Study: ‘Tipped’ Minimum Wage Kills Jobs, Too

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Stacks of $5 bills in the wrapping and binding department at the Bureau of Engraving and Printing in Washington, D.C., March 26, 2015. (Gary Cameron/Reuters)

The minimum-wage debate has quieted down a bit since the Senate parliamentarian put the kibosh on party-line federal legislation, but the research continues. A new study focuses on the “tipped” minimum wage.

Workers who make a lot of their money from tips have a lower minimum — federally, $2.13 instead of $7.25 — and some would like to change that. A Democratic bill, for example, would hike the overall minimum wage to $15 and eliminate the lower wage for tipped workers. The new study, however, looks at what happened when states experimented with variations in the tipped minimum wage and finds not-so-rosy results.

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Specifically, the study looks at trends in full-service-restaurant employment in these states, using limited-service restaurants (basically, no-tip fast-food joints) as a control group, and also accounting for trends in places that didn’t change their tipped-minimum-wage policies. By this analysis, hiking the tipped minimum wage kills some jobs, and while those who remain employed do seem to make a little more money, it doesn’t appear to be enough to cancel out the losses for this group as a whole.

As the authors put it, “tipped restaurant workers do not gain, on average, from increases in the tipped minimum wage, and may even lose.”

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