In recent years, minimum wage has become a flash point at the center of a national debate about worker's rights, employer responsibility, and the job market. But an essential feature of minimum wage work for millions of Americans has a dark history that's rarely talked about.
Wages based on customer tips are rooted in a racist American history involving powerful industries, newly freed slaves, and the availability of cheap labor, says Saru Jayaraman, co-founder and co-director of the Restaurant Opportunities Centers United and director of the Food Labor Research Center at University of California, Berkeley.
"Because of our racist history, early restaurant industry and railroad company interests demanded the right to hire newly freed slaves and not pay them anything, and let them live on customer tips," she told ATTN:.
But the horrible justifications for hiring tip-only workers more than a century ago weren't only confined to discriminatory company policies in the late 1800s. They were enshrined into the country's first minimum wage legislation, passed by Congress in 1938 under the Fair Labor Standards Act.
According to Jayaraman, the notion that customer tips could make up wages paved the way for the tipped minimum wage. "[T]hese industries could claim that they were hiring these workers when nobody else would and providing them the opportunity to get tips,” she told ATTN:. The idea that those tips would be their wage, she added, "was agreed upon and codified into the very first minimum wage law that passed in 1938 as part of the New Deal."
How did tipping become so popular in the U.S.?
Though its practice is widespread in the U.S., tipping became popular among feudal European aristocrats, and was brought back to the states by wealthy American travelers who wanted to show off their worldliness, according to The New York Times.
The practice was met with a decidedly negative reaction back home. Several states, propelled along by the labor movement, passed anti-tipping laws in the early 1900s. In Washington, accepting a tip was a misdemeanor. Thanks in part to lobbying efforts from industry interests, however, those bans were repealed by 1926. By 1938, Congress allowed states to set a lower tipped minimum wage.
Not much has changed since 1938 for tipped workers.
Jayaraman says that the same logic used in the tipped wage's racist origins — that customers, not companies, pay workers' wages — is still at play today. Thanks to lobbying on the part of powerful industry groups like the National Restaurant Association, the federal tipped minimum wage has been stuck at $2.13 an hour since the early 1990s.
"We ended up not only keeping tipping, but allowing it to replace wages. That's the part that is the most nefarious," she told ATTN:.
Many American service workers still make a tipped minimum wage, which is calculated based on the assumption that customer tips make up the difference between what's often just a few dollars an hour, and what's the required hourly minimum by law, which can vary state to state. Those wages can be shockingly low, and leave customers responsible for covering the difference, which, as we know, doesn't always happen. In fact, how much you leave with the bill is more often based on personal tipping patterns rather than a reflection of the quality of service. The chart below from Mother Jones gives us an idea of how much (or how little) tipped workers across America make.