servers are treated like absolute garbage
And either way, if you wanted to believe the merit-based approach, you're talking maybe the top 5% of servers anywhere making "good" money. Wage theft in the industry is colossal.
I will be pleasantly surprised if the removal of tax on tips does absolutely anything to move the needle for the bottom 95% of servers.
The restaurant industry has been lobbying for this to further avoid the pressure of raising wages and the complication of reporting taxes — the reasoning is out there in the open.
This is the sort of modern shell game where corporate interests further obscure costs to trick the lower class into thinking it's a good deal. It's akin to the math on maintenance Uber drivers tend to fail to do when they're calculating their wages... they're absolutely getting hosed and most of them don't even understand how.
Waiters in the US make significantly more than their British and French counterparts, due to tipping: the US minimum wage is lower than the British and French minimum wages, and despite American waiters being paid at an even lower hourly rate than the US minimum wage, they end up making more due to tips, performing the same job.
The upper 25% of waiters in the US make over $40k a year. Your 95% estimate is very off base.
> waiters make more in America
By apparently 1.5k€ per year? Not a strong argument as it stands and we haven't even begun talking about the lifestyle and workplace differences between the two countries.
And that's before even factoring in the tax benefits, which is exactly what this article is about! No tax on tips means nearly all of that income is untaxed. French waiters pay 11% taxes, and British ones are in a 20% tax bracket. The difference widens even further.
Tips allow American waiters to earn more, and no tax on tips makes them take home even more. Hand-wringing about how the American system pays less than the European one is innumerate.
no tax on tips reduces pressure for employers to support higher minimum wages, that's why the restaurant lobby supports it
No tax on tips will positively affect American waiter wages at basically every level. It's pretty simple math.
You can make that argument about literally anything that reduces the tax burden on people who's primary income is useful income.
Workers who earn too little to pay taxes (A) will not benefit from a tax cut (B).
But workers who earn enough (not A) may still not benefit (not B), for example because their employer indirectly pockets the difference. That is actually being argued in the article.
So this is indeed the appropriate way of formulating the statement: at least 40% of workers will demonstrably not benefit from this.
Some tipped workers, like bartenders, can make more in tips than a junior software engineer lol. Less taxes definitely helps their cause.
If you are concerned with indirect effects, there's quite a few pros and cons that you could extrapolate from the no tax on tips policy. These arguments are far less compelling in general.
> Some tipped workers, like bartenders, can make more in tips than a junior software engineer lol. Less taxes definitely helps their cause.
neat, but you can only deduct up to $25k and the benefits phase out if you earn more than $150k (single filers).
If someone earned $125k salary + $25k in tips. Their taxable income would decrease by about $6k (or $500/mo, 4% overall).
I just turned on reader mode in Firefox and then refreshed the page and got the article. I'm surprised how often it works. It often doesn't but sometimes it does.
That seems correct. It's a pretty useless statement, but it is true.
The whole "I get taxed whether you tip me or not", "I have to pay to serve you if you don't tip"? No, not so much. If you can show (there's even a hugely burdensome IRS form that might take as much as 3-4 minutes a month for cash tips) that you earned less than that 8% average, then that's what you get taxed. But most servers don't want to fill that form out, because they get ... rather more than that, and are being undertaxed already.
More carve-outs complicating the tax code and pandering to specific constituents is a bad thing.
It reminds me of listening to a story of how day care business owner-operators are not required by law to contribute to Social Security, don’t, and are then screwed at the end of their life because they don’t have any way to retire.
Of course, you're still expected to leave a tip and suggested minimum is now 20%, plus even McDonalds is charging $15 for a 4 oz burger, so I rarely go out to eat at places that expect a tip anymore.
I'm not sure why they specifically should be tax exempt though. Cash tips often were, practically speaking, so a lot of tax evasion was happening, but it still seems odd to single them out.
https://www.latimes.com/archives/la-xpm-1988-11-01-mn-628-st...
> California doesn't have a special minimum wage for tipped professions?
