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10 Truths About Tipped Workers You Might Not Know

A new report from the Economic Policy Institute (EPI) takes a look at a variety of myths about tipped workers and the truths behind those myths. It has been 23 years since the federal minimum wage for tipped workers, currently $2.13 an hour, was last raised. Meanwhile, the federal minimum wage for other workers, which also has lost much of its value in recent years because of wage stagnation, is set at $7.25 an hour. Here are 10 truths about tipped workers and the tipped minimum wage from the EPI report:

1. In 1996, when the two federal minimum wage rates were separated from each other, the tipped minimum wage was 50% of the regular minimum wage. Now it stands at a record-low 29.4% of the regular minimum wage.

2. Customers subsidize the $5.12 difference between the two minimum wage rates, with customers paying more than twice the wage employers pay ON TOP of the actual costs of their meal (or whatever other service is provided).

3. More than 60% of tipped workers are employed in the food service industry, which is one of the fastest growing sectors in the U.S. economy, with a growth of 86% since 1990 (compared to 24% for the overall private sector), meaning the negative effects of a stagnant tipped wage are growing.

4. Two-thirds of tipped workers are women.

5. The majority of tipped workers are at least 25 years old; 25% are at least 40.

6. The median hourly wage for tipped workers (including tips) is $10.22; it's $16.48 for all workers.

7. Tipped workers are twice as likely to live in poverty, with a poverty rate of 12.8%, compared to a 6.5% poverty rate for non-tipped workers.

8. Poverty rates for tipped workers are significantly lower for tipped workers in states where they receive the full minimum wage rate.

9. Nearly half (46%) of tipped workers rely on public benefits, compared to 35.5% of non-tipped workers, meaning the taxpayers are also subsidizing these workers.

10. A higher minimum tipped wage doesn't hurt job growth: The seven states where tipped workers receive the full regular minimum wage have seen stronger tipped wage job growth since 1995 than in the states where the tipped minimum wage is left.

In addition to the above video, EPI has produced three other videos to explain the problems with tipped workers and a series of shareable graphics.

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