Tipping Point: The Outcome of States' Decisions to Eliminate Subminimum Wage for Tipped Restaurant Employees
Open Access
Author:
Skinner, Chad
Area of Honors:
Economics
Degree:
Bachelor of Science
Document Type:
Thesis
Thesis Supervisors:
Oak Saharat Pongsree, Thesis Supervisor David Ruth, Thesis Honors Advisor
Keywords:
Wage Policy Subminimum Wage Tipped Employees Employment Federal Wage Floor
Abstract:
This paper seeks to analyze the impact that the elimination of the subminimum wage for tipped workers has had on employment and establishment growth. While the United States federal government imposes a mandated wage floor for states to follow, state governments have the autonomy to enforce their own wage policy as long as it monetarily exceeds the United States mandate. Aside from the current federal government imposed minimum hourly wage of $7.25, the US government enforces its territories to abide by a subminimum wage of $2.13 an hour for tipped workers. Along with setting wage floors that exceed government standards, many states have either eliminated the subminimum wage from their legislation or increased it by varying degrees. For states that have eradicated this policy, tipped restaurant workers such as food servers, bartenders, and bussers are paid at least the state's hourly minimum wage. To determine the impact that higher enforced wages highlighted by the elimination of a subminimum tipped wage has had on the full-service restaurant sector, this paper examines industry performance in various areas that abide by varying wage policies. Performance is analyzed by considering industry employment and establishment data along with area populations during a 13-year period encompassing 2010-2022.