The difference is where the money comes from: directly from employer vs directly from customer. But in all cases *the sum of these sources* must equal the minimum wage.
If the employee is not taking home at least minimum wage, then the employer is guilty of wage theft.
If the employer does not make at least $x towards an employee's wage, the employer is guilty of wage theft.
So instead, read the CA's (and AK, MN, MT, NV, OR, WA) rule as "tips may not be credited towards an employee's salary".
[0] https://www.dol.gov/agencies/whd/state/minimum-wage/tipped
See what your server's reaction is if you tell them to report this wage theft.
They won't. They'll just suggest you tip them to compensate.
So instead of trying to tell me how fruitless this is and just give up to endless arguments, maybe report wage theft if you know about it. You can do it anonymously. You can do it for people that tell you. It's not a hopeless situation. Hell, lawyers take payment after the case is won, and you know if your wage is being stolen then others are too
And it's not like restaurant owners don't talk among themselves. Getting blackballed isn't great.
Bottom line is that you seem to think that there's zero reason why people are shy about reporting wage theft. And yet so many people don't want to do it. Maybe try a little humility on and accept that maybe there are reasons you don't know about or don't understand. It's very easy to tell people what they should be doing when you don't have to walk in their shoes.
I’m sympathetic to the arguments, but this sounds like scaremongering.
If you have evidence of it, please post.
There are so many restaurants everywhere, just leave the worst place off your resume. I can’t see owners coordinating if there’s no online platform for it.
> but retaliation is a thing, and is hard -- and expensive -- to prove.
It also is not expensive. At least not more than the theft. Lawyers working on wage theft generally take payment as part of the recovery. You pay out of the winnings, not up front.
Honestly, a big part of the problem is that many people have defeatist attitudes. A lot of people don't even bother to make a report after they leave. It is hard to retaliate when you've left.
You're not wrong that, in states with a lower tipped minimum, the tips act as a credit. But you're ignoring what the power imbalance in those situations can do to an employee, and you're ignoring the fact that in states like that, tips paid by customers are effectively subsidizing the employer out of paying minimum wage.
And I don't think that it would be surprising that wage theft is more common in places where the tipped minimum is set lower than the general minimum.
As a customer, I would much rather know that the employer is paying the full fair minimum wage regardless, and any tip I leave will always be on top of that. I don't want to be paying a part of the employee's wage that the employer would otherwise be paying.
> tips paid by customers are effectively subsidizing the employer out of paying minimum wage.
But I'm making sure that the conversation is clear that anyone not making minimum wage is suffering from wage theft. We have to identify the right problem if we want to fix it.
> As a customer, I would much rather know that the employer is paying the full fair minimum wage regardless
> I don't want to be paying a part of the employee's wage that the employer would otherwise be paying.
Sixteen states use the federal tipped minimum wage of $2.13: Alabama, Georgia, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Nebraska, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Utah, Virginia, and Wyoming.
> Seven states do not have a separate, lower minimum wage for tipped employees
There's a subtle but important difference in wording. There is no "lower minimum wage" for any employee anywhere. The rule is that employers may credit tips towards pay, up to a certain amount. And they can never credit 100% of pay.
So tipped employees should always earn: minimum_wage + stochastic_number
"lower minimum wage for tipped employees" is incorrect and is just the interpretation of "minimum employer must pay after applying tip credits". Subtle, but very different things! If you aren't earning at least minimum wage (tips inclusive), then your experiencing wage theft.
The DOL page[0] specifically says "Maximum Tip Credit Against Minimum Wage" and that's how the column "Minimum Cash Wage" is calculated, but under no circumstances[1] can the employer pay less than "Minimum Cash Wage". Anything less is illegal. ALSO under no circumstances[1] may an employee earn less than minimum wage.
[0] https://www.dol.gov/agencies/whd/state/minimum-wage/tipped
[1] We're ignoring allowed deductions like lodging and meal
If it's the same in both cases, that's his point.
