The federal minimum wage for tipped employees is currently $2.13 per hour and has been since 1991. During that eighteen year period, the federal minimum wage for non-tipped employees has increased five times, from $4.25 per hour in 1991, to the most recent figure of $7.25 per hour.
Alerted to the inequities of this system, Representative Donna F. Edwards (D-MD) has introduced a bill that would raise the federal minimum wage of tipped employees to $3.75 per hour three months after enactment. It would then increase to $5.00 in 2011 and cap out at 70 percent of the regular minimum wage in 2012. From 1966 to 1996 the tipped employee minimum wage had been determined as a percentage of the regular minimum wage. Congressional action in 1996 ended that practice, giving restaurant industry employers a windfall.
The National Employment Law Project (NELP) is the main advocacy group behind this push for an increased minimum wage for tipped employees. NELP has reported that tipped employees have been forced to get by with poverty-level incomes as a result of this neglect by the legislature. Restaurant servers (the largest group of tipped employees) have nearly three times the poverty rate of the national workforce as a whole.
Thirty-two states currently have tipped employee minimum wages above the federal level, including seven which guarantee tipped employees the full minimum wage of regular workers. Although the fate of this legislative proposal is still uncertain, it could potentially affect thousands of businesses across the country.