The difference between the standard minimum wage and the lower required “cash wage” to be paid to tipped employees is considered the “tip credit.”8 The federal tipped wage was set at its current rate as part of amendments made in 1996, which defined tipped employees as those earning more than $30 in regular tip income.9 Currently, federal law allows employers to pay a base wage of $2.13, as long a. [...] In 2019, the nonpartisan Congressional Budget Office (CBO) reported that the first Raise the Wage Act, a bill passed in the House of Representatives to increase the federal minimum wage to $15 and simultaneously phase out the federal tip credit, would cost anywhere from 1.3 million to 3.7 million minimum wage jobs, including jobs for tipped workers, across the country by 2026.17 William Even, Miam. [...] This means that of all of the tipped workers that would potentially receive a raise, nearly 1 in 3 would instead lose their jobs.18 The current proposal put forth in the Raise the Wage Act of 2021 bill seeks to eliminate the tip credit along an accelerated timeline: the standard minimum wage would rise to $15 by 2025 (5 years after passage) and be indexed to reflect the growth rate of median wages. [...] Workers argued that eliminating the tip credit would reduce their take-home pay as tipped workers on average earn much higher than the current minimum wage, and ending the tip credit would turn “professional, commission-based sales people” into “entry-level workers.”40 In 2019, the state legislature and governor amended the minimum wage law to raise the tipped minimum to $3.00 by 2023, but voted a. [...] At the time, a Facebook group of “Supporters of the Tip Credit in New York” maintained over 23,000 followers, and over 12,000 signers joined a petition to save the tip credit in the state.43,44 Currently, New York State and jurisdictions throughout, including New York City, continue to allow employers to take a tip credit in paying their tipped employees.
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- United States of America
