In the United States, the restaurant industry employs nearly 15.7 million people as of 2024. The income gap between servers and their employers is growing. This is worrying, especially with the Trump administration’s plan to undo an Obama-era rule protecting workers in tipped jobs. This could severely affect servers and their families, as tips often make up more of their income than their base pay.
For wait staff and bartenders, tips make up a big part of their earnings. They account for 58.5 percent of earnings for wait staff and 54 percent for bartenders. With average monthly tips of $867, losing this income could be a big hit for many families.
There’s a big issue with fair pay for servers and bartenders. The Bureau of Labor Statistics shows that Black workers in these jobs make about $9.62 an hour, including tips. Latino workers make $9.93 an hour. This points to unfair income distribution and how systemic biases affect the money well-being of minority communities.
The Importance of Tipped Wages for Servers
Servers Depend Heavily on Tips
Servers and bartenders in the restaurant industry count on tips a lot. A study by the Restaurant Opportunities Centers United (ROC) and the National Employment Law Project (NELP) found that the average monthly tips for these workers are $867. But, even with these tips, they make low hourly and yearly wages. The average hourly wage is $10.11, and the yearly wage is $19,990 to $20,800.
Workers of color face an even bigger income gap. Black servers and bartenders make about $9.62 an hour. Latino workers make $9.93 an hour. This shows how crucial tips are for these workers to make a living in the restaurant industry.
| Occupation | Median Hourly Earnings | Median Annual Earnings |
| Wait Staff | $10.11 | $19,990 |
| Bartenders | $10.11 | $20,800 |
| Black Workers | $9.62 | N/A |
| Latino Workers | $9.93 | N/A |
Tipped wages are key for servers in the restaurant industry. The debate on tipped wages and minimum wage standards affects their financial well-being.
“Servers and bartenders depend heavily on their tip earnings to pay for essential expenses such as rent and utilities.”
Servers salaries in the US are heavily reliant on tips, making up a significant portion of their income alongside their base wages, which averages around $10.11 per hour according to the Bureau of Labor Statistics.
The Disparities in Wages and Incomes for Tipped Servers
The Trump administration’s proposed rule could hit workers of color hard, who already earn less than white counterparts in restaurants. A recent report found that in states where all workers get the same pay, poverty rates for workers of color drop by 27%. These states also see more restaurant sales, jobs, and new restaurants than states with a lower tipped minimum wage.
Tipped servers face big wage gaps. In Indiana, waiters and waitresses earn a median of $10.97 an hour, with $8.84 of that from tips. Bartenders make a bit more, at $10.90 an hour. Coatroom attendants earn less, at $8.46 an hour. Nationally, tipped workers make $10.22 an hour with tips, but all workers average $16.48 an hour.
These wage gaps affect certain groups hard. In Indiana, 18.7% of female tipped workers live in poverty, especially women of color. Tipped workers are mostly women (66.6%) and are often young, but many are over 25 years old, and a quarter are over 40.
The restaurant industry has grown a lot, especially full-service restaurants, by 86% from 1990 to 2013. But, this growth hasn’t helped tipped servers much. They often rely on public benefits and have less access to benefits than private sector workers.
| Wage Metric | Value |
| Median hourly wage for waiters/waitresses in Indiana | $10.97 |
| Portion of waiters/waitresses’ wages reliant on tips in Indiana | $8.84 (over 80%) |
| Median hourly wage for bartenders in Indiana | $10.90 |
| Median hourly wage for coatroom attendants in Indiana | $8.46 |
| Median hourly wage for all tipped workers nationally | $10.22 |
| Median hourly wage for all workers nationally | $16.48 |
The report recommends one fair wage for the restaurant industry to support its workers and keep growing. By fixing the wage gaps for tipped servers, the industry can make a better future for all employees, no matter their race, gender, or age.
“The shift in wages for tipped workers is predicted to lead to higher prices on menus, potential elimination of tipping in favor of a service fee model, and possible staff reductions or automation to cope with increased labor costs.”
Conclusion
The debate over tips versus wages for servers shows how some workers struggle to make ends meet. The Trump administration’s proposed rule could make things worse by letting employers control tips. This could hurt servers and their families a lot.
However, some states have found a better way. They use a one fair wage system. This has led to higher wages, less poverty, and stronger economic growth for everyone involved.
We need to find a way to give servers fair wages without hurting the restaurant industry. This is key for the well-being of workers, businesses, and the economy. By solving the problems faced by tipped employees, we can make the restaurant industry better for everyone.
FAQ
What is the proposed rule change by the Trump administration regarding tipped workers?
The Trump administration wants to change an Obama-era rule for tipped workers. This includes restaurant servers and bartenders. They plan to let employers take all tips from workers, even if they pay them just $7.25 an hour. Employers won’t have to tell customers what happens to their tips.
How much do servers and bartenders depend on their tip earnings?
Servers and bartenders get a lot of their pay from tips. Tips make up 58.5 percent of what wait staff earn and 54 percent of what bartenders earn. They need these tips to cover things like rent and utilities.
How do the wages and incomes of tipped workers compare to their counterparts?
Tipped workers earn very little, even with tips. They make about $10.11 an hour and $19,990 a year on average. Black and Latino workers earn even less, at $9.62 and $9.93 an hour.
How do states with equal treatment for tipped workers compare to those with a lower tipped minimum wage?
States that treat all workers fairly have lower poverty rates for workers of color. These states also see more restaurant sales, jobs, and new restaurants. This is compared to states with a lower tipped minimum wage.
What are the potential impacts of the proposed rule change on tipped workers?
The new rule could hurt workers of color the most, as they already earn less. The report suggests a fair wage for all in the restaurant industry. This would help workers and keep the industry strong.
