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Analysis: Let Me Give You a Tip…Finally…

Beacon Hill finally opened the spigot (very little) to tipped workers. (WMassP&I)

Beacon Hill finally opened the spigot (very little) to tipped workers. (WMassP&I)

Come January, tipped employees in Massachusetts will receive their first raise in over 15 years. The increase will be meager $1.12. The full minimum wage will rise to $11 from $8. Still, this time, the most vulnerable workers affected by minimum wage laws are not completely forgotten thanks in part to the work of Raise Up Massachusetts and the Shared Prosperity Agenda of Progressive Massachusetts.

The tipped wage came about in the 1960’s when workers who receive tips food service workers, were finally covered by in the federal minimum wage at 50% of the full wage. While the percentage changed over the years, it was cut off entirely on the federal level in 1996, freezing the federal rate at $2.13.

Inexplicably, Massachusetts followed suit in 1998. Other states did not. Connecticut had, until recently kept its tipped wage pegged to the full wage, such that it is currently a comparably robust $5.69.

The Massachusetts Senate’s minimum wage law raised the tipped employee wage to 50% of the full minimum wage, a total of $5.50 when the full minimum wage matured to $11. Instead, the tipped wage will rise, over three years, to $3.75 from $2.63. It is unclear what the senate got out tossing the higher tipped increase (as well as minimum wage indexing) out the window. House leadership seemed dead set against an increase higher than $3.75, such that they shut down Reps’ efforts to raise the wage. While still too low, the increase arrests decades of widening disparity between the full and tipped wages.

Bloomin’ Brands, then as OSI, fought and largely won a case to maintain its right to take the tips of employees making the tipped minimum and give them to other employees. (via

“Tips make up the difference,” restaurateurs argued. One Republicans member of the senate laughably said that a higher tipped wage was unjustified because, as the o-owner of a diner, waitresses were making more than he was. Even if true, beachside breakfast nooks are quite unlike chain empires.

At these large establishments, tips might make up for it…or not. The party that leaves five bucks on a $100 check certainly does not. Perfect service does not guarantee great tips. But, even as those chains will get paid for what they sell, tipped employees may have to fork over a set amount of money to other employees, regardless of what the server actually earned.

Anybody can sympathize with the struggling independent restaurant owner. However, it is the big guys who hide behind the little guys to avoid paying employees fairer wages. The Massachusetts Restaurant Association and its Big Brother the NRA (not the gun one) swoon over the thought of paying their tipped workers one cent more. It will bankrupt the small business owner!

That is probably not true. More importantly, tipped workers endure incredible demands. A sampling include no consistent income; forced sharing of tips (which is legally distinct from the illegal practice of tipped pooling); demands from guests and management; physical exertion; constant pressure to sell and more. The slightest wail from a guest can land a server in trouble or the unemployment line…if the boss does not try to disqualify him/her. Never mind that tipped workers are at huge risk for wage theft.

Meanwhile, tipped workers are not simply college students. Students constitute a huge share, but the stage a person is at in life should not be grounds for a lower wage. Secondly many of those college kids continue in their positions beyond graduation as they struggle to start long-term careers. Finally, many, many tipped workers, particularly outside the orbit of the sizzling Boston-Cambridge economy are not just starting out. Life happens and suddenly folks, well into their 50’s are raising a family, supplementing another job or the income of a spouse/partner or just struggling to pay their own expenses.

Massachusetts, despite its draconian tip wage, actually does better than some states. Employers cannot deduct the credit card service charge off of tips. Tip sharing is restricted to “service employees.” There is far more to be said about this issue and perhaps, around January, it may be time agitate for a prompter or higher increase. For the moment, this increase was a long time coming…and it is an improvement. When not abused the tipped wage can work out for all parties, but there is still much room for progress.