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The Case for Phasing Out Maine’s Subminimum Wage for Tipped Workers

ROC United has partnered with the National Employment Law Project (NELP) to release The Case for Phasing Out Maine’s Subminimum Wage for Tipped Workers. The report analyzes the impact of maintaining a lower minimum wage for tipped workers and draws from the experience of “One Fair Wage” states and cities that have abolished the subminimum tipped wage.

Residents will soon vote on a ballot initiative in the November 2016 election that, if successful, would gradually raise the state’s minimum wage from its current level of $7.50 to $12 per hour by 2020. A $12 minimum wage in Maine by 2020 would raise wages for 181,000 residents. Under current law, employers can pay tipped workers the lower tipped wage as long as gratuities cover the difference between the regular minimum wage and the subminimum tipped wage. Tipped workers include waiters and waitresses, bartenders, food delivery workers, and many others at the heart of important Maine industries like tourism and hospitality. By eliminating the subminimum tipped wage, the ballot initiative would directly address the economic insecurity and high rates of sexual harassment that uniquely affect the nearly 24,000 tipped workers in Maine.

Key findings include:

The outmoded subminimum tipped wage promotes poverty wages and un- stable incomes for a tipped workforce that is 79 percent female in Maine
While a small number of tipped workers are employed at high-end restaurants where they earn a signi cant amount in tips that translate into higher incomes, high-earning servers are a small minority and not representative of tipped workers in Maine.
Eight percent of all workers in Maine live in poverty, but Maine’s tipped workers experience poverty at over twice that rate.
People of color feel the impact of the tipped subminimum wage even more sharply—a quarter of tipped workers of color in Maine live in poverty, compared to 18 percent of white tipped workers.
With a base wage of $3.75 per hour, Maine’s tipped workers depend almost entirely on tips for their income. This forces servers to tolerate inappropriate behavior from customers, and leaves them vulnerable to objectification and harassment from coworkers and management.
The nation’s top wage enforcement experts at the U.S. Department of Labor report that the complex subminimum tipped wage system is so complicated that it is difficult to enforce and results in high rates of noncompliance by employers.
Contrary to opponents’ predictions, raising the subminimum wage while prohibiting a lower tipped subminimum wage has not led restaurants to abolish tipping and has not led diners to reduce tipping levels.
The restaurant industry is strong in the seven One Fair Wage states, demonstrating that it is economically feasible to phase out the subminimum tipped wage without harming restaurant jobs or sales. In fact, restaurant employment in the seven One Fair Wage states is projected to grow in the next ten years by 10.7 percent, while Maine’s restaurant employment rate is projected to grow 7.6 percent during that same period.

Full report here