The Domino Effect: Should Tipped Employees Benefit From an Increase in Minimum Wage?

by lquaglino | May 12, 2013 8:48 am

By LISA QUAGLINO

Many students today hold jobs that pay less than minimum wage on an hourly basis and rely on tips to supplement their paychecks. As a result of today’s economy, however, tips have become smaller, but wages have not increased.

In the state of New Jersey, according to minimumwage.org[1], a tipped employee is anyone who receives at least $30 in tips per month, and can be paid as little as $2.15 per hour. Tipped employees are required to make the minimum of $30 per month in tips on top of their base pay, which can be less than minimum wage. Any tipped income over $30 is considered a bonus. With recent talks of Obama’s plans to raise minimum wage to $9 per hour from $7.25, tipped employees are left to wonder if they too will receive a mandatory increase in their hourly pay.

Jessica Marino, employee of The Jumping Jungle, a business which hosts birthday parties and where employee salaries are largely based on tips, was alarmed by the low dollar amount claimed to be enough to be considered a tipped employee. She, like many others, believes that the $30 minimum should be increased.

“If I was making only $30 a month in tips, there is no way I could afford car insurance payments, books for school, to put gas in my car. Besides the fact that I truly believe that if the minimum wage is increased to $9 an hour, tipped employees deserve an increase as well, I also think the minimum requirements to be considered a tipped employee should be changed. It seems unfair that if someone makes a maximum of $30 a month in tips their employer could decide to pay them $5 dollars an hour. That’s not livable,” said Marino

Do Tips Provide Enough Income?

Many people expect that when they leave a tip for someone who has helped host and serve their party, that the cash is something extra, simply something that shows appreciation. For the people on the receiving end of these tips, more often than not, what is handed to them is all the money they will have until payday.

This is especially true for employees of The Jumping Jungle, a business primarily open on the weekends. Although the employees receive a wage much closer to the requirement of $7.25 than other tip based jobs, their pay still reaches under minimum wage, averaging around $5 per hour.

“Whatever I get handed on Saturday and Sunday is the only cash I’ll have all week,” said employee Liz Mohr. “Some weekends are better than others, and it also depends on how many parties you work. Then there are those parties where you get tipped on the card. A tip is a tip, and I’m glad to see that money in my pay check, but not so happy after you see the taxes taken out of it. Cash is always better,” Mohr said.

According to the Bureau of Labor Statistics[2], there are about 64,330 employees in amusement and recreation industries who make an average of about $10.81 per hour, after the tax deductions. Although that number sounds high, the problem here becomes how many hours these employees are actually working.

 A Day in the Life

Employees of The Jumping Jungle can be scheduled for nine hour days, hosting up to four, two-hour parties if business is busy enough. On normal weekends, shifts tend to average out at around six hours.

Party hosts are kept on very strict time limits, making sure each party follows its schedule and moves smoothly into the next transition. They watch over children while also interacting with them. They are always required to keep a smile on their face while serving food, cutting cake, handing out favors, keeping guests happy and cleaning party rooms. The long days spent attending to the needs of others can lead to frustrations.

“Of course I know the math adds up to me making $9 or $10 an hour after you calculate tips, but no one remembers that I’m not working 9 hour days all the time. I’m working an average of four parties a weekend,” Marino said. “If I work around two and a half hours per party and make a $20 dollar tip, I might be about even with someone working for minimum wage, but I’m not always getting tipped that well. It’s unpredictable, even if my work ethic is the same for every party. There have been times where I got nothing.”

The unreliability of a tipped income is the number one problem for employees who need them. According to the Bureau of Labor Statistics, in 2012, 1.6 million wage workers earned exactly the federal minimum wage, while about 2 million had wages that fell below the federal minimum.

Are There Solutions?

These employees find themselves at the mercy of those who they serve. Even when their job is done to the best of their ability, there is no guarantee they will receive a proper thank you, or the money they deserve. Without any legal obligations for their employers, other than the minimal government regulations, it leaves them no choice but to find their own solutions.

“I had to get another job, I didn’t really have a choice,” said Jumping Jungle and Stop&Shop employee Caitlyn Newell. “I wasn’t making enough in tips to cover everything. And getting paid in cash tips makes it hard to save up money. I was trying to pay for school and it just wasn’t working. I needed a job with a guaranteed income and guaranteed raises because I’m part of a union.”

Audio Gallery: Listen to a tipped employee discuss issues surrounding minimum wage

[3]Caitlyn Newell speaks on the benefits of belonging to a Union[4]

Caitlyn Newell discusses why she decided to get a second job[5]

Caitlyn Newell shares her opinion on tipped employees receiving an equal pay increase[6]

Working multiple jobs may be one way to earn more money, but it is not realistic for everyone, especially full time college students. These students face even more difficulties due to the limited options available when it comes to part time jobs, many of which revolve around tips. These tipped employees are simply looking for some stability.

“I definitely think that if there was some sort of union for tipped employees that could do something like make it a requirement to tip them, even if it’s a very small amount, that it would help their wages become more steady and reliable. I don’t think anyone is expecting a huge increase in their pay, just a way to ensure that they have enough to get by,” said Newell.

Most recently, Gov. Christie stated he would not sign Assembly Bill No. 2162[7], approved by The Assembly Labor Committee, because he did not agree with the annual increases in pay. According to an article on NJ.com[8], if the bill is approved within the next year, voters can decide on the issue without Christie’s signature.

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