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$7.25 is Shameful

Pennsylvania legislators have neglected to protect workers by refusing to raise the wage floor since it was federally set 14 years ago, now they have the chance to do right by them.

 

Pennsylvania has persisted alongside the twenty states in the union that have neglected to raise their minimum wage since it was set federally in 2009. Although there is precedent for the federal wage floor changing in accordance with inflation and cost of living, there has been no movement in 14 years, leaving the wage floor stagnant as hardworking Americans watch the cost-of-living skyrocket. Pennsylvania is just one among the slew of states who have left their workers to sustain themselves on a wage deemed adequate when Miley Cyrus was still Hannah Montana and a gallon of milk was $3.03. In 2019, state Senator Christine Tartaglione (D-2) spearheaded legislation to raise the minimum wage to $9.50 by 2022. Her legislation was introduced and amended in the Senate but was consistently referred back to the Senate Labor and Industry Committee and the Senate Appropriations Committee, stifling any success it could’ve seen.


After four years, the slim Democratic majority introduced new legislation to the House Labor and Industry Committee, which would incrementally raise the minimum wage to $15 per hour by 2026. This bill would begin by increasing the minimum wage to $11 per hour on January 1st 2024, and would subsequently add two dollars to the minimum wage per year until 2026. Once the minimum wage has been increased in 2026 and reaches $15 per hour, it will be evaluated and adjusted annually using data based on the Consumer Price Index for all Urban Consumers. The index evaluates the cost of living for consumers in the Pennsylvania, Delaware, New Jersey, and Maryland areas to calculate what would be considered a living wage within the Commonwealth.

But what about tipped workers? Every earnest conversation around the dinner table that I begin—and inevitably regret—about increasing the minimum wage is squashed by the tipped worker conundrum. My sister works as a waitress for $2.83 an hour plus tips, and the suggestion that her wage floor be raised evoked genuine disgust. Tipped workers are paid almost entirely in the gratuity patrons feel adequate, meaning that their wage is not stable or guaranteed, nor is it the burden of their employer. This often means extreme wage oscillations. I spoke with waitresses at my local Pittsburgh sports bar who shared that “it is normal for us to have zero-dollar paychecks.” Once their paychecks are filtered through taxes and fees, their primary source of take-home income is cash tips from guests.

The bill, which passed the House Labor and Industry Committee along party lines, also updates the system by which tipped workers are paid, establishing a higher paid wage while also allowing the cultural importance of gratuity to continue. According to its text, tipped workers cannot be paid “less than...sixty percent of the cash wage required to be paid the employee under section 4” in addition to “the tips received by the employee which is equal to the difference between the wage specified.” This means that tipped workers must receive no less than sixty percent of the minimum wage from their employer and that tips may cover the other forty percent of their wage, meeting the wage floor. One of the most critical aspects of the bill is that it still necessitates gratuity, meaning that its cultural importance will not significantly waver. For tipped workers, gratuity will remain part of their income, but this bill establishes that a lack of tips will not result in unsteady pay.

Under this bill, tipped workers would no longer have a wage floor at $2.83 per hour, and on January 1st, 2024, their wage from their employer could not be less than $6.60 per hour (sixty percent of $11.00 per hour), with the ability for the other $4.40 per hour to be covered by gratuity. If forty percent of the minimum wage ($4.40 per hour in 2024) is not covered by tips, the difference must be covered by the employer. In addition, the bill specifies that the tipped value of the minimum wage cannot exceed the actual amount in tips that an employee receives. This complicates the practice of “tipping out” employees who aren’t given tips themselves but whose wage is partially made up of gratuity, like restaurant hosts. The bill further explains that when the amount in gratuity is not surrendered to the employer (meaning that it was given by the customer directly) or it is added to the receipt charge (by the establishment or the customer), the tipped amount becomes “the property of the employee,” meaning that it cannot be used to supplement another employees pay. The bill establishes that it does not intend to “prohibit the pooling of tips among employees who customarily and regularly receive tips” it would instead ensure that employers are responsible for paying the wages of their workers, not their coworkers.


The idea of creating a disgustingly low wage floor to supplement protected pay with non-guaranteed gratuity is more sinister than forcing tipped workers to rely on the whims of their patrons because it also demonizes steady wages. After discussing with my sister, a waitress earning $2.83 per hour plus tips at a sports bar tucked between the Pittsburgh Airport and Robert Morris University, our once diverging concerns bled together. I argued that her employment should be the burden of her employer and that they–principally– should not be able to rely on her labor to sell their product without providing a steady, fair income. Her concerns are echoed by coworkers, and they centered around the loss of tipped income that is assumed with raising the wage floor. Another waitress, Cindy, said, “[a] majority of people won’t tip at all if we make $15, even if it’s exceptional service, making us not as motivated to go above and beyond.” The key piece of information that is not adequately communicated to Pennsylvanians is that tipped wages are not being scrapped altogether under this legislation.

