Beginning in January, the minimum wage in Massachusetts rose to $12 an hour, on a slow crawl up to $15 by 2023. The increase will help the wage catch up to inflation, where it has been lagging since 1968, and is now high enough to lift a family of three above the federal poverty line.
Unless you’re a waiter working for tips.
The tipped minimum wage in Massachusetts, even with the recent increase, is only $4.35 an hour. Diners make up the difference with their own largesse, according to their wallet or whim. Business owners are required to make workers whole if their tips do not bring their wages up to the $12 minimum, but that is hard to calculate, and even harder to enforce. Workers in 21 states are covered only by the federal minimum wage, an appallingly low $2.13 an hour for tipped workers. That hasn’t increased since 1991.
Are we surprised that those most affected by the subminimum wage are women? According to the Bureau of Labor Statistics, 66 percent of workers earning the federal tipped minimum wage — in restaurants, salons, and the like — are women.
Many of these workers report harrowing stories about needing to flirt and flatter — and worse — in order to earn tips. Even before the #MeToo movement raised awareness of sexual abuse on the job, a 2011 study found that 37 percent of sexual harassment claims by women to the federal Equal Employment Opportunity Commission came from the restaurant industry alone. Tipped workers are vulnerable to power imbalances that require them to endure crude comments, groping, and even threats, just to earn a living.
Equally galling is the way the tipped minimum wage relies on consumers to carry labor costs that ought to be borne by business. The tips we give cab drivers, baristas, bellboys, and other service workers are necessary because their employers often don’t pay a living wage. (Businesses can also pass along higher wage costs to consumers, but only up to a point.) Similarly, taxpayers fill in the gaps when fast food or big box store workers are forced to accept food stamps, or when contract workers are deliberately given hours below the threshold for health care benefits.
This sort of cost-shifting is endemic in an economy that values wealth more than work.
Even well-meaning progressive policies can perpetuate the imbalance. Senator Sherrod Brown of Ohio, a likely presidential candidate, has proposed lifting low-wage workers out of poverty by increasing the earned-income tax credit, about the only tax break that benefits low-wage workers. Brown’s proposal would boost the incomes of 47 million Americans by an average of $2,800 a year. That’s a raise of just $1.34 an hour.
Of course I’m not saying that the safety net or progressive tax breaks should be scrapped just because they prop up a system of inadequate wages. And anyone who makes income inequality a central theme of his political campaign deserves credit. But Brown’s fix is still a kind of bank shot.
More direct is a guaranteed basic income, a notion gaining currency among some economists. Stockton, Calif., began issuing $500 checks to about 100 poor residents in a pilot program late last month. The concept earns a plank in the proposed Green New Deal resolution, and business titans such Elon Musk and Mark Zuckerberg support it. But it’s safe to assume the whole idea will fall to red-baiting in a country where even many recipients begrudge the “social” in Social Security.
Joining a union is another way to negotiate higher wages, so employers shoulder their fair share. The average unionized worker earns multiple times the most generous minimum wage. But unions are on the wane: Just 6 percent of private-sector workers today are unionized.
The truth is that US wages have long been stagnant at almost all levels, not just at the minimum. Economic data analyzed recently in The New York Times show that incomes for 90 percent of Americans have not kept pace with the overall economy since 1980. Finances are precarious for millions of families, even given the low unemployment rate; the Federal Reserve estimates that 40 percent of Americans could not handle a single emergency bill of $400.
Closing the income gap is a long, steep climb. But eliminating the subminimum wage would be a good place to start.
Renée Loth’s column appears regularly in the Globe.