Mel Nichols, a 37-year-old bartender from Phoenix, Arizona, takes home between $30 and $50 an hour, including tips. But the uncertainty of how much she will earn each day is a constant source of stress.
“For every good day, there are three bad days,” said Nichols, who has worked in the service industry since she was a teenager. “You have no certainty when it comes to knowing how much you will earn.”
This uncertainty exists largely because federal labor law allows companies to pay workers who tip waiters, bartenders and bellhops less than the minimum wage, as long as customers’ tips make up the difference. Voters in Arizona and Massachusetts will decide in November whether continuing to allow employers to pass on some of their labor costs to consumers is good policy.
The ballot measures reflect an accelerating debate over the so-called subminimum wage, which advocates say is crucial to the sustainability of the service industry and critics say shifts labor costs from employers and leads to worker exploitation.
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The amount employees receive in tips varies by state. Fourteen states pay the federal minimum wage, which is just over $2 per hour for tipped workers and $7 per hour for non-tipped workers.
Arizona employers can pay their tipped employees $3 less per hour than other employees. Under current rates, this means tipped workers’ base wage is $11.35 per hour.
Voters will decide whether to approve a measure backed by state Republicans and the Arizona Restaurant Association to lower the minimum wage for tipped workers to 25% below the regular minimum wage, as long as their tipped wage is $2 above it Minimum wage is.
The hourly minimum wage in Arizona is currently $14.35 and increases annually based on inflation.
Massachusetts voters are being asked to repeal the tiered minimum wage system.
There, voters will decide on a measure to gradually augment the state’s tipped wage – currently $6.75 an hour – until it reaches the regular minimum wage by January 2029. The measure was proposed by One Fair Wage, a nonprofit organization that advocates for the abolition of the subminimum wage.
If voters approve the measure, the Bay State would join the seven states that currently have a uniform minimum wage. Michigan will soon join this group August State Supreme Court Ruling has initiated an exit from the sub-minimum wage.
“If you’re not making the money you should be making to pay your bills, it’s going to be tough for you,” said James Ford, a longtime hotel worker from Detroit. “(The verdict) makes me think we’re moving forward.”
Other states have wage measures on the ballot. In California, voters will decide whether they want to do this Increase the minimum hourly wage from $16 to $18 achieve the highest national minimum wage in the country by 2026. Measures in Alaska and Missouri would gradually raise the minimum wage to $15 an hour while mandating paid unwell leave.
In the last two years, Washington, DC and Chicago have also begun eliminating subminimum wages.
Employers must ensure that employees are paid the full minimum if they do not earn as much from tips. However, they do not always comply with federal labor law. One in 10 restaurants and bars nationwide investigated by the U.S. Department of Labor between 2010 and 2019 violated a provision of the Fair Labor Standards Act, resulting in the establishments paying $113.9 million in back wages.
The problem disproportionately affects women, who make up about 47% of the U.S. workforce but nearly 70% of those who work in top jobs, according to an AP analysis of U.S. Census data.
In Arizona, Republican Sen. JD Mesnard, the sponsor of Proposition 138, said the measure would be a win for both businesses and low-income earners.
“The employer is protected in the sense that they can maintain that lower base knowing that there are tips on top of that,” Mesnard said. “The tipped worker is guaranteed to earn more than minimum wage, which is more than they are guaranteed today.”
Nichols doesn’t support it.
“It would reduce my hourly wage, and anything that reduces my hourly wage is not something I want to get involved in,” she said. “I don’t think business owners need further reductions in labor costs.”
Proposition 138 was originally introduced in response to a ballot measure pushed by One Fair Wage that would create a uniform $18 minimum wage, but the group abandoned the effort after the restaurant association faced litigation over how it would be implemented Collected signatures, threatened.
Instead, One Fair Wage will focus on pushing through a wage augment in Parliament. Democratic Rep. Mariana Sandoval said she hopes her party can flip the Legislature in November, where Republicans hold a one-seat majority in both chambers.
After working for tips for more than 20 years, waitress Lindsay Ruck, who works at a restaurant at Phoenix Sky Harbor International Airport, said she has encountered her fair share of belligerent customers. But because her tips make up such a enormous portion of her salary — about $60 an hour — she’s hesitant to fight it.
For Ruck, a higher base salary – and not less – is required.
“I think there should be just one minimum wage, and then people should get tips on top of that,” Ruck said.
The National Restaurant Association and its state chapters are warning of shorter hours, lower employment rates and price increases on menu items if employers can’t rely on tips to pay their workers. That’s why Dan Piacquadio, co-owner of Harold’s Cave Creek Corral restaurant outside Phoenix, hopes voters pass Proposition 138.
“This is just a way to protect our current system that has been in place for 20 years and protect restaurant owners, keep restaurants affordable and most importantly ensure very good pay for all tipped workers,” Piacquadio said.
Between 2012 and 2019, the number of restaurants and the people employed at those restaurants grew faster in the seven states that have a uniform minimum wage than in the states that pay the federal minimum wage, according to labor economist Sylvia Allegretto.
“Here we are in a state that has a $16 minimum wage,” Allegretto said from Oakland, California, where she works at the left-leaning Center for Economic and Policy Research. “No minimum wage and we have a thriving restaurant industry.”
