Making Change: State Tipped Minimum Wage Policies and the Poverty Gap
Arts and Sciences
Economics, Political Science
In 1996, an amendment to the Fair Labor Standards Act set the national tipped minimum wage at $2.13 per hour. The Act states that, if a tipped employee’s tips do not make up the difference between the tipped minimum wage and the federal, regular minimum wage, then employers must make up the difference. Eight states have chosen to make up the difference themselves by unifying their tipped and regular minimum wages. Twenty-six states have chosen to lessen the difference by raising their tipped minimum wage. This paper seeks to examine the effect of states’ policy choices for tipped minimum wages on the poverty gap of the United States’ largest tipped worker populations: wait staff and bartenders. Using Occupational Employment Statistics from the US Bureau of Labor Statistics, this paper will empirically assess the impact of the changes to states’ minimum wage policies by examining the trends in poverty gap data for this group of workers both before and after these changes were instituted. Considering the wage theft that results from employers neglecting to make up the difference between their tipped employees’ tips and the regular minimum wage, this paper predicts that the wage alterations will be associated with lower poverty gap indices in those states.
Steinhiser, Kaitlyn M., "Making Change: State Tipped Minimum Wage Policies and the Poverty Gap" (2021). Symposium on Undergraduate Research and Creative Expression (SOURCE). 964.