Tipped Workers in America, Essay Example

When rich Americans took home the concept of tipping from their vacations in Europe throughout the late 19^th century, it was looked upon as bribery to the countrymen. State legislatures immediately banned the concept of tipping money. However, restaurateurs, considering the idea of transferring their cost of labor directly to the customers, eventually were able to convince Americans to conform to the concept of tipping.

Regarding ethical theory, tipping is fundamentally adverse in funding the labor compensation for service workers. Despite the fact that many Americans still tip, tipping is actually an adverse custom. It is adverse for customers and even more adverse for the workers. Tipping is not at all beneficial for restaurants, because the legal confusion encompassing gratuities can result in many expensive lawsuits. Tipping does not serve as a reward for hard work. In fact, the elements that correlate the most with the dollar amount of a tip are often not even related to the quality of service provided. Larger parties with significant bills leave smaller tips that are actually disproportionate to scale as opposed to smaller parties. (Liebelson, 2014)

Irrelevant or subtle factors will control the tipping equation until the quality of work becomes the primary driver of tipping amounts, but this is not likely to happen anytime soon. The amount of the tip is not the true issue however. The problem is that the restaurants do not pay their employees a reasonable living wage. The federally set standards for fixed wages allow the restaurants to pay their employees working for tips as minimal as $2.13 per hour. Although both state and federal laws require that restaurants assure that the tips bring employees on par with minimum wage, very few restaurants actually enforce this. This factor aids in diverting these workers into poverty. (Cooper, 2014)

In most states, restaurants pay their employees working for tips a base salary which is far less than the standard minimum wage. The $2.13 per hour figure reported by the US Department of Labor is what most employees working for tips currently make in nearly 20 states. Each individual state, however, has widened their base pay margins in order to establish higher wages for their servers. There are twenty-four states that have willingly increased their servers’ base pay to more than $2.13 per hour, and seven states have even started making it mandatory that all servers are paid the same base pay as the other employees not working for tips. Now this might be a beneficial system of payment for the restaurant industry, because it allows businesses to pay less than the federal minimum wage in nearly every US state. However, this system of payment by restaurants attributes to poverty amidst those employees working for tips. This is true particularly in every restaurant that is not high-end. In fact, employees working for tips are almost three times more inclined than regular minimum wage workers to undergo poverty. Tipped workers as well as their families frequently have to depend on Government assisted welfare programs to sustain living and support their families. Because these tipped workers are generally dependent on public subsidies for living assistance, taxpayers become responsible for funding their Government assistance. (Stuart, 2014) (Cooper, 2014)

The legislation of the Fair Labor Standards Act (FLSA) was enacted in 1938 in order to establish many labor laws to protect workers and their compensation. This is where standards of labor such as the 40 hour work week, overtime safeguards, and the national minimum wage were established. The legislation has been amended throughout the years, but the amendment of 1966 was particularly significant for tipped workers. This amendment extended provisions that would service employees working for tips that had initially been precluded from the FLSA, but also enacted a new base pay –or sub-minimum wage— for workers who were regularly compensated through tips. This is where the concept of tipping took a pivotal turn. As tips were initially a simple token of gratitude from the customer to the service worker, they essentially became a subsidy from the customers to the employers of these tipped workers. Basically, a significant part of the employers’ salaries and wages expenses was now paid for by the customers through their tips. The most recent provision to the FLSA was in 1991 when the minimum base pay for tipped workers was set at $2.13. This provision stimulated inflation in the economy and reduced the purchasing power of the federal minimum wage for tipped workers to the lowest it has ever been. It should be the employers’ responsibility to ensure that their tipped employees are compensated fairly. Instead, that responsibility has been shifted to the government in the form of assistance programs and tax dollars. 2014 presented possible solutions regarding these issues however. (Stuart, 2014) (Cooper, 2014)

The Fair Minimum Wage Act of 2014— also called the Harkin–Miller Bill— was proposed as it would not only raise the federal standard minimum wage for non-tipped workers to $10.10 per hour, but would also return the sub-minimum wage for tipped workers closer to the standard minimum wage by requiring that the previous one be equal to 70 percent of the most recent wage. Although this would appear to be a positive step forward; there is evidence that tipped workers would benefit more from simply eliminating the minimum wage for tipped workers altogether, and just pay them the full standard minimum wage as everyone else. (Cooper, 2014)

Often, any concerns regarding the minimum wage fail to include any proposals for tipped workers and the sub-minimum wage they currently get. Yet this is a continuing employment occupation. It needs to be addressed in solutions for minimum wage that an adequate policy concerning tipped workers may reform the lower wage jobs stricken by poverty into more secure jobs. Many of the tipped workers are the essence of as needed employment by restaurants adjusting their supply of service staff in correlation to customer flows. This might appear to be beneficial for the employers, but it is not at all beneficial for their tipped employees. This is because volatility of wages is aggravated by the tipped workers’ dependence on tip wages, which carries significant fluctuations. A tipped worker’s pay check will fluctuate depending on variations of tip wages, which makes it difficult for the tipped workers to meet financial obligations pertaining to rent, education, and other miscellaneous payments. (Cooper, 2014)

Working for tips and receiving lower wages is unethical for the workers, customers, and the economy. Based on the FLSA provisions and given factual scenarios supported by relevant data, tipped workers are at a disadvantage and fall victim to being taken advantaged of if these issues remain unresolved. The data provided suggests that government assistance will be a growing and continuing factor for tipped workers which in all impair the economy. Conclusively, continuation of tips as opposed to a standard minimum wage for service workers is not only unethical, but is not even economically logical.

Bibliography

Cooper, S. A. (2014, July 10). Twenty-Three Years and Still Waiting for Change. Retrieved from Economic Policy Institute : http://www.epi.org/publication/waiting-for-change-tipped-minimum-wage/

Liebelson, D. (2014, May 12). The Minimum Wage Loophole That’s Screwing Over Waiters and Waitresses. Retrieved from Mother Jones: http://www.motherjones.com/politics/2014/05/minimum-wage-tip-map-waiters-waitresses-servers

Stuart, H. (2014, October 17). 9 Reasons We Should Abolish Tipping, Once And For All. Retrieved from The Huffington Post: http://www.huffingtonpost.com/2014/10/17/abolish-tipping_n_5991796.html