Arlington, VA – Today, the Employment Policies Institute (EPI) released a new study conducted by University of California-Irvine economists Dr. David Neumark and Emma Wohl, which examines how increasing the tipped minimum wage affects earnings gaps for restaurant workers.

While anti-tip credit activists claim eliminating the current tip credit system would reduce inequities faced by women and minority workers, the study finds tipped wage hikes have no impact on reducing earnings gaps between white male workers and their female and minority counterparts.

The study analyzes U.S. Census Bureau data and finds:

• Tipped minimum wage hikes have not increased total weekly earnings for women or minority tipped employees;
• Tipped wage hikes are shown to increase, rather than decrease, the hourly wage gaps between minority tipped employees and white tipped employees;
• Keeping tip credits intact in general minimum wage increase proposals is statistically more efficient at raising wages and reducing earnings gaps for tipped employees.

The full study is available here.

Dr. David Neumark, distinguished professor of economics at the University of California-Irvine, made the following statement on the findings:

“Higher tipped minimum wages won’t necessarily reduce minority and female pay gaps just because there are many minority and female restaurant workers. Many minority workers are in non-tipped jobs in this sector, and tips and hours (not to mention employment) may adjust in response to changes in the tipped minimum wage. The data show that raising tipped minimum wages does not impact earnings shortfalls of minorities or women relative to white men. Tip credit elimination is an ineffective solution to solve the very real problem of lower pay for minorities and women.”

EPI’s research director, Rebekah Paxton, made the following statement on the study:

“Anti-tip credit organizations like One Fair Wage have crusaded against tipping in America for years, claiming that eliminating the tip credit will reduce discrimination and inequality in the industry. The data shows that’s simply not true. Lawmakers should listen to workers in the industry who say they prefer to keep the tipping system instead of following proposals that have no positive impacts.”