Black, Latina and Native women are the tipped workers most exposed to poverty

Calculating what percentage of the check should be added to the cost of a restaurant meal is part of the experience of any hospitality customer in the United States. If a few years ago 10% was adequate, these days any amount below 20% seems insufficient, leaving many consumers with the feeling that they paid more than they had expected for their dining experience. The truth is that the tip, justified by some and vilified by others, is a fundamental part of the salary of almost five million workers throughout the country. Of these, seven out of every 10 are women. And among them, Latinas are overrepresented: despite accounting for 7.9% of the total U.S. workforce, they represent 12.9% of the tipped workforce.

A report by the National Women’s Law Center, presented on Wednesday, warns that dependence on tips increases the risk of living below the poverty line, which in 2023 stood at $20,000 per year for a family with two adults and $30,000 for a family of two adults and two children. However, due to rising purchasing and housing costs, “even those with incomes of up to twice the poverty line (i.e., $40,808 for a family of two adults and $61,800 for a family of four with two kids) are living near poverty, where a medical emergency, a few cut shifts, or another unexpected expense can mean that families won’t have enough to pay for basics, like food, rent, utilities, or child care,” the report notes.

Three out of every 10 women who depend on these jobs live at or near the poverty line, and more than 10% below it, almost double the total number of women present in the labor market. These jobs generally offer unstable schedules and lack benefits such as health insurance or paid sick days. The problem is even greater for Black women, Native women, Latinas, and many subgroups of Asian American, Native Hawaiian, and Pacific Islander (AANHPI) women.

The differences also occur by state. The situation improves in those where the employer pays the federal minimum wage, which has been $7.25 per hour since 2009. For more than three decades, however, the law allows the employer in some states to pay only a “tipped minimum cash wage” of $2.13 per hour, making up the rest with tips. The employer is obliged to make up the difference when tips fall short, although in many cases this is difficult to verify and is not enforced. In the states of Alaska, California, Minnesota, Montana, Nevada and Oregon, where the employer is required to pay a fair wage, fully covering the state minimum excluding tips, the poverty rate among women is 30% lower than in those that pay only $2.13 per hour.

Increased risk of sexual harassment

Relying on tips also means that women “face a greater risk of sexual harassment, “since they may feel compelled to tolerate inappropriate behavior from customers just to make ends meet,” notