End the subminimum tipped wage
If it’s passed by Congress, President Joe Biden’s COVID-19 relief proposal would do a lot more than fund relief payments and vaccine rollouts. It would also raise the wage floor for all U.S. workers — and give a particularly long overdue raise to restaurant servers, taxi drivers, manicurists and other tipped workers.
For Tanya Wallace-Gobern, getting rid of the subminimum wage for tipped workers is a matter of racial justice.
“Passing a living wage bill for tipped and non-tipped low-wage workers is essential to reducing inequality,” she said in a recent briefing.
As the executive director of the National Black Worker Center Project, Wallace-Gobern oversees a network of eight centers across the country that aim to build power and transform working conditions for Black workers. The subminimum federal wage for tipped workers, which has been stuck at just $2.13 since 1991, is a clear barrier to the project’s goals.
While employers are technically supposed to make up the difference if workers don’t earn enough in tips to reach the current $7.25 federal minimum, this rule is largely unenforced.
Meanwhile, studies have long found a racial bias in tipping. A survey by One Fair Wage found that prior to the pandemic, 60% of Black tipped workers earned less than $15 per hour, compared to 43% of white tipped workers. And since the pandemic, 88% of them have seen their tips plunge by half or more.
The legislative vehicle for the Biden plan, the Raise the Wage Act, would boost the overall federal minimum wage to $15 by 2025. For tipped workers, it would rise to $4.95 this year and then by $2 per year until it matches the overall $15 minimum in 2026.
The subminimum tipped wage is a shameful relic of slavery. Tipping became prevalent in the United States only after the Civil War, when restaurants and railway companies embraced the practice because it meant they didn’t have to pay wages to recently freed slaves.
That past hangs heavily over many Black workers.
“Let’s face it,” Wallace-Gobern told me, “Fifty years after President Lyndon B. Johnson declared a war on poverty, Black people in the South still contend with economic hardships, persistent poverty and the enduring legacy of slavery.”
Wallace-Gobern, who is based in Raleigh, North Carolina, argues that policies designed to empower Black workers will help every other worker, too.
“Black workers are the canaries in the economic coal mine of our country,” Wallace-Gobern said. “When the canary died, that was a signal that the conditions were bad for the miners. That’s the role Black workers play. If you improve their working conditions, that will lift all workers.”
New studies agree with her.
The Economic Policy Institute estimates that nearly one-third of all Black workers would get a raise under the Raise the Wage Act. The Congressional Budget Office estimates that it could also raise wages for 17 million workers overall. Another 10 million workers earning just above $15 could also see an increase.
With the National Black Worker Center Project, Wallace-Gobern is aiming to strengthen the capacity of Black worker centers to win minimum wage increases, build up a cadre of civil rights organizers, and advance a Southern strategy on racial justice and democratic freedoms.
The challenges are many. Particularly in the South, worker advocates are up against anti-union “right to work” laws and “pre-emption” restrictions that block cities from improving labor protections at the local level. But Wallace-Gobern is optimistic about the future.
Young people “are ready to lead if we step aside and give them space,” she remarked. “I welcome the opportunity for them to stand on our shoulders and take us to heights that I and my grandparents could never imagine.”
Rebekah Entralgo is the managing editor of Inequality.org at the Institute for Policy Studies.