Want to Help Women? Get Rid of the Tipped Minimum Wage

Overview

This fact sheet by the Institute for Women’s Policy Research (IWPR) investigates the far-reaching consequences of the federal tipped minimum wage, which has remained stagnant at $2.13 per hour since 1991. The report highlights how this outdated policy disproportionately harms women, particularly women of color, by exacerbating financial insecurity and perpetuating economic inequities. IWPR argues for systemic wage reforms, including a nationwide “one fair wage” policy that guarantees all workers the full minimum wage.

Key Findings

• Women Drive the Tipped Workforce: Women constitute nearly two-thirds (65.5%) of workers in tipped minimum wage occupations, such as servers and bartenders.
• Persistent Gender Pay Gaps: Women servers earn only 78.5% of what their male counterparts make. Women of color consistently earn less than White men in these roles, underscoring deep wage inequities.
• Reforms Matter: States that have abolished the tipped minimum wage, such as Nevada, Oregon, and Washington, report higher earnings and lower poverty rates among tipped workers compared to states adhering to the federal tipped rate.
• Limited State Action: While 29 states have raised the tipped minimum wage above the federal standard, only seven states have abolished the tipped wage altogether, requiring employers to pay all workers the full state minimum wage.

Implications for Policy and Practice

The report identifies the tipped minimum wage as a significant driver of economic insecurity, particularly for women and marginalized groups. It calls for the adoption of "one fair wage" policies across the U.S., which would ensure that all workers earn at least the full minimum wage, regardless of tips. This shift could:

• Alleviate poverty among tipped workers.
• Narrow gender and racial pay gaps.
• Enhance economic security and workplace equity.

Recommendations

• Abolish the Tipped Minimum Wage: Policymakers should follow the lead of states that have implemented "one fair wage" policies, which eliminate tipped subminimum wages.
• Strengthen Wage Equity Policies: Address systemic factors contributing to wage inequities for women, especially women of color, through stronger workplace protections and enforcement of equal pay laws.
• Educate Employers: Raise awareness about the financial and social benefits of ensuring fair wages for all workers.

Conclusion

The IWPR fact sheet underscores the urgent need for wage reform to address the inequities perpetuated by the federal tipped minimum wage. By abolishing this system, policymakers can create a fairer and more equitable economic environment that uplifts women and marginalized communities.