That's the point that all the parents above them are concerned with. So a semantic argument is needlessly pedantic.
Minimum wage. You can credit that with tips in some places, but you also have to credit the customer in those cases (not legally, but they aren't coming if you don't), so the net is the same.
Not to mention that in a state where there is no lower tipped-wage minimum, all tips go to the employees directly. In a state where the tipped minimum is lower, tips effectively go to the employer for the amount between the tipped minimum and regular minimum, as that's a cost the employer would otherwise have to pay.
Waffle house then opened an "inquiry" since if they weren't making minimum wage through tips, it must have been because their service was poor (of course it's actually because it was a weekday graveyard shift).
They got their additional $30 or whatever and were then let go.
So while I agree it is illegal to pay less than federal minimum wage, even with tips, but in practice the system is built such that for poor workers in poor areas, they will frequently make less than minimum wage.
Although probably much less nowadays since the $7.25 is still the federal minimum wage and it's pretty hard to find people desperate enough to work for that little money since recent inflation.
This isn't to say that I don't tip when not required to or that I only tip people I think are being underpaid, but ... things have gotten a little out of control. If I feel like tipping, I'll tip. I do not need a prompt suggesting anything when it's not coming out of the employee's takehome pay.
I hate to say it but I think some government regulation is required here.
If the restaurant is going to be shady and unilaterally introduce confusion to an already confusing norm, then I consider that norm voided and fair game for any interpretation.
> I live in California and this isn't true here
To be clear:
- Any worker that is not making *at least the state's minimum wage* (including tips) is suffering from wage theft. (with the exception of Georgia (WTF))
- Any worker not receiving a positive valued check are suffering from wage theft
- Tips only count as a credit and no state lets tips act as a 100% credit to the wage[1]. Credits may be amortized across "workweek" pay.
[0] https://news.ycombinator.com/item?id=44751537 (sources linked here)
[1] Federal only lets max credit of 70% of min wage. Some states go up to ~75% of min wage, but their minimum wage is higher than federal.
"Many restaurant owners illegally don't actually follow this law". "Report them to the DOL". "I don't want to do that. You should tip me to make sure I have a livable wage instead."
Don't confuse "logical" with "correct" or even make the false notion that there is a "correct" reaction. The "right" reaction depends on your goals, short term and long term.
But defeatist attitude results in a tragedy of the commons situation. It's social debt. Think of it like a mess. Messes are easiest to clean up right after they occur. But as time goes on, it becomes harder to clean. If everyone is doing their share of their work messes are very manageable. But if people don't do their share, then it must be picked up by everyone else, right? I think most of us have been in a situation where we've had to clean up "everybody's" mess (if you haven't, you might be that asshole leaving that mess). The defeatist attitude is like that person grumbling "it's too big of a mess, we'll never clean it up." Well... not with that attitude. If the mess needs to be cleaned up, it needs to be cleaned up. Either you help or you make it worse for everyone else.
Jeez, where is this? According to the famous McCheapest map the most expensive Big Mac in America is about 8 bucks. Have prices really shot up that much recently?
What got lost in an edit was that's for the combo with a bag ($0.25 extra).
Don't tip, especially 20%, for over the counter service. That is ridiculous.
>I'm not sure why they specifically should be tax exempt though. Cash tips often were, practically speaking, so a lot of tax evasion was happening, but it still seems odd to single them out.
It's just a gimmick to get votes. The theory is that poor people tend to be the ones that work these jobs, they need a break, and it's not a policy that would cost very much anyway. There is a cap on the tips and most cash tips were going unreported anyway.
A living wage in most population centers in CA is nearly $30/hr.
I have to ask what is causing what's considered a living wage to increase so rapidly, because it appears to be increasing far faster than the national inflation rate.
It sounds like a wage-price spiral, though I'm not aware of anyone claiming we're in one.
Granted, like a lot of things in economics, you can only tell in hindsight long after it has played out and the data is collected and analyzed, so it is also possible that the spiral is already underway and we just don't know it yet.