Once I realized this essential piece of information needed to be better understood, I laid out the exact plan for raising the minimum wage while keeping a separate tipped wage intact. To alleviate the concern that tips will be lost, I broke down what her hourly wage would be under this new legislation. I highlighted how instrumental tips would continue to be in her wage, still comprising 40% of it. After the bill’s intentions were spelled out, her concerns were tempered, and she was more supportive of demanding a higher wage because her tipped income was no longer being placed on the chopping block. Not effectively communicating within the bill that tipped wages would not disappear suppresses tipped workers in their fight for fair pay. It equates workers advocating for a higher wage to actively choosing pay cuts for themselves. Advocacy for living wages does not equate to self-sabotage, and implying that is a method of suppression.


The concern that establishing a steady wage will be a net negative for tipped workers because patrons will no longer be incentivized to tip as generously is a common misconception that has been proven false. The Keystone Research Center, a Pennsylvania-based think tank, published a study that examined employment rates and wages in counties on both sides of the border of states with higher minimum wages than Pennsylvania, including New York, New Jersey, Maryland, and Delaware. Their study first focused on employment within the leisure and hospitality sector, which encompasses “restaurants, bars, hotels, casinos, theaters, and other similar venues.”

The Keystone Research Center honed in on the difference in wages and employment among counties along the Pennsylvania-New York border. While Pennsylvania’s minimum wage has been $7.25 per hour for fourteen years, New York has been incrementally increasing their wage floor for a decade, reaching $14.20 per hour in 2023. After New York began increasing their minimum wage in 2013, their employment rates outperformed that of Pennsylvania, whose rates were comparable until New York’s 2017 spike, which lasted until 2020. Despite the harmful effects of the COVID-19 pandemic, “New York leisure and hospitality employment recovered at a much faster pace...[they] rose nearly 50% for New York workers over the full 2013 to 2022 period (Figure 2), far above Pennsylvania’s 10% leisure and hospitality wage growth.” They found that similar growth was reflected in the rate at which wages recovered as well, “New York border county leisure and hospitality workers earned an average of $111 a week more than their Pennsylvania counterparts in Q3 2022, a $5,772 yearly difference for someone employed 52 weeks.”

New Jersey employment and wage rates can be similarly compared to Pennsylvania. The Garden State began incrementally increasing its minimum wage from the federal floor in 2014, reaching $14.13 per hour in 2023. Although employment rates were similar between Pennsylvania and New Jersey until their wage floor reached $10.00 per hour in 2019, New Jersey employment and wages fared much more favorably during the pandemic. Keystone Research found that their employment dropped “a bit less than in Pennsylvania after the onset of COVID and then recovered to pre-pandemic levels faster.” In addition, leisure and hospitality workers’ earnings in New Jersey “have been rising faster than their Pennsylvania border county counterparts since they sharply diverged in 2016” and are now “50% higher than in Q3 of 2013, compared to a 25% increase in bordering Pennsylvania counties.” New Jersey’s slow increase proved successful in combating the economic uncertainty of the COVID-19 pandemic, and Pennsylvania should take note.

While I am sympathetic to concerns that tipped wages in the leisure and hospitality sector will take a hit as a result of increasing the wage floor, the Keystone Research Center shows the opposite effect. As more time passes, and there are more increases to the minimum wage, “data from leisure and hospitality…still show positive effects on average wages coupled with no adverse impact on employment.” Pennsylvania workers deserve to be paid a living wage, and upholding the importance of setting a fair wage floor must begin by remembering its historical significance.


At its creation in 1938, the minimum wage “aimed to stabilize the post-Depression economy while protecting workers who had little bargaining power,” it sought to ensure that the health and well-being of employees were firmly enforced. At the time, President Franklin D. Roosevelt established that the minimum wage should be a living one, which he thought should “mean more than a bare subsistence level – I mean the wages of a decent living.” President Roosevelt fought to establish a wage floor because it manifested as a concrete way to tamper the ability of capitalistic greed to affect working people negatively. Creating strict requirements for employers, like setting an adequate wage floor, is a protective measure meant to uphold the integrity of the working life that keeps this country afloat. Ensuring a balance of power that prioritizes the dignity of workers where profit concerns could steamroll their interest is a sentiment that Pennsylvanians should hold closely.


Workers in Pennsylvania deserve to be treated with dignity, and the lack of movement on their wage floor is truly embarrassing. Researchers at MIT have found that the average living wage in Pennsylvania is $16.41 and is only considered “enough to keep that single worker afloat without anti-poverty program support.” While politicians refuse to put more money in the pockets of hardworking people – allowing the current wage floor to fall 2.25x below what workers need to survive– Pennsylvania suffers. Legislators have continuously refused to stand on the side of workers, instead supporting corporations and allowing greed to contort the idea of a living wage into that of a utopia. On June 20th, representatives in the State House opted to support the legislation, and Pennsylvania’s State Senators will cast their votes in the coming weeks. While 16.7% of restaurant workers live below the poverty line, State Senators should keep their eyes laser-focused on delivering the dignity that Pennsylvania workers deserve.


Claire McCafferty is a second-year student at American University from Pittsburgh, Pennsylvania, majoring in Political Science. She is a Staff Writer and a Deputy Editor for the Agora.


Image Courtesy: free-images.com

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