Title

Making Change: State Tipped Minimum Wage Policies and the Poverty Gap

Faculty Sponsor

Niru Devaraj

College

Arts and Sciences

Discipline(s)

Economics, Political Science

ORCID Identifier(s)

https://orcid.org/0000-0002-8669-4255

Presentation Type

Oral Presentation

Symposium Date

Spring 2021

Abstract

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.

Biographical Information about Author(s)

Kaitlyn Steinhiser is a senior Political Science and Communication major at Valparaiso University. Workforce development policy has been a key focus of her undergraduate career. In 2019, she interned for the Brookings Institution's Workforce of the Future Initiative, where she contributed to the report Realism about Reskilling: Upgrading the Career Prospects of America's Low-wage Workers.

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