allowed to pay them an amount lower than the minimum wage. So in 2014, CT's "full" minimum wage is $8.70. Employers who hire bartenders are allowed to count 11% of tips received as part of that bartender's wage, and therefore are only required to pay these workers $7.34 an hour. The wage for hotel workers and restaurant employees is even lower -- state law allows an employer to count tips as 31% of these employees' wages, and therefore these workers only receive $5.69 an hour.
Seven states have decided to abandon this complicated "tip credit" system entirely and require full minimum wage payment for ALL workers. Restaurant Opportunities Centers, an amazing organization with a wealth of resources, has put out a number of papers discussing the problem with this tip credit system. ROC has shown that employees rarely recover wages when they receive insufficient tips (as required by law), that the instability of a tip wages means a greater reliance on government programs, and that a disproportionate number of women hold service jobs and suffer as a result.
Here in Connecticut the tip credit issue is about to get even more complicated. When our state passed a minimum wage increase in 2013, which raised the base wage to $9.00 effective January 1, 2015, the law modified the tip credit to prevent an increase in the tipped minimum wage. This means servers will stay at $5.69 an hour. While the rest of our state's workers get a raise, these vulnerable employees remain subject to the same uncertainty and low earnings.
Fortunately, the Governor's new minimum wage bill, Senate Bill 32, has been written to allow servers and bartenders to receive a higher wage as the full minimum wage increases. We want to encourage advocates and legislators to support this parity, and to fight on behalf of our state's lowest earners, as we continue the campaign to raise the minimum wage to $10.10.
Additionally, CAHS has created a one-page fact sheet that dives into the tipped minimum wage a little further. We encourage you to share broadly and to reach out if you have any questions.