Tipped Workers in the United States

Today more than 3 million people in the United States work a tipped job. The U.S. Department of Labor defines a tipped employee as any employee engaged in an occupation in which he or she customarily and regularly receives more than $30 a month in tips.

Although the federal government has not established a strict job classification structure that defines which occupations are eligible to receive tips, the Bureau of Labor Statistics (BLS) identifies a variety of industries and occupations most likely to have tipped employees:

  • Restaurants, bars, and casinos
  • Hotels
  • Automobile parking (valet)
  • Local passenger transportation (such as taxis, tour bus, helicopter, and limousine services)
  • Beauty salons and barber shops
  • Passenger railroad service
  • Deep sea passenger service

Food Service Highest Amount of Tipped Workers

By far, restaurants lead all other industries claiming 63 percent of all tipped jobs in the U.S. Among tipped restaurant occupations, bartenders are the highest tipped workers, earning a median hourly wage (including tips) of $9.09. Waiters and waitresses earn a median hourly wage (including tips) of $8.92.

When Tips Aren’t Enough: The Tip Credit

Approximately five percent of tipped workers say their combined base wage and tips don’t equal the regular minimum wage, making them eligible to claim a tip credit. The tip credit allows workers to have their employers make up the difference between their base wage and tips and the applicable state or federal minimum wage, if those employees’ tips are insufficient.

The Origins of Tipping

Tipping may have originated in the taverns of 17th Century England where patrons would slip money to the waiter “to insure promptitude” or T.I.P.

Tipping reached the shores of the United States just after the American Civil War in the late 1800s when wealthy Americans who witnessed the European custom of tipping brought it back to boast their prestigious education and class, but it was not well received. By the 1890s organized resistance against tipping began. Many were outraged by this custom because it went against American ideals and allowed the ‘service class’ to be dependent on the higher class.

Traveling salesmen who dined out frequently set up temporary tipping boycotts, some waiters were said to have gone on strike because they preferred a stable wage, while other waiters fought back. Rumors began to swirl about waiters spitting in or poisoning their patron’s food. This caused nervous diners to petition local legislators asking them to take action.

In the early 1900s lobbying groups and state legislators pushed anti-tipping laws through in Washington, Mississippi, Arkansas, Iowa, South Carolina and Tennessee. Iowa’s legislation even imposed fines of up to $25 (equaling more than $500 today) for “offering, receiving or facilitating a tip.” These states weren’t good at enforcing these laws though and within 10 years every anti-tipping law was withdrawn. There hasn’t been a significant effort to end the practice since.

Minimum wage laws introduced during the Great Depression of the 1930s did not take waiters into account. It wouldn’t be until 1966 when the tipped minimum wage was established that waiters were included. However, their wages were set lower with the expectation that they would receive a tip.

The Pros and Cons of Tipping

Tipping doesn’t just stop with those in the restaurant industry; today we tip everyone from our waiter to the man who takes it upon himself to open the door for us. The line of people you potentially could tip is being blurred. Should tips be given solely to those earning the federal tipped minimum wage?

People who argue against tipping say the employee is just doing what they were hired to do; that they know what they signed on to do when they applied for the position. Others say they are confused about whom to tip and end up tipping everyone out of fear of looking cheap – which seems to have exacerbated the problem.

But a common theme seems to be emerging … customers tip people who work hard and go above and beyond. If they don’t go above and beyond, neither should you.

For more on tipping, read our other post “Has Tipping Gone Too Far?

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