EDITORIAL: Increase the Tipped Minimum Wage
THE LAST TIME the Tipped Minimum Wage was increased, the year was 1991 and George H.W. Bush was in the White House. That wage currently stands at $2.31 per hour. In the U.S., 3.3 million workers are employed in sectors that use the tipped minimum wage, which amounts to $4,430 per year for a full-time worker, according to a UPI report published last year. In Michigan, more than 160,000 tipped workers, over 74 percent of whom are women, earn a base wage of $3.50 an hour—above the federal tipped wage—but still far below the poverty line.
State Sen. Coleman Young II, of Detroit, and state Rep. Pam Faris, of Clio, have sponsored joint bills in the Senate and House that gradually would raise Michigan’s tipped minimum wage until it reaches $8.15 per hour.
This is an important step toward pay equity in Michigan, even if $8.15 per hour still constitutes a poverty-level wage.
The Michigan Restaurant Association, however, argues that raising tipped wages “will dramatically increase (restaurants’) overhead and unequivocally cause some restaurants to shutter their doors.” According to the U.S. Dept. of Labor, in California, employers are required to pay servers the full minimum wage of $9 per hour – before tips. Even with a recent increase in the minimum wage, the National Restaurant Association projects California restaurant sales will outpace the U.S. average in 2014.
The tipped wage is, in essence, an enormous subsidy for restaurant owners. Restaurant employers pay tipped workers less and then ask customers to make up the difference. Tips, however, are not mandatory.
In Ann Arbor, the number of workers in the service industry has grown over the past half a dozen years. On Main Street and elsewhere, restaurants have popped up to replace what were once retail establishments. The growing number of restaurants, and the increase in those who work in the service industry jobs created by those restaurants, are directly impacted by the push to raise the tipped wage.
Low wages for those who work as servers in Ann Arbor restaurants have created an income gap which has given rise to a number of round-about solutions, including the recent AAATA millage enhancement. Taxpayers were pitched an additional tax to fund bus services to Ann Arbor from surrounding communities for the elderly, as well as those unable to afford to live in Ann Arbor where they work.
A recent housing stock study documented a housing affordability gap in Ann Arbor that is directly related to the growth in service industry jobs, including jobs which pay tipped wages. Those working minimum wage and tipped wage jobs in Ann Arbor, seek housing in surrounding communities. ReImagine Washtenaw, a redevelopment proposal which includes so-called “workforce housing,” seeks to address these issues. However, the price-tag to taxpayers could easily run into the hundreds of millions of dollars.
The obvious answer is to begin to directly pay tipped workers more rather than ask taxpayers to fund transit millages and finance grandiose redevelopment schemes. The $8.15 per hour tipped worker pay rate proposal is only a start. In cities all over the country, activists are pushing politicians to pass ordinances that require $15 per hour pay for a minimum wage and tipped wage workers. Ann Arbor should lead in this progressive movement.