Minimum Wage and the Tipping Culture Divide

Annali Cler*

On November 3rd, voters flocked to the polls, and election results gripped the nation for the following week. Although the presidential race captured headlines, another important vote occurred that day. In Florida, voters approved an amendment to the state’s minimum wage. Florida’s minimum wage for non-tipped employees will increase to $15 by 2026, while non-tipped employees will earn $11.98. Not only will this amendment make Florida one of the few states with a $15 minimum wage, but it also boosts Florida’s tipped employees well above the federal minimum cash wage and that of many states. Tipped employees have a unique pay structure, where employers only have to pay $2.13 per hour directly to the employee if that number combined with tips received adds up to the federal minimum hourly wage (or the state required wage). The obvious difference in pay raises questions about the existence of tipping culture and the need for a separate category of employees. 

The little-known history of tipping in the U.S gets its roots from racist practices following the Civil War. In the 1850s, wealthy Americans brought the practice back from Europe. Initially, many Americans opposed tipping, seeing it as an extra expense on top of the cost of food. Attitudes began to shift in the 1860s. After the Civil War, people who were freed from slavery had limited employment options and often turned to sharecropping or service positions, such as servants or porters. Tipping functioned as a way for employers to avoid paying their workers and as a sign of servitude. In 1902, a journalist wrote “[Black workers] take tips, of course; one expects that of them–it is a token of their inferiority.” Low or no wage work therefore continued to exist long after the abolition of slavery.

The development of labor law continued to make distinctions among workers. The Fair Labor Standards Act (FLSA) of 1938 exempted certain occupations from minimum wages. Employers in the agricultural and domestic sectors, jobs largely held by people of color, were not required to pay the federal minimum wage. These exemptions still exist. 

Saru Jayaraman, co-founder and president of Restaurant Opportunities Centers United (ROC United), says “[i]t’s the legacy of slavery that turned the tip in the United States from a bonus or extra on top of a wage . . . to a wage itself.” Tipping as a wage structure perpetuates low valuations on certain kinds of work, particularly service jobs. 

Further, tipped work worsens inequality in several dimensions. Research suggests that white workers receive bigger tips than black workers. Additionally, two-thirds of tipped workers in states that do not mandate full state minimum wage, which encompasses 43 states, are women. Although some argue tipping is a means to incentivize employees to work harder, the high rate of poverty for workers in restaurant industry compared to the general population suggests that tips alone do not provide a living wage, regardless of one’s work ethic.

Florida’s amendment signals acknowledgement by the public that the current federal minimum wages for non-tipped and tipped employees have failed to keep up with the cost of living. An increase in minimum wages across the board would benefit service workers, especially women and people of color, who are over-represented in that sector. Recognizing the inequitable rationales behind the distinction between non-tipped and tipped employees, Florida is moving in the right direction by bringing tipped employees above the federal minimum wage for employees generally.

*J.D. Candidate (2021), University of Minnesota Law School