Monday, December 27, 2010
NJPP Monday Minute 12/27/10: To Insure Promptness: Tips for the Holiday Season
As the holiday season winds down, many have said thanks by tipping the people who take care of them during the year. These are the people who take care of their children, clean their houses and cut their hair. They are the people who walk their dogs, deliver their newspaper and prepare and serve their food. And, because many of these people are only guaranteed a fraction of the full minimum wage from their employer, they rely on these tips to help them make ends meet.
Tipped workers earn less than one-third the $7.25 an hour New Jersey state and federal law guarantees to minimum wage workers. The federal Fair Labor Standards Act allows employers to pay workers who rely on tips as a major source of income as little as $2.13 an hour, as long as the worker earns at least the full minimum wage when his or her hourly wage and tips are averaged over a full work week. The definition of a tipped worker is one who earns at least $30 a week in tips. That includes waiters and waitresses, bartenders and parking lot attendants whose wages averaged about $11 an hour in 2009 when tips were included.
The problem with a job that relies on tips is that workers can see wide fluctuations in their income, which can make it difficult to pay their bills. All but two states, including New Jersey, have established a minimum wage for tipped workers to help alleviate the problems associated with these fluctuations. Because New Jersey has not established a minimum wage for tipped workers, the state's rate defaults to the federal standard of $2.13 an hour, a wage that was last raised in 1991 and is the same in New Jersey as it is in Mississippi. Imagine living in New Jersey on a Mississippi wage that has not increased in 19 years.
The last time New Jersey addressed the issue of minimum wage workers was in 2005 when it raised the wage for most workers to $7.15. At the same time, it established the New Jersey Minimum Wage Advisory Commission to report on the adequacy of the wage and the condition of minimum wage workers. The commission issued two reports - the first in December 2007; the second a year later. Both reports recommended that New Jersey's minimum wage be raised (first to $8.25 an hour, then to $8.50) and adjusted annually to reflect increases in the cost of living, as has been done in 10 other states.
But New Jersey lawmakers have failed to act. Only because the federal minimum wage increased in July 2009 did New Jersey's minimum wage workers receive a 10-cent increase, which increased the hourly wage to $7.25. Perhaps frustrated by the state's inaction, the Minimum Wage Advisory Commission has not met since 2008.
Today 14 states and the District of Columbia have higher minimum wages than New Jersey does. On January 1, three more states will provide a more generous wage than New Jersey currently does. A minimum wage worker in New Jersey who works full-time 52 weeks a year earns $15,080 annually, barely above the federal poverty level for a family of two ($14,570) and less than the federal poverty level for a family of three ($18,310) or four ($22,050). Supporting oneself or one's family on salaries like that is especially difficult in New Jersey which now has the fifth highest cost of living in the country.
Raising wages for the lowest-paid workers helps sustain consumer spending and will boost the economic recovery. Minimum wage increases go directly to workers who spend the additional money immediately - on food, rent, gas and clothing. Without action by New Jersey lawmakers, the value of New Jersey's minimum wage will continue to erode, making it even harder for minimum wage workers to make ends meet. And, without the establishment of a statewide minimum wage for tipped workers, the people who depend on tips to pay their bills will continue to fall into deeper and deeper poverty.
In this season of giving, New Jersey owes it to these workers to raise the minimum wage; to restore its value; and to establish a minimum wage for people who rely on tips to supplement their income. The minimum wage was set up to provide a safety net for the most vulnerable workers. It's time for this to actually mean something.