Cover of Factsheet

A fair minimum wage ensures that working people can support themselves and their families, no matter who they are or what job they hold. But today, the federal minimum wage is just $7.25 per hour—and for tipped workers, the federal minimum cash wage has been frozen at $2.13 per hour for nearly three decades. Women, who represent over two-thirds of tipped workers nationally, are hit especially hard by this poverty-level wage. Nationwide, the poverty rate for women tipped workers is over 2.5 times the rate for workers overall. And women’s concentration in tipped occupations and other low-wage jobs is an important factor contributing to the persistent gender wage gap: women working full time, year round typically are paid just 80 percent of what their male counterparts are paid. This wage gap varies by race and is even wider for Black women, Latinas, Native women, and many subgroups of Asian American and Pacific Islander women compared to their white, non-Hispanic male counterparts.

A number of states, however, have set minimum cash wages for tipped workers above the federal level, and seven states require employers to pay tipped employees the regular minimum wage regardless of tips. Compared with states that have a $2.13 hourly tipped minimum cash wage, women in these “One Fair Wage” states—where tipped workers must be paid the regular minimum wage before tips—face a smaller gender wage gap and a lower poverty rate. Women in tipped occupations in One Fair Wage states experience poverty at a rate more than one-quarter lower than their counterparts in states that follow the federal standard.

Raising wages for all working people—tipped and non-tipped alike—has outsize benefits for women and their families, reducing poverty and helping to close the gender wage gap. Ensuring that tipped workers can count on receiving the full minimum wage, before tips, is a crucial step toward equity, dignity, and safety for women at work.

Key Facts:
In One Fair Wage states, compared to states with a tipped minimum cash wage of $2.13 per hour:

  • The wage gap for women overall working full time, year round is 31 percent smaller.
  • The poverty rate for employed women is 14 percent lower—and for women working in tipped occupations, the poverty rate is 28 percent lower.
  • The poverty rate for women of color in tipped occupations is 31 percent lower.
    • The poverty rate is 35 percent lower for Black women in tipped occupations.
    • The poverty rate is 31 percent lower for Latina women in tipped occupations.

The wage gap for women overall working full time, year round in One Fair Wage states is smaller than in states with a tipped minimum cash wage of $2.13 per hour.

  • As of 2017, 18 states follow the federal standard and require employers to pay their tipped workers a minimum cash wage of only $2.13 per hour. Overall, women working full time, year round are typically paid 77 cents for every dollar paid to their male counterparts in these states—a wage gap of 23 cents.
  • One Fair Wage states require employers to pay their tipped workers at least the regular minimum wage, regardless of how much the workers receive in tips. Overall, women working full time, year round are typically paid 84 cents for every dollar paid to their male counterparts in these states—a wage gap of 16 cents, which is 31 percent smaller than the 23-cent gap in states that follow the federal standard.

Women’s poverty rates are lower in One Fair Wage states than in states with a tipped minimum cash wage of $2.13 per hour—especially for women of color in tipped jobs.

  • Not surprisingly, a higher minimum wage helps lift women out of poverty. The poverty rate for women working in One Fair Wage states (7.7 percent) is 14 percent lower than in states with a $2.13 tipped minimum cash wage (8.9 percent), and the poverty rate among women of color working in One Fair Wage states is nearly 24 percent lower.
  • The difference for women in tipped occupations is particularly stark—and for women of color most of all.
    • The poverty rate for women tipped workers in One Fair Wage states (13.7 percent) is 28 percent lower than in states with a $2.13 tipped minimum cash wage (19.2 percent).
    • Overall, women of color working in tipped jobs in One Fair Wage states experience a poverty rate of 14.9 percent – nearly one-third lower than the poverty rate for their counterparts in states with a $2.13 tipped minimum cash wage (21.7 percent).
      • Black women working in tipped jobs in One Fair Wage states experience a 17.9 percent poverty rate – 35 percent lower than the poverty rate for their counterparts in states with a $2.13 tipped minimum cash wage (27.5 percent).
      • Latina women working in tipped jobs in One Fair Wage states face a poverty rate that is 31 percent lower than their counterparts in $2.13 states (15.5 and 22.6 percent, respectively).

Women, and especially women of color, make up a disproportionate share of workers who have to depend on tips to get by—leaving them and their families at risk of living in poverty and perpetuating racial and gender pay disparities. Raising the minimum wage—and ensuring that tipped workers receive the full minimum wage before tips—can advance equal pay for women and economic security for their families.

 

View Women in Tipped Occupations, State by State to see the tipped minimum cash wage, the wage gap, the share of tipped workers who are women and women of color, and poverty rates for women in tipped jobs in your state.

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