For thousands of low-paid tipped workers in New York, the New Year is not likely to feel any different than the last.
When lawmakers in Albany approved a measure last March to gradually raise the state's minimum wage to $9 per hour, industry lobbyists demanded a last-minute carve-out to allow restaurant and hotel employers to continue paying tipped workers a base wage of just $5 per hour.
As a result, when the first step of this minimum wage increase — a 75-cent boost in the minimum wage to $8 per hour — took effect on New Year's Day, more than 165,000 low-paid workers across the state received a long-overdue raise, but thousands of tipped workers in the restaurant and hotel industry remained stuck earning a base wage of only $5 per hour.
From a policy standpoint, it's hard to justify letting industry lobbyists write themselves an exception to a minimum wage increase. While employers of tipped workers are required to make up the difference if workers do not receive enough in tips to bring them to the full minimum wage, a low base wage of $5 per hour means that the hourly earnings of tipped workers remain made up substantially of tips alone — leaving them vulnerable to sudden pay drops as tips vary depending on broader economic trends, from season to season, and from shift to shift.
Gov. Andrew Cuomo can correct this oversight by appointing an independent "wage board" with the authority to establish a higher base wage rate for tipped restaurant and hotel workers. For the sake of thousands of low-paid tipped workers across the state, the governor should appoint this board quickly and ensure that it gives tipped workers a significant raise.
Contrary to common misperception, tipped workers remain an overwhelmingly low-paid workforce.
While it's true that a small number of waiters and waitresses at high-end Manhattan restaurants earn high incomes, the bulk of the state's tipped workers are like the waitress at the Applebee's in Albany or at the diner in Queens who, even after tips, average just over $9 an hour — which, according the U.S. Census Bureau, is the median hourly wage for waiters and waitresses in New York.
As a result of these low wages, many tipped workers must rely on public safety net programs in order to afford the basics. Across the country, tipped workers are more than twice as likely to fall below the federal poverty line, and nearly three times as likely to rely on food stamps, according to an analysis of census data by the Economic Policy Institute.
Raising the base wage for tipped workers is not only an important economic priority — it's also a critical step toward addressing fair pay for women, who represent roughly 70 percent of tipped restaurant workers. Narrowing the pay gap between men and women will require a commitment to boosting pay in low-wage industries where women make up the bulk of the workforce.
Seven states already guarantee tipped workers a base wage equal to the full value of the minimum wage, with tips received on top of this base wage. Washington's minimum is $9.32 per hour; California recently approved an increase to $10 per hour by 2016. Economic data indicate that tipped workers in these states consistently experience reduced rates of poverty compared to states with lower tipped minimum wages.
It makes sense for tipped workers to be paid the full value of the minimum wage directly by their employers: Tips are meant to be gratuities for good service, not a substantial share of any given worker's hourly wage.
While the restaurant and hotel industry may believe that it's entitled to an exception, New York's economy — and the thousands of low-paid tipped workers struggling to make ends meet across the state — cannot afford another year of this special treatment.
Jack Temple is a policy analyst at the National Employment Law Project.