Why Tip Crediting Should Be Hillary Clinton’s Next Big Issue

hillary clinton tip crediting

Image: Hillary for Iowa via Creative Commons

One of the challenges of the presidential campaign trail is knowing which issues and talking points will land with which audiences. During a debate, for example, a viewer can expect to see candidates spar over ideas that are relatively palatable for the masses—think national security and some top-level economic policy ideas. During rallies with supports, local stump speeches, and private fundraisers, though, a candidate may try a slightly different approach that’s more tailored to the room.

But sometimes, those ideas and policies that candidates research for small, targeted functions could actually have huge momentum on the national stage. Such is the case, I think, with tip-crediting which, this week, Hillary Clinton came out against—again.

In front of a crowd made up largely of union members at the Javits Convention Center in New York City yesterday, Clinton praised Governor Andrew Cuomo’s proposal for a statewide $15 minimum wage. Then, she went a step further, decrying the practice of tip-crediting.

“It is time we end the so-called tipped minimum wage…We are the only industrialized country in the world that requires tipped workers to take their income in tips instead of wages.”

She called the practice—which is the law of the land in 43 states—”shameful.”

Which, to be fair, it is.

INFOGRAPHIC: Who are Tipped Workers?

Tip crediting, also called the “sub-minimum wage,” assumes that a worker’s tips, combined with extremely low wages, will bring their hourly pay to a level that is commensurate with the federal minimum wage. Put another way, it directly puts customers on the hook for ensuring that a worker makes an amount of money that can even be passably considered to be appropriate for a day’s work in the year of our lord 2016. If a worker is unlucky enough to pull down less than $7.25 per hour in tips, then and only then is their employer required to float them the extra cash through wages.

But you don’t have to take my word for it. From The Nation in 2014:

A unique economic relic, the base wage for tipped workers has eroded steadily since 1996, when it was unpegged from the already absurdly low federal minimum. The crumbling value of both wage tiers over the past decade,according to the calculation of advocacy group Restaurant Opportunities Center (ROC), amounts to a yawning gap between tipped workers’ earnings today and what they would have made had the wage rates been adjusted equitably. All in all, the gap represents a net “loss” of more than $20 billion.

“Relic” though it may be, the war on wages is still being waged; just last year, Representatives in Minnesota, a state that previously did not have a two-tiered wage system, attempted to enact one.

This isn’t a new issue—nor is it the first time Clinton has brought up the idea of getting rid of it. She mentioned tip-crediting back in September at a Women for Hillary rally, and the restaurant workers’ union ROC United has used it as a talking point since that time. But why hasn’t Clinton, herself, flown the flag a little higher?

In part, I suspect it’s because this particular facet of the wages and middle-class economy conversation hasn’t been the most splashy; the bulk of the discussion around tip-crediting is by super-wonks, labor leaders, service workers who feel like they’re getting bilked, and businesses that are trying to compromise on raising the minimum wage. Despite its wide-reaching impacts, it’s just not an issue that’s at the top of mind for most voters.

But it is a policy that impacts millions of Americans—a Pew Research study from 2014 found that 1.8 million workers earn less than the minimum wage, many of them because they work for a tipped wage—and one that has deep roots in racial and gender equity. Much like sick leave, the tipped minimum wage has huge implications for women, non-binary folks, and people of color.

Tipped workers are disproportionately neither male nor white, which means they already tend to earn less than salaried workers; coupled with the low wages that are a result of sub-minimum wage, and tipped workers run a greater risk of ending up in poverty. The average tipped worker earns just barely above the federal minimum wage—slightly under $9/hr—whereas their peers earn $12 to $15 including tips. Add in the fact that tip crediting leads to an unreliable income, and that it basically ensures that customers are forced to accept even the worst behavior from customers to make a living, and it’s a pretty poor system all around.

It’s also a system that can be easily pointed to as both anti-worker and anti-business. Though the Chamber of Commerce and the National Restaurant Association might disagree, paying workers such a drastically low raise is terrible for business, because it puts a drag on the local economy. Workers simply aren’t earning enough money to get ahead in tip-crediting states, which means they certainly can’t afford to eat in restaurants, buy new clothes, go to the movies, or even fill their gas tank.

As part of Clinton’s inclusive economic platform, getting rid of tipped credit makes perfect sense—and it’s an opportunity for her to get ahead with young people and those who may feel like her pro-labor platform is all talk and no action. It’s also a chance for her to speak up on an issue that, while he’s been quiet about it, Bernie Sanders has legislatively been active on, though surprisingly tame. In 2015, Sanders, who supports a federal minimum wage of $15/hr, introduced a bill to Congress called the Pay Workers a Living Wage Act. The act called for a raise for employees who are receiving tips and, eventually, a phasing-out. However, it was never a cornerstone of his $15 push.

This could be a brilliant opportunity for Clinton, if she opted to take it, because it would either force Sanders to get on board with getting rid of it, or paint him into a corner of being pro-worker but, potentially, not as strong on race and gender equity. If she wanted to set herself apart as uniquely on the side of all workers, this would be a good way.  This is a time when wage issues are bigger than ever, and eliminating tip crediting would be an easy talking point for Clinton if she chooses to take it for a walk on the national stage.



Hanna Brooks Olsen
Hanna Brooks Olsen is a reporter in Seattle. Her writing about the economy and politics has appeared in the Atlantic, the Nation, Salon, Fast Company, and elsewhere.