As a Server, I Can Tell You a Tip Penalty is a Horrible Idea

The following is a guest post from Nicole Hilgendorf, a server in Minneapolis.

I recently asked a colleague what receiving the $7.25 minimum wage as a tipped employee meant to her, and she, without hesitation, responded, “It makes me feel like I am worth something.”

My colleague was not only referring to a sense of monetary worth, but also worth of one’s esteem. Undeniably, an investment in overall human capital drives the American economy, yet the federal minimum wage for tipped employees has remained at $2.13 an hour since 1991. At the same time, the restaurant industry continues to flourish. Minnesota bucks this trend by paying all workers at least $7.25, which is not enough but it is much more than tipped workers get in other parts of the country.

Some politicians want to pass a “tip penalty” or “tip credit,” which would allow employers to pay tipped workers like me much less – between $2.13 and $7.25 an hour.

I have been a server on and off for the past eight years. My serving career began while I attending college in Wisconsin. I received $2.33 an hour plus tips. I never received a paycheck, as my hourly wages covered state and federal taxes. I could not create monthly budget because my monthly income was inconsistent at best. At the end of each month, if I did not earn enough in tip income to cover my bills and rent, I had to choose between picking up additional shifts and missing class or paying bills late, only to incur late penalties.

After I moved from Wisconsin to Minnesota, the first job I was offered was a serving position. I was initially unaware that tipped employees received the actual minimum wage in Minnesota. I assumed throughout the nation, servers were only earning an hourly wage of slightly over two dollars. After receiving an actual paycheck, I felt like a valued employee and worker. More importantly, I realized I lived in a state that values its tipped employees as well.

Because tipping is culturally enforced, it is subjective and therefore not guaranteed. Relying solely on tip money for income is impossible, given that business dictates how much a tipped employee earns in their shift. I am unaware of a single tipped employee that has not at least once in their career left work without receiving any tips.

Furthermore, a 40-hour work week is not typical for tipped employees. A lunch or dinner shift usually last fives hours. Many tipped employees work two jobs (myself included) to make up for lack of work hours.

Tipped employees rarely receive benefits such as health care, paid time off, or a 401(k). They simply cannot afford to get sick – or rather, do not get proper health care when sick. For a tipped employee, any missed work is missed income, and any missed income makes the out of pocket health care costs even more unbearable. Subjecting tipped employees in Minnesota to a “tip penalty” or “tip credit” would dissuade many tipped employees from getting proper care when ill.

I would like to thank Rep. Jason Metsa for taking on the Working America Minimum Wage Challenge. Representative: I know this challenge has deepened your understanding of the realities of a low-wage budget, and made you aware that Minnesota workers every day are sacrificing essentials just to get by.

The intended purpose of a minimum wage is allow any worker to afford  basic living standards, but today’s minimum wage only represents the lowest hourly wage in which an employer can legally pay employees. Minimum wage is not a living wage. I hope the state of Minnesota realizes the necessity to fairly compensate all workers –  our economy and livelihood depend on it.

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