The New York wage board on Friday recommended raising the minimum wage for tipped workers from the current $5 an hour to $7.50, or even higher in New York City. The measure is intended to help workers who rely on gratuities reach the state minimum of $8.75, which is set to increase to $9 at the end of 2015. While labor advocates see the recommendation as a positive step, restaurant owners warn that the increased wage will require hour cuts and price hikes. As a compromise, the board also recommended permitting businesses whose employees average notably higher tips to reduce base pay by $1 per hour. However, in the face of high poverty rates for tipped workers, a significant pay increase is necessary to improve quality of life for those who rely on this industry to survive.
While raising the pre-tip minimum wage would provide some relief, it should be seen as a mere band-aid to a broken institution. The concept of tipping in order to incentivize good service has been proven ineffective time and again. People tip more if a server leaves a smiley face on the check or gives their name, but tip less if they pay with cash or are in a large group. Tips can also depend on the season or if the economy is doing well. On top of that, according to a 2000 study, a customer’s judgment of the quality of service changed the tip by only 1 to 5 percent, a statistically insignificant number. This means that in a system meant to reward good service, workers are chronically underpaid despite quality.
The increase marks a stark contrast to the federal minimum cash wage of $2.13 an hour, and is actually higher than the federal combined cash and tip minimum wage, $7.25. The baseline of $2.13 has not been updated since 1991. While businesses in all states must guarantee enough tips to match the total federal minimum wage, it does not always happen. A Department of Labor Wage and Hour Division investigation found that 83.8 percent of restaurants had violations, implying that underpaying workers is a frequent transgression, although it does not constitute all violations. Considering the cost of living in Manhattan is more than twice the national average, the minimum wage for tipped workers in the city needs better protection.
Tipping often seems like a burden to university students on a tight budget, but it is critical to remember that servers are not yet making a living wage for New York City, and that many tipped workers are also trying to fund their education. While a wage increase could hurt some small restaurants, it could also help hundreds of thousands of workers reach a reasonable standard of living among New York City’s sky-high costs.
A version of this article appeared in the Tuesday, Feb. 3 print edition. Email the Editorial Board at [email protected]