Has Tipping Gone Too Far?
Tipping is the voluntary demonstration of gratitude in exchange for a service. Although it’s standard practice to leave a tip for a server when dining out at a restaurant or to drop coins in a tip jar for baristas at the coffee shop, the number of hands extended to receive those tips seems to be growing.
Federal Tipped Minimum Wage
Waiters and waitresses receive a federal tipped minimum wage – the minimum wage required to be paid to tipped employees. This wage is set lower than the standard federal minimum wage to include customer tips which together can equal or exceed the federal minimum wage. However, if a tipped employee doesn’t make enough from their wage and tips to equal the federal minimum wage, their employer is legally required to make up the difference.
The president’s proposal to increase the federal minimum wage to $10.10 would raise the rate for tipped workers from $2.13 to $4.90 by 2016. Supporters of the wage increase say that it would help to boost the economy, yet others say the wage increase would force businesses to cut employee hours, lay off workers, and hire fewer people.
Minimum Wage Increases and Tips
Would you still tip if your server made a wage equal to or more than the regular (non-tipped) minimum wage? In cities like Seattle, where legislators are pushing to raise the minimum wage to $15 for everyone, some hourly wage workers have said they will stop tipping if their waiters make more than they do.
That begs the question: Do we tip for a job well done or are tips just something to be expected?
Tipping expert Michael Lynn says we are tipping out of guilt.
“It’s expected and they don’t want to risk disapproval for failure to comply with social norms … Many tipped employees are paid a substandard wage and this fact has created social pressures on consumers to tip even when the service is bad.”
According to an unpublished study done by Lynn that analyzes tipping patterns state by state, customers tend to tip less in states where the tipped minimum wage is higher. But it’s unclear whether higher tipped minimum wage is causing people to question how much they tip, or if state legislators are increasing the minimum wage because people aren’t tipping.
Where Do We Draw the “Tipping” Line?
No matter which side of the tipping line you are on, tipping for great service is sage advice. Tipping out of guilt … well, you should talk to your therapist about that. But should you tip your therapist? Although that may sound unreasonable, the line of people we do tip seems to be growing. It’s not just wait staff anymore. We tip bartenders, the pizza delivery person, coffee shop baristas, hotel maids, bellhops, taxicab drivers, hairdressers, manicurist/pedicurists, parking attendants, tour guides, musicians, golf caddies; the list goes on.
But do all of these professions really require a tip?
Stay Tuned for Part 2: Who Gets a Tip?
Minnesota Raising Minimum Wage Rate
The nearly 155% increase moves Minnesota from the bottom four U.S. states with lowest minimum wage rates.
Minnesota’s minimum wage rate will increase in stages beginning in August 2014, eventually reaching $9.50 per hour by 2016. Beginning in 2018, the rate would be indexed to the implicit price deflator to help Minnesota workers’ wage keep up with inflation, but any annual increases would be capped at 2.5 percent of the previous rate.
The state’s current minimum wage is $6.15 per hour, but most businesses use the higher federal rate of $7.25 per hour. Minnesota’s minimum wage had not increased since 2005.
Senator Jeff Hayden, the Senate Bill’s author, said about 315,000 Minnesotans would benefit from the minimum wage increase.
The measure faced strong opposition in the Minnesota legislature. The Senate version eked out a 35-31 win and the House of Representatives voted 71-60. Governor Mark Dayton signed the bill into law April 14, 2014.
Minnesota Minimum Wage Timeline: Phasing In the Increase
Businesses with gross sales of $500,000 or more:
- August 2014: $8.00 per hour
- August 2015: $9.00 per hour
- August 2016: $9.50 per hour
Large business can apply a $7.75 minimum wage rate for a 90-day training wage for 18- and 19-year-old employees, all 16- and 17-year-old employees (even after 90-day training), and employees who are foreign medical graduates working under a J1 visa.
Businesses with gross sales less than $500,000:
- August 2014: $6.50 per hour
- August 2015: $7.25 per hour
- August 2016: $7.75 per hour
All Minnesota Businesses to Index to Inflation in 2018
Beginning in 2018, all wages would increase each year on January 1 by inflation measured by the implicit price deflator capped at 2.5 percent.
Minnesota Minimum Wage Posting Requirements for Employers
Employers will be required to display the new version of the Minnesota Minimum Wage posting. For customers enrolled in the GovDocs Update Program, we will provide the revised posting once it is released.
Lowest State Minimum Wage in the U.S.
Once Minnesota’s minimum wage increase takes effect, three states will retain minimum wage rate lower than the federal minimum wage of $7.25:
- Georgia: $5.15
- Wyoming: $5.15
- Arkansas: $6.25
Minnesota Employers: Get Ready!