A Fight for $15 local chapter made misleading claims on social media Tuesday by stating a national $15 minimum wage would phase out the subminimum wage tipped workers receive. This confusing part of the minimum wage debate often brings heated rhetoric about underpaid workers, but the facts paint a slightly different picture.
Federal law allows employers to compensate their tipped workers below the minimum wage at $2.13 an hour. The Fight for $15 chapter for Northern California claimed on social media that a proposal to raise the federal standard to $15 an hour would raise that subpar standard. The claim, however, overlooks a critical component of the law.
“The Raise the Wage Act will phase out subminimum wage for tipped workers, which has been frozen at $2.13,” the Fight for $15 local posted online.
— Fight For 15 Nor Cal (@NorCalFF15) May 30, 2017
The federal minimum wage is currently at $7.25 an hour for all nonexempt employees. The exception for tipped workers was added because they often make above the minimum wage once tips are included. Some tipped workers fail to bridge the difference, but federal law still protects against that possibility.
The Fight for $15 claim overlooks the fact federal law requires employers to make up the difference. An employee who was unable to get enough tips is still entitled to the federal minimum wage. Basically, it is still illegal for employers to pay their tipped workers below $7.25 an hour.
“Activists continually claim that the tipped wage is ‘subminimum,’ but this is completely misleading because employers are by law required to make up the difference in the rare instances that tips don’t,” Jordan Bruneau, senior research analyst at the conservative Employment Policies Institute, told InsideSources.
The Fight for $15 movement has been at the forefront of the minimum wage debate since it started in November 2012. It has held numerous protests and launched media campaigns in support of the policy. The movement is primarily supported by labor unions like the Service Employees International Union (SEIU).
Minimum wage advocates have cited tipped workers as an area of concern in the past. Employees that receive tips, however, often make above the minimum wage. Bureau of Labor Statistics (BLS) data reveals that the average tipped worker likely receives $13 an hour.
“In fact, average tipped employees earn over $13 an hour, with top earners making even more, when tips are taken into account,” Bruneau said. “In the real world, the tipping status quo works for employees, employers, and customers – and dramatic increases in the tipped wage would reduce these highly sought after job opportunities.”
Sen. Bernie Sanders and other leading progressive lawmakers introduced a bill last week aimed at increasing the federal minimum wage to $15 an hour. Sanders originally introduced the proposal in July 2015. The policy has since gained enough support to be included in the Democratic Party platform.
The Fight for $15 local made its claims based on a study from the progressive National Employment Law Project and Economic Policy Institute (EPI). The study found that the national $15 minimum wage proposal would phase out the subminimum wage for tipped workers. EPI tells InsideSources that fraud and abuse often interfere with the federal protections.
The EPI found in a separate study that 83.8 percent of the restaurants investigated between 2010 and 2012 violated the rule in some way or another. Some employers might not be aware of the law, while others purposely ignore it. Employees have the ability to report violations directly to the Department of Labor (DOL).
Another caveat is states that enact their own minimum wage above the federal standard. Those states that go above the federal requirement don’t always include the same protections. Employers in those states must still abide by the federal standard, but that could mean their tipped workers still get paid less than other minimum wage employees in the state.
The $15 minimum wage itself has become a point of contention among many economists. Some believe that the increase could help millions of low-wage workers rise above poverty. Those opposed warn it has the potential to hurt the very people it’s meant to help by limiting job opportunities through increased labor costs.
The Fight for $15 and its local affiliate did not respond to a request for comment by InsideSources.