Under the current system, tipped restaurant workers are paid a low base salary by their employer and collect tips to make up the difference to the non-tipped minimum wage. However, employers are responsible to make up the difference if the tips collected are not enough to get an employee to the local minimum wage.
Below chart from US Department of Labor’s “Wage and salary workers paid hourly rates with earnings at or below the prevailing federal minimum wage, by occupation, 2016 annual averages” clearly shows that unfortunately, restaurant workers are on top of the list.
In a restaurant, FOH (front-of-the-house) positions require the proper skills, knowledge, training and also require them to be overall presentable to the customer. They are not minimum wage positions.
Restaurant Opportunities Center whose mission is to improve wages and working conditions for the 14 million people who work in America's restaurant industry is campaigning for “One Fair Wage”. One Fair Wage would require the restaurant industry to pay all of its employees at least the regular minimum wage.
In addition to one fair wage, tips are necessary for ensuring above minimum wage pay, rewarding and promoting a better performance and create a balance between work load and the number of FOH staff in a restaurant. For example, without the tips, employees won’t have incentives to work harder in a very busy shift, however, if the employees are incentivized to work for tips, their employers will be able to reduce the number of employees during expected slow shifts while controlling payroll and ensuring above minimum wage for the employees.
There are concerns about where the additional money will come from to pay for the increase to support the One Fair Wage concept. The answer is simple; menu prices should go up. It is time for the industry that employs almost 10% of the US work force to start operating within a proper business structure. With 25-30% food cost, 35-40% labor cost, 10-15% rent, taxes, repairs and other operating expenses, not to mention paying 12% to over 20% to marketers/facilitators like GrubHub, most of the industry is struggling to reach 4-6% profitability. Individual restaurants can be small businesses but the industry is not a small business and needs change. One fair wage would help accelerate this long overdue change.