Underpaid Workers + Lobbying + “Stagnant” = Winning Headline

by JT McGee

If it weren’t for its inflammatory headlines, there would be nothing of substance to read at the HuffingtonPost.

At least they write awesome headlines.

Anyway, I found a post on the minimum wage as it relates to servers. It’s titled “Minimum Wage For Restaurant Servers Remains Stagnant For 20 Years Under Industry Lobbying.”

You guessed it! Servers are underpaid, underappreciated, and just generally ignored by everyone who should agree they’re clearly in need of becoming a new protected class of people.

Sup in Serverville?

The article starts off with a typical human interest intro. We’re introduced to a 50-year old woman with 30 years’ experience in restaurants who works for $2.13 an hour. We’re told she doesn’t have health insurance, which I would agree is a very serious issue. And her employer doesn’t offer a 401k, which I find ridiculous because it costs (practically) nothing for a business to offer one. (I really think business owners should offer 401ks to employees, with or without match.)

The author writes that the woman featured in the article earns only $2.13 per hour before unleashing this awesome comment:

That miniscule wage is usually swallowed up by taxes, leaving her to live on her tips, which can fluctuate from week to week.

Nope, the bottom marginal tax bracket is not 100%. Her “miniscule wage” is swallowed up by taxes, which she obviously owes on her tips. I’m not really sure how this is relevant to discussion on total earnings, but we’ll continue…

Then we get into logical nothingness. Since 1991, the author notes, minimum wage for tipped employees has been set to the same minimum of $2.13 per hour. This means nothing as servers are paid the greatest of 1) hourly pay plus tips, 2) state or federal minimum wage from a combination of base pay, tips, and an additional contribution so employees earn at least the ordinary minimum wage.

Basically, servers are GUARANTEED minimum wage – not $2.13, but whatever the “normal” minimum wage is. So, whether or not the minimum wage for tipped employees has changed since 1991 is irrelevant insofar as tipped employees falling behind ordinary minimum wage workers, which is obviously this writers’ thesis given the title of the article.

Then we get to the pandering…

The restaurant industry, led by the National Restaurant Association — and its board chairman Herman Cain, who would later become the group’s president — successfully pressured lawmakers to have the minimum wage for tipped employees separated from the increase and kept at $2.13.

“I don’t think anyone knew at that point that it was a permanent deal,” says Jen Kern, minimum wage campaign coordinator at the National Employment Law Project, an advocacy group for low-wage workers. “As these things happen … they become ingrained. They succeeded in creating this second-class wage system, and people accepted it as the way it’s always been.”

A second class wage system. Hmm.

It should be repeated that no matter how much a server takes home in tips he or she will always get his or her $2.13 per hour, or higher if state law sets a higher minimum. Additionally, servers are guaranteed a floor of $7.55 per hour. Meaning a day without tips is a day that the restaurant owner coughs up $7.55 an hour for a servers’ work.

This does not sound very second class. In fact, I’d say that those who work in areas where tips are not expected are getting a very raw deal. Servers are guaranteed to earn at least minimum wage, and potentially far more. No other minimum wage workers have the same opportunity.

So servers get minimum plus potential for upside. Other minimum wage workers just get the minimum. So who exactly is second-class? It certainly isn’t the servers, who the National Employment Law Project represents.

Oh, there it is!

It isn’t until page 2 that the author concedes that wage stagnation is real across the whole minimum wage spectrum. Obviously, the minimum wage has not kept pace with inflation.

Fair enough, but that’s a far cry from the implications in the headline, which reads “Minimum Wage For Restaurant Servers Remains Stagnant For 20 Years Under Industry Lobbying.” The minimum hourly pay for restaurant servers has stagnated. However, severs are paid minimum wage, which has not stagnated over the course of 20 years unless you include the effects of inflation. And, even when you include inflation, people who make a flat minimum wage amount are in far worse shape than severs, who earn at least minimum wage.

Servers are likely to earn more than their coworkers…say, the “busboys” who actually earn a flat minimum wage. But it is servers, not the busboys – or anyone on a flat minimum wage – that is supposedly “second-class.”

The article ends with a brief discussion on raising minimum wage for servers. There are varying proposals for minimum wage increases for all minimum wage employees, as well as those for tip earners. One proposal calls for pushing the minimum wage to $9.80 and indexing it to inflation, tip earners will see their minimum wage go to $6.86 before being indexed to 70% of the minimum wage.

Personally, I find this a weak proposal. Let’s go full circle, set minimum wage for everyone to at least $40 per hour as we’ll all be wealthier. Yeah, that’s the answer.

Anyway, killer article by the Huffington Post. Second-class servers unite!

{ 7 comments… read them below or add one }

tom June 6, 2012 at 07:50

While I mostly agree with you, I do think the server minimum should be increased as minimum wage is increased.

As minimum wage increases and server wages stay the same, it gets more and more difficult to cross the federal or state minimum threshold and benefit from your tips.

Now, that said, if you can’t make an extra $5 an hour in tips, you are probably a terrible server or working at an unpopular restaurant. In both cases, it’s time for a change.


JT June 6, 2012 at 13:34

So we should raise the minimum server wage but no one else’s? Food costs have gone up, tips should have too.


Eric J. Nisall - DollarVersity June 6, 2012 at 08:50

Dude, it’s called sensationalism and that’s what most of the “news” media outlets are resorting to these days to grab people’s attention. That’s why I don’t watch the news or read the paper (well, aside from the fact that the paper down here has more grammatical and spelling errors than a 1st grader’s notebook). Everything seems to be about the headline, or “Exclusive coverage”, “You heard it here first”, Only one station” blah blah blah

They should have just inserted the opening of Reservoir Dogs where Steve Buscemi rails on and on about why he doesn’t tip.


JT June 6, 2012 at 13:35

Hmm, I need to read that. I’ll probably agree, even though I do tip.


Eric J. Nisall - DollarVersity June 7, 2012 at 21:48

You’ve never seen Reservoir Dogs? It’s one of the best movies ever. Here’s a YouTube clip of the scene I’m talking about


When you get a chance, you should watch the whole movie


PK June 6, 2012 at 10:31

“That miniscule wage is usually swallowed up by taxes, leaving her to live on her tips, which can fluctuate from week to week.” – Equally as accurate would be to say “her tips pay for her miniscule taxes”.

Why stop at $40 an hour? Why not increase the tax on earners over $200,000, not adjust for inflation, and increase the minimum wage to $100 an hour? That would go over well!


JT June 6, 2012 at 13:35

I like the way you think on both counts. Minimum wage to $100/hr!


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