States that mandate a normal minimum wage, with no exemptions for restaurants.
This data, sourced from the ROC's March 2014 study, centers on the disparity between the seven states that prohibit the $2.13 sub-minimum wage, and those that don't. (The Department of Labor has a map that illustrates which participate.) "Per capita restaurant sales increase as the tipped minimum wage increases" and "above-average employment growth occurs in" those seven. Both good things!
Tip crediting (and its downsides).
In the states that don't, there's tip-crediting, another nuance I should've addressed. Simply put, the concept says if a waiter makes below minimum wage ($7.25 an hour) after tips, the restaurant has to cover the difference. Which sounds decent, until you take these two factors into account:
- Cincinnati.com reports: "Among the 9,000 restaurants the U.S. Department of Labor investigated between 2010-2012, nearly 85 percent of them were in violation of wage laws, including [the tip-crediting] requirement."
- In New York, a state where restaurants are required to pay $5/hour (above the federally mandated $2.13, but below the statewide minimum of $8), "one out of five tipped workers makes less than the current state minimum wage of $8.00 an hour even when including tips", and "thirty percent of tipped workers in the state earn less than $8.88 an hour, which for a full-time, year-round worker translates to just $18,470 annually, not enough to keep a family of three out of poverty."
So, tip-crediting has some loopholes, too, and restaurants routinely walk through them. Plus, even if everything is on the level, it still doesn't comprise a living wage in some states.