--:-- [Theme music fades out]
--:-- Host: Support for this show comes from ServiceNow. AI is only as powerful as the platform it's built into, don't you know? That's why it's no surprise that more than 85% of the Fortune 500 use the ServiceNow AI platform. Didn't know that. While other platforms duct tape tools together, ServiceNow seamlessly unifies people, data, workflows, and AI, connecting every corner of your business. And with AI agents working together autonomously, anyone in any department can focus on the work that matters most. I've never met an AI agent. Learn how ServiceNow puts AI to work for people at servicenow.com.
--:-- Host: Support for this show comes from Strawberry.me. Be honest. Are you happy with your job? Or are you stuck in one you've outgrown? Or never wanted in the first place? Sure, you can probably list the reasons for staying. But are they actually just excuses for not leaving? Let a career coach from Strawberry.me help you get unstuck. Discover the benefits of having a dedicated career coach in your corner. Go to strawberry.me slash unstuck to claim a special offer.
--:-- Host: If I didn't get tips, I wasn't getting paid. You're a bartender and you can't make good tips, then you're just not a good bartender. You got $6 tip. So an 87% tip. This is Explain It To Me from Vox. I'm John Guant Hill. My name is Freddie. I'm video server for today. Awesome. Give me a more fan-for-a-look at the food menu. Do you have any recommendations? What are your favorite things?
--:-- Freddie: My favorite in the menu, this is a seasoning three weapons. You like spice? I like spice. All right, we've got two chilies. We'll make it happen. Yeah, let's do it.
--:-- Host: Okay, Jonklin, this is me, Peter Balanon-Rosen, producer on Today Explained, and explain it to me, what are we doing today?
--:-- Peter Balanon-Rosen: Okay, so one, we're bonding in a team-like fashion, which is very important. Very important. But even more importantly, we're out and about because we are doing an episode about tipped wages. And what better way to do that than to go to a place where they tip, a.k.a. a restaurant. So we're having lunch.
--:-- Host: All right, yes, we did have some delicious lunch, but I got to admit, that chicken was not actually that spicy. Okay, I'm glad you said that because it was good, but I was like, this is not that hot. No, no, not at all. But hey, it could just be us. Maybe we're used to spice. Maybe. I don't know. Those two chilies did seem like they were lying.
--:-- Peter Balanon-Rosen: Okay, but we weren't just there to check out the Chili Report. We were also there to discuss a bunch of calls that we got from our listeners. They had a lot to say about tips and wages.
--:-- Host: I really want to know how to tell when someone is being paid serving minimum wage. Because when they flip that little POS tablet towards you asking for the tip, I always feel like I'm in a moral crisis of whether or not I tip and how much I should tip because how much are they being paid?
--:-- Host: My main question is, what do servers actually take? Can I be able to do it? I'm a server at a fine dining restaurant in Wisconsin where servers make $2.33 an hour. And what you take home is really just your tips.
--:-- Peter Balanon-Rosen: All right, so we're going to split up, right? Yes. I'm going to find out the history of tipping, and you are going to talk to some people with skin in the game. And then we're going to come back and talk about what we found out.
--:-- Host: All right, let's do it.
--:-- Peter Balanon-Rosen: Okay, Peter, you went out. You did some reporting. What'd you find?
--:-- Peter Balanon-Rosen: Okay, JQ, well, we need to start with something absolutely riveting. A definition. So basically, there's this thing called the tipped minimum wage. It's a way more minimum wage just for workers who get tips like servers or bartenders. At the federal level, it's just $2.13 an hour. The idea is tips will help those workers earn at least minimum wage. And if they don't, employers are supposed to pay the difference. But right now, states and cities all over the country are kind of like our caller from Wisconsin. They're wondering, should this way more minimum wage? Should it change? Should they get rid of it?
--:-- Peter Balanon-Rosen: And one of the places figuring this out is where you live, the place we had lunch, Washington, D.C. A place I know very well. So to learn about how this is playing out in D.C., I went to go meet up with Sophie Miyoshi. She's executive director of Rock D.C., an advocacy group for restaurant workers.
--:-- Sophie Miyoshi: Yeah, am I seeing a piñata here? A piñata. We have some puppets of the council members.
--:-- Peter Balanon-Rosen: She has been out there leading protests, calling for tip workers to get paid more. There's so many problematic things about the tipped minimum wage. So one of the first things is wage theft. Technically, the employer is supposed to make up the difference if you're not making the full minimum wage on top of the tipped minimum wage. Most folks aren't paying attention to that. They're just trying to survive. So it's really easy to steal from tipped workers because of the system that is in place.
