Several States to Consider Ending Subminimum Wages
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Workers in the restaurant industry typically make around $2.13 an hour plus tips. The volatility of that wage is one reason several states are introducing bills to replace it with a minimum wage.
With most pandemic restrictions in the rearview mirror, people have started dining out again. But while the customers are mostly back, the workers still aren’t—an issue advocates and lawmakers alike blame on servers’ woefully volatile wages.
According to the latest report from the National Restaurant Association, the industry is still down 462,000 jobs from pre-pandemic levels. To bring them back, at least a dozen states are considering eliminating subminimum wages. Under federal law, some workers can be paid less than the minimum wage, such as tipped workers, students and disabled workers.
Several states have already started addressing the latter. South Carolina Gov. Henry McMaster signed a bill last year ending the subminimum wage for those with disabilities, joining a dozen or so other states in phasing it out.
Now, several states are turning their attention to tipped workers. The federal subminimum wage for tipped workers is currently $2.13 per hour and has not been increased in more than three decades.
The restaurant industry is one of the largest employers in the country, and its workforce is overwhelmingly women and disproportionately women of color, Saru Jayaraman, president of One Fair Wage, an advocacy group, said in a call with state lawmakers and reporters Friday.
“They need a full, stable livable wage in order to come back to the restaurant industry,” Jayaraman said. “But we are also hearing from thousands of restaurant owners that they'd like to see policies that would create a level playing field, raise wages across the board and signal to millions of workers that these wage increases are permanent, and it's worth coming back to more restaurants.”
Today, 43 states use subminimum wages. In addition to ending such wages, some states are also looking for ways to ensure minimum wages increase with the cost of living or other economic makers.
One such state is New York. It bumped its minimum wage up to $15 an hour in 2018, but wages have been stagnant since then. Lawmakers have been pushing to increase the minimum wage to $21.25 by 2026 and index hourly earnings to inflation from then on. A separate bill from Assemblymember Jessica González-Rojas would eliminate subminimum wages and allocate $50 million in grants to help restaurants pay their workers minimum wage.
Similarly, in Rhode Island, state Rep. Leonela Felix introduced a bill last year to gradually eliminate the state’s subminimum wage of $3.89. Additional legislation to be introduced this week would increase wages for all workers, said state Rep. David Morales on Friday’s call.
A few years ago, Rhode Island lawmakers passed legislation to raise the minimum wage to $15 by 2025. But with the cost of living skyrocketing, lawmakers are looking to push that further to $20 by 2027 or 2028, Morales said. A separate bill would then tie wages to the consumer price index to ensure they increase appropriately.
Ohio state Rep. Elliot Forhan said lawmakers are planning to introduce legislation this year that will eliminate subminimum wages, and a separate bill would immediately bump the minimum wage for all workers from $10.10 to $15 per hour. It would then increase to $21 over three years and increase $1 annually until it reaches the living wage as defined by the Massachusetts Institute of Technology’s Living Wage Calculator or Economic Policy Institute’s Family Budget Calculator, according to Forhan.
The fate of these bills is uncertain, but at least four other states—Hawaii, Illinois, Maryland and Massachusetts—are also expected to consider fair-wage bills.
Molly Bolan is the assistant editor for Route Fifty.
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