The Case for the Tip Credit
The tipping system provides substantial earning opportunities for workers across many industries, especially restaurant servers and bartenders – well beyond the current minimum wage, and even beyond the proposed $15 minimum wage.
- Tipped employees consider the current system to be a profitable, flexible earning system: 97 percent prefer it over no-tipping alternatives.
- Tipped workers nationwide report earning more-than-twice the current federal minimum wage ($15.51) per hour on average. When tips are included in the calculation of hourly earnings, tipped workers can make as high as $84 per hour.
- Tipped workers are roughly 20 percent (3.6 percentage points) less likely to be poor than other minimum wage workers.
- A $15 tipped minimum wage will cost more than 280,000 tipped workers their jobs and cost more than $2.2 billion in workers’ earnings.
- Customers prefer the traditional tipping system (81%) to no-tip alternatives.
- Many restaurants that have tried eliminating the tip credit and no-tip policies have switched back to traditional tipping, in response to workers’ and customers’ opposition to the change.