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Minimum Wage For Restaurant Servers Remains Stagnant For 20 Years Under Industry Lobbying

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Minimum Wage Waitress

Rebecca Williams has waited tables, on and off, for 30 years. A lot has changed since her first stint in the business ended in the early 1990s. Restaurants now tout their commitment to local and organic fare. Diners eagerly pass and poke at tapas-style small plates. Chefs at brick-and-mortar restaurants now compete with a growing legion of food trucks. But one thing that's remained consistent in all that time is Williams' paycheck.

Williams, 50, has worked mostly at upscale bistros in Atlanta, Ga., earning $2.13 an hour before tips. It's the most frustrating element of a job she largely enjoys, she says. That miniscule wage is usually swallowed up by taxes, leaving her to live on her tips, which can fluctuate from week to week.

She hasn't had health care coverage for years. The restaurants she has worked in haven't offered affordable plans, and she doesn't have the money to pay out of pocket for it. She simply hopes she doesn't get sick.

As for retirement? "I can't even think about retirement," says Williams. "I'd go into shock." Her restaurants haven't offered savings plans, either, leaving her with little beyond a modest 401(k) nest egg from a long-ago foray into the corporate world.

The federal government raised the minimum wage to $7.25 per hour in 2009. Some states have raised theirs above that amount, to as much as $9.04, in Washington state.

But since 1966, a sub-section of the minimum wage has existed for people who work for gratuities, known as the "tipped minimum wage," which Congress last bumped to $2.13 per hour in 1991. Some states have increased the tipped minimum wage on their own as well -- and Washington, like six other states, has no tipped minimum wage at all, so servers earn a full $9.04 before gratuities. About half of all states, however, continue to allow restaurants to pay servers $2.13, provided they make up the difference if the server doesn't reach the standard minimum wage after tips.

The cost of living, meanwhile, has continued to climb.

"As far as income goes, I made more 20 years ago than I do now, effectively," says Williams, who has a bachelor's degree but prefers to work in restaurants. "My affluent friends, their jaws drop when I tell them."

Under this system, gratuities aren't really gratuities. They constitute the vast majority of a server's salary. Instead of giving a server a bonus for good service, diners are essentially subsidizing many servers' legally guaranteed wages.

And as the tipped minimum wage has remained the same, diners have been subsidizing a growing portion of that guaranteed wage over the years. Servers, meanwhile, are increasingly relying on customers to keep them on pace with inflation.

Being paid a mere $2.13 an hour before tips might not be a big deal for a server at a four-star restaurant in Manhattan, where tips are generous and workers can earn a better-than-decent living. But for a career server working at, say, a pancake house in rural Kansas, an extra couple of bucks an hour could make a huge difference.

If Williams' pre-tip wage in Georgia were closer to $5 an hour, for example, like it is in many states, that would translate into an extra $6,000 per year, making it a lot easier to cover basic expenses. Maybe she would even be able to afford health insurance.

HERMAN CAIN'S LASTING LEGACY

The fact that the tipped wage has held steady for over 20 years at the federal level and in many states is a testament to the restaurant lobby's effectiveness.

In 1996, President Bill Clinton pressured Congress to raise the minimum wage for the first time in years. He ultimately got House Republicans on board with the wage hike, but not without a significant caveat.

The restaurant industry, led by the National Restaurant Association -- and its board chairman Herman Cain, who would later become the group's president -- successfully pressured lawmakers to have the minimum wage for tipped employees separated from the increase and kept at $2.13.

"I don’t think anyone knew at that point that it was a permanent deal," says Jen Kern, minimum wage campaign coordinator at the National Employment Law Project, an advocacy group for low-wage workers. "As these things happen ... they become ingrained. They succeeded in creating this second-class wage system, and people accepted it as the way it's always been."

Indeed, paying the lowest wage possible before tips is common practice throughout the restaurant industry. According to advocates for restaurant workers, even restaurants that workers hold in high regard tend not to pay servers anything more than the tipped minimum wage, since that's all the law mandates.

Those who say the tipped minimum wage is due for an increase argue that the growing restaurant industry can withstand it. Throughout the fits and starts of the economic recovery, the restaurant sector, much like retail, has served as one of the few reliable bright spots when job numbers are issued.

In its recent 2012 forecast, the NRA predicted record restaurant sales of $632 billion this year. It said the number of jobs in the industry would grow to nearly 13 million, accounting for roughly one-tenth of the nation's workforce and outpacing the economy at large.

The problem, however, is that many restaurant jobs are low-paying. The average wage for food and beverage workers was $18,130 in 2010, according to the Bureau of Labor Statistics, meaning that many workers end up toiling below the federal poverty line.

And even as the number of jobs has expanded, the wages received for those jobs have actually decreased, according to a recent report from PayScale, a website that tracks salary data.

"This is part of the stagnation we've seen for all workers over the last 20 or 30 years," says Sylvia Allegretto, a labor economist at the University of California, Berkeley and a former waitress herself. "This industry is growing by leaps and bounds, but it's not paying a good wage. The fact is we have millions of workers in this industry, and a few of them do fairly well -- mostly men, at high-end restaurants."

But the mostly female workforce of servers, she notes, has "no health care, no sick pay, no vacation. You have to make enough in wages and tips to pay for those things."

"I don’t know how anyone can defend a policy that’s been in effect for over 20 years, that’s eroded significantly in that time," she adds. "Why should this industry benefit so much from this artificially low pay that’s instituted?"

The NRA, for its part, says that the industry's growth is no reason to hike the tipped minimum wage. The group says that most servers already earn well above the federal minimum wage of $7.25, and that raising the tipped minimum wage could hurt kitchen employees and others who don't work for tips.

"Even in a challenging economy, the restaurant industry has continued to be one of the country’s leading job creators," Katie Niebaum, a spokeswoman for the group, says in an email. "Legislation increasing the required minimum employer-paid wage for tipped employees would force employers to redirect payroll dollars away from employees who do not earn tips, and give them to tipped employees who are usually earning far in excess of the minimum wage."


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