--:-- Sophie Miyoshi: Sophie says to understand what's going on here, we got to go back in time a bit. In 2016, the fight for 15 was popping off. You remember that?
--:-- Peter Balanon-Rosen: I remember that, yeah. So DC agreed to raise their minimum wage to 15 bucks an hour for everyone except tipped workers. Ooh, okay. All right. They said the minimum wage for tipped workers would top off at $5 an hour. And Sophie was like, That's super unfair to restaurant workers. We need to take this on our own.
--:-- Sophie Miyoshi: Sophie and her organization, they start eyeing a ballot initiative, which basically puts the question of should the tipped minimum wage go up directly to voters to vote on? What was the response to the initiative?
--:-- Peter Balanon-Rosen: Well, as you can imagine, not everyone was into this. The restaurant industry, who actually lobbied to keep that tipped minimum wage at five bucks an hour, they came out saying, uh-uh. They said this ballot initiative, it'll raise labor costs. It'll make restaurants have to close. It'll force bosses to have to cut jobs or hours for workers. And they sent this messaging to voters and restaurant workers. Like spreading fear among workers of like, oh my God, my tips are going to go away. If this passes, we're just going to get the minimum wage, which was not the case at all.
--:-- Sophie Miyoshi: There are many states that this system doesn't exist in and they're doing just fine. So.
--:-- Peter Balanon-Rosen: Whose messaging prevailed in all of this? Well, in 2018, Sophie's did. The ballot initiative passes. I mean, it was exciting that it actually passed despite the efforts of the Restaurant Association. But one of my colleagues, like, turned to me and said that, you know, we can't really celebrate because it's going to get repealed by the D.C. Council.
--:-- Peter Balanon-Rosen: The D.C. City Council basically says, yeah, no thanks. We're going to get rid of this thing. Why'd they do that? What's the thought process? Well, if you look at some reporting from the time, it says that in the moments after the vote was counted, the Restaurant Association in D.C. began lobbying politicians to overturn it.
--:-- Sophie Miyoshi: They told politicians this was going to cause bosses to cut hours, cause customers to tip less. Sophie and her camp, they were saying, no, no, no, no, no. This is going to be good for workers. This is what the voters voted on.
--:-- Peter Balanon-Rosen: But the D.C. Council, they got rid of it. So this thing kind of basically dies. But then a little thing called the novel coronavirus pandemic hits in 2020. And we see restaurant workers get laid off by the masses. And people who don't work in restaurants, they start tipping more. They start donating to laid off employee funds. Our whole relationship to restaurants and tipped workers it changes.
--:-- Host: Yeah that feels really familiar You know I was here in D during lockdown and my thing once a week was that I going to get takeout from a local restaurant that I love and I want to stay open And I'm going to tip well, and I'm going to tip well because I'm not spending any other money because I'm just sitting in my house watching WandaVision.
--:-- Peter Balanon-Rosen: Indeed, indeed. Okay, so you, me, everyone else, we're all doing that. And riding that energy, in 2022, this new initiative hits the ballots and asks voters again, should the tipped minimum wage in D.C. go up to match the regular minimum wage? So we're doing this again. We are doing this again. And again, it passes. This time, the tipped minimum wage starts going up from $5 to $6 to $8 to $10 over a few years. And this year, right, as the law decreed that the tipped minimum wage would hit 12 bucks an hour, everything comes to a halt.
--:-- Peter Balanon-Rosen: What's going on and also how are restaurants responding during all of this? I mean, if you ask the Restaurant Association of Metropolitan Washington, they'll say things had been kind of crashing out for them for a while. They basically pointed to the fact that 74 local restaurants had to close. And they set out on this campaign to kill the tipped wage increase and get it back down to where it had been at $5.35.
--:-- Tony Tomeldin: I mean, in one year, my payroll doubled. I mean, for the first time in 15 years here, I raised prices. I can't really go much higher than $5 for a Miller High Life.
--:-- Peter Balanon-Rosen: This is Tony Tomeldin, Tony T. He's the owner and bartender at a place called The Pug.
--:-- Peter Balanon-Rosen: Oh, I'm familiar with The Pug. I've had a beer there myself a time with you. So, you know, like the bar, it's covered floor to ceiling in beer signs, bobbleheads, band posters, all these light-up Santa Clauses. I mean, I guess it's your definition of a dive bar. A lot of D.C. stuff and then a lot of boxing. Pug is actually short for pugilist. Oh, I had to ask, do you own a pug? No, it's for pugilists, so that's the boxing stuff.
