The Impact Of Raising The Minimum Wage On Women And the Importance of Ensuring a Robust Tipped Minimum Wage

Source: National Economic Council, the Council of Economic Advisers, the Domestic Policy Council, and the Department of Labor, March 2014

From the press release:
Today, the White House is releasing a new report that lays out how women and the workforce would benefit if Congress passed legislation to raise the national minimum wage and tipped minimum wage for all Americans. Key findings from the report include:

Raising the minimum wage is especially important for women because:
• Women in the workforce are more highly concentrated in low-wage sectors such as personal care and healthcare support occupations.
• Women account for more than half (55 percent) of all workers who would benefit from increasing the minimum wage to $10.10.

Women also make up the majority of workers in predominantly tipped occupation. Under Federal law, employers are allowed to pay a “tipped minimum wage” of $2.13 to employees who regularly earn tips as long as their tips plus the tipped minimum wage meet or exceed $7.25 per hour.
• Women account for 72 percent of all workers in predominantly tipped occupations – such as restaurant servers, bartenders, and hairstylists.
• Average hourly wages for workers in predominantly tipped occupations are nearly 40 percent lower than overall average hourly wages.
• Workers in predominantly tipped occupations are twice as likely as other workers to experience poverty, and servers are almost three times as likely to be in poverty.
• About half of all workers in predominantly tipped occupations would see their earnings increase as a result of the President’s proposal.

The national tipped minimum wage has been stuck at $2.13 for over 20 years. Partly as a result, tipped workers are at greater risk of not earning the full minimum wage, even though employers are required by law to ensure that employees’ tips plus their employer-paid wage meet or exceed the full minimum wage.
• Since 1991, the tipped minimum wage has declined by 40 percent in real terms. Today, the tipped minimum wage equals just 29 percent of the full minimum wage, the lowest share since the tipped minimum wage was established in 1966.
• When surveyed, more than 1 in 10 workers in predominantly tipped occupations report hourly wages below the full national minimum wage, including tips. This fact highlights the challenges of ensuring compliance with minimum wage laws for tipped workers, as the employer contribution has been eroded by 20 years of inflation.
• Many states have recognized the need for a greater employer contribution to the wages of tipped workers. Currently 32 states (including the District of Columbia) require employers to pay tipped workers an hourly wage that exceeds the national tipped minimum of $2.13 – and seven of these states require employers to pay both tipped and non-tipped workers the same state minimum wage before tips.