Eliminating the tipped minimum wage helps alleviate poverty, reduce gender and racial pay gaps

Labor law allows a subminimum wage for tipped workers, temporary teenage workers, and workers with disabilities. A report from the Center for American Progress finds that eliminating the subminimum wage and establishing a single fair wage would help alleviate poverty and reduce inequality. Eight U.S. states have already gotten rid of the tipped minimum wage. In 16 more states, the federal tipped minimum wage ($2.13 per hour) is still used, while the remaining 26 states have tipped wages between $2.13 and the regular federal minimum of $7.25. The authors used pre-pandemic data to analyze state-by-state differences and found that states with one fair wage had lower poverty rates among workers in key tipped industries. Given that women and people of color represent disproportionate shares of tipped workers, eliminating the tipped minimum wage also reduced gender and racial pay gaps. Importantly, their analysis also shows that moving to one fair wage does not hinder employment in tipped industries. #workforce #racialequity

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