--:-- Tony Tomeldin: So Tony T, who owns The Pug, but not a pug, he also used to own this place called Brookland's Finest. And he says because of the tipped wage increase, his payroll costs were set to go up $60,000 this year. And that, combined with the fact that his sales were way down, it meant he just couldn't swing things. And he shut down Brookland's Finest a few months ago.
--:-- Peter Balanon-Rosen: We were ringing half what we rang pre-lockdown, and it wasn't the only factor, but that's a big factor, is how high my payroll got. Like you just mentioned, sales were shrinking. I don't know how rents are going here. I know where I live. They're going up and up. So there seemed to be a confluence of factors going on. Why focus on the wage one? Because that's the only thing that the city can really step in and affect.
--:-- Peter Balanon-Rosen: And with the restaurant association lobbying for it and restaurant owners like Tony T calling for it, the city council, they came in for a second time to stop a raise to the tip to minimum wage. But where are the workers' heads in all of this? So I went to meet Max Holla, a bartender, to find out.
--:-- Max Holla: He's been in the hospitality industry for over a decade, making cocktails, serving beers, bringing out patrons. His bar, The Grand Duchess, includes a 20 percent auto gratuity on bills. And he says raising the tip minimum wage to $10 an hour, it's been good for him. It's like I can buy more groceries on time. My tax returns look a little cleaner. If you're not depending solely on tips, you don't have to put up with as much negative interactions.
--:-- Peter Balanon-Rosen: Some workers in D.C. have come out against raising the tip minimum wage. They worry if customers know they're making a higher base wage, they'll tip less and it'll leave their paychecks worse off overall. But data shows median hourly wages for servers and bartenders, it's now up since this measure passed, even if it's still below what economists call a living wage.
--:-- Peter Balanon-Rosen: But what is the scene in D.C. like overall? Well, I reached out to the D.C. Restaurant Association. They never agreed to an interview. But when you look at the numbers, it's not actually like D.C.'s restaurant scene has evaporated because of this. If you go deep into Bureau of Labor Statistics data, which I did because I got a little obsessed here, you'll see that there were about a thousand full service restaurants in 2022 before this law took effect. And today there are actually a few dozen more.
--:-- Peter Balanon-Rosen: So, you know, it's not exactly like the restaurant scene is now exploding because of this law, but it definitely has not evaporated either. What should cities and states that are trying to figure out their whole tipped minimum wage thing take away from this? So my takeaway is that implementing change, it's messy. And if you're going to raise the tipped minimum wage via a ballot measure in a place with a strong restaurant lobby, well, be ready for some backlash.
--:-- Host: Support for the show today comes from LifeKit, the podcast from NPR. What's in your LifeKit? I'm asking. They didn't ask that. Every day you have to make choices that might shape the direction of your life, but you can't flip to the back of the book to find an answer key. Instead, you can listen to the LifeKit podcast from NPR. Life Kit offers real stories about common issues like relationships, finances, parenting, and your career. If you're looking to move with more intention or just need thoughtful guidance on living better, Life Kit delivers strategies to help you make meaningful, sustainable change.
--:-- Host: From fitness routines to mental resilience, navigating personal goals to tackling burnout, each episode is full of relevant insights and clear takeaways about things we all could use a little help with. Life Kit wants to help you approach your own life with confidence and clarity and walk away with a game plan you can implement right away. Enough from me. Go listen to the show Life Kit. It's a podcast from NPR.
--:-- Host: And the newest trends. If you like to save but also like to stay in style, Burlington is your answer. And the question you'll be asking yourself is, why go anywhere else? Burlington. Deals. Brands. Wow.
--:-- Host: Tipped workers have different taxes now And they also have what called the tipped minimum wage The thought behind this is that the server at your favorite lunch spot will make up the difference between what they paid and the regular minimum wage and the tips they get when they bring you that chicken Caesar salad wrap But how did we get this system to begin with? That's where Nina Mast comes in. She's a policy and economic analyst at the Economic Policy Institute, a left-leaning think tank.
--:-- Nina Mast: Tipping goes back to the pre-Civil War times in the U.S. There were wealthy Americans who were vacationing in Europe. Garcon. And they noticed that there was this practice of tipping where if you had good service, you gave a small extra fee. Here you are, my boy. And they kind of brought this back with them to the U.S. as this trendy thing that rich people did.
--:-- Nina Mast: But then tipping actually started to fade in Europe, but it persisted in the U.S. And I think we can really tie that back to slavery. You know, once slavery was abolished following the Civil War, workers who were formerly enslaved in agriculture and domestic service, they continued to do these same jobs, but employers didn't want to pay them. So they suggested that the customer paid a small tip to black workers for their services. And it became the predominant way that workers in these jobs were paid.
--:-- Nina Mast: Ladies and gentlemen, the president of the United States. After many requests on my part, the Congress passed a Fair Labor Standards Act, what we call the Wages and Hours Bill. So we got a federal minimum wage in 1938 through the creation of the Fair Labor Standards Act, which is kind of our landmark worker protection law. It established the minimum wage. It established the 40-hour work week and overtime protections. It is the most far-reaching program, the most far-sighted program for the benefit of workers that has ever been adopted here or in any other country.
--:-- Nina Mast: But it was a very contentious bill. And to get Southern Democrats on board specifically, it left out workers in agriculture, restaurants, most tipped occupations, domestic work, hotels. It's not a coincidence that all of these sectors were the predominant employers of Black Americans.
--:-- Nina Mast: So in the mid-60s, you know, this is during the Civil Rights Movement, a few years after the March on Washington, which called for stronger minimum wage protections. We march today for jobs and freedom. But we have nothing to be proud of. For hundreds and thousands of our brothers are not here. For they're receiving starvation wages or no wages at all.
--:-- Nina Mast: There were amendments to the Fair Labor Standards Act that established a minimum wage for workers in service sectors, but it created a minimum wage for tipped workers that was only half of the minimum wage that other workers were eligible to receive. In 1996, this changes. Right now, employers need to pay 50% of the minimum wage, or $2.13 an hour, for tipped employees. Instead of maintaining that 50% employer payment, The bond amendment freezes it for all perpetuity at $2.13.
--:-- Nina Mast: So essentially what they did was freeze the tip minimum wage at $2.13 an hour, while the federal minimum wage continued to go up. And that's still the situation we're in now.
--:-- Nina Mast: Nina, which states have eliminated the tipped minimum wage? There are seven states that have eliminated the tip minimum wage and pay tipped workers the same wage as everyone else. Those states are California, Washington, Oregon, Nevada, Montana, Minnesota, and Alaska. And then there are a few localities that have also eliminated or phased out the tip minimum wage, like Chicago and then Washington, D.C.
--:-- Nina Mast: Nina, why hasn't this changed? It seems like it would just be a lot easier to give everyone the same minimum wage. It's really been an uphill battle. And I think that's in large part due to the lobbying and advocacy efforts of the National Restaurant Association, its state affiliates, and groups like the Chamber of Commerce, other employer groups that have really fought tirelessly to prevent the minimum wage from being raised.
--:-- Nina Mast: In most states, the minimum wage for tip workers is still less than $4 an hour. Employers are legally required to make up the difference if workers aren't receiving enough in tips to get them up to the regular minimum wage. But in practice, it's extremely difficult to enforce that rule. You know, it's largely left up to the workers themselves to track their hours, track their tips, and then they have to confront their employer if it seems like they're not actually receiving the minimum wage.
--:-- Nina Mast: And we see rampant wage theft in the restaurant industry, particularly among tipped workers. And so you have a system where workers who are disproportionately women, people of color, and immigrants who are often living below the poverty line, they're essentially forced to rely on the kindness of strangers to pay their wages.
--:-- Nina Mast: I think as consumers, we're kind of initially taught that tips are a way to reward good service. You know, someone has a big table, it's crowded, but they're really showing up. And it's like, you know what, I'm going to give you a good tip. But if, you know, you get less than stellar service, it's a way to make it known that you got service you don't like.
--:-- Nina Mast: Do you think that's the way we should be thinking about tips? Yeah, I think this is a big misconception. I mean, people don't realize that they're actually paying the lion's share of their server's wages through their tips. So unfortunately, when you fail to tip your server, you're actually denying them their wage.
--:-- Nina Mast: Obviously, this is a bad system. You know, the burden shouldn't be on customers to be paying their tipped workers' wage. It should be on employers. And that's essentially what advocates are calling for when they are asking for the tip minimum wage to be eliminated.
--:-- Host: This episode was produced by Peter Balanon-Rosen, edited by our executive producer Miranda Kennedy, fact-checked by Melissa Hirsch, and engineered by Patrick Boyd. For an upcoming episode, we're going to be talking about trains. What's been your experience on passenger trains in the U.S., and how does it compare to trains around the world? Do you think American trains deserve their bad rep? Give us a call at 1-800-618-8545. Explain It To Me is part of the Vox Media Podcast Network. For more award-winning podcasts, visit podcast.voxmedia.com. I'm your host, John Glenn Hill. Talk to you soon. Bye. Thank you.
