Mel Nichols, a 37-year-old bartender in Phoenix, Arizona, earns $30 to $50 an hour with tips. But uncertainty about how much you’ll make each day is a constant source of stress.
“For every good day, there are three bad days,” said Nichols, who has worked in the service industry since she was a teenager. “You don’t have any security when it comes to knowing how much you’re going to make.”
This uncertainty is largely because federal labor law allows businesses to pay tips to workers, such as caterers, bartenders and bellhops, less than the minimum wage as long as customers’ tips make up the difference. Voters in Arizona and Massachusetts will decide in November whether continuing to allow employers to pass on some labor costs to consumers is a good policy.
The ballot measures reflect an accelerating debate over the so-called minimum wage, which supporters say is essential to the sustainability of the service industry and critics say pushes labor costs off employers’ shoulders and leads to worker exploitation.
The amount workers receive varies by state. Fourteen states pay the federal minimum, or just over $2 an hour for tipped workers and $7 an hour for non-tipped workers.
Employers in Arizona can pay their tipped workers $3 less per hour than other workers. Under current rates, this means the base wage for tipped workers is $11.35 per hour.
Voters will decide whether to approve a measure backed by state Republicans and the Arizona Restaurant Association to change the minimum for tipped workers to 25% below the regular minimum wage as long as their wages with tips are $2 more than that minimum.
Arizona’s minimum hourly wage is currently $14.35 and increases annually according to inflation.
Massachusetts voters are asked to repeal the minimum wage system.
There, voters will decide on a measure to gradually increase the state’s worker wage — currently $6.75 an hour — until it reaches the regular minimum wage by January 2029. The measure was introduced by One Fair Wage, a nonprofit working to end… Minimum wage.
If voters approve the measure, the Bay State would join seven states that currently have one minimum wage. Michigan will soon join that group yet August state Supreme Court ruling Work has begun to phase out the minimum wage.
“When you’re not making the money you should be making to pay your bills, it’s hard on you,” said James Ford, a longtime hospitality worker in Detroit. “(The ruling) makes me think we are moving forward.”
Other states have wage measures on the ballot. In California, voters will choose whether to do so or not Raising the minimum hourly wage from $16 to $18 by 2026 in what will be the highest state minimum wage in the country. Actions in Alaska and Missouri would gradually raise the minimum wage to $15 an hour while also requiring paid sick leave.
In the past two years, Washington, D.C., and Chicago have also begun eliminating the minimum wage.
Employers must make sure workers receive the full minimum if they do not earn a lot in tips. But they don’t always comply with federal labor law. One in 10 restaurants and bars investigated nationally by the U.S. Department of Labor between 2010 and 2019 violated a provision of the Fair Labor Standards Act, resulting in the establishments paying $113.9 million in back wages.
The problem disproportionately affects women, who make up about 47% of the U.S. workforce but nearly 70% of those who work in important occupations, according to an AP analysis of U.S. Census data.
In Arizona, Republican state Sen. J.D. Mesnard, the sponsor of Proposition 138, said the measure is a win for both businesses and low-wage workers.
“The employer is protected in the sense that they can maintain this minimum base, knowing that there will be tips on top of it,” Mesnard said. “A tipped worker is guaranteed to earn more than minimum wage, which is more than he is guaranteed today.”
Nichols doesn’t support that.
“It will reduce my work hours, and anything that reduces my work hours is not something I want to rely on,” she said. “I don’t think business owners need further reductions in labor costs.”
Proposition 138 was initially introduced as a response to a ballot measure pushed by One Fair Wage that would create an $18 minimum wage, but the group abandoned the effort after threats of litigation from the Restaurant Association over how it collected signatures.
Instead, One Fair Wage will focus on trying to pass a wage increase in the Legislature. Democratic state Rep. Mariana Sandoval said she hopes her party in November can flip the Legislature, where Republicans have a one-seat majority in both chambers.
After working for tips for more than 20 years, server Lindsay Rack, who works at a restaurant at Phoenix Sky Harbor International Airport, said she’s encountered her fair share of belligerent customers. But since their tips make up a large portion of her pay — about $60 an hour — she’s reluctant to stand up to them.
For Rock, a higher — not lower — base wage is needed.
“I think there should be one minimum wage, and then people should get tips on top of that,” Rock said.
The National Restaurant Association and its state affiliates are warning of reduced hours, reduced staffing and higher menu prices if employers cannot rely on tips to pay their workers. That’s why Dan Piacudio, co-owner of Harold’s Cave Creek Corral restaurant outside Phoenix, hopes voters will approve Proposition 138.
“This is just a way to protect our current system that has been in place for 20 years and protect restaurant owners, keep restaurant prices affordable and, most importantly, keep wages very good for all tipped workers,” Piacquadio said.
Between 2012 and 2019, the number of restaurants and the people working in those restaurants grew faster in the seven states with a single minimum wage than in states that pay the federal minimum wage, according to labor economist Silvia Allegretto.
“We’re sitting here in a state that has a $16 minimum wage,” Allegretto said from Oakland, California, where she works at the left-leaning Center for Economic and Policy Research. “There is no minimum wage, and we have a thriving restaurant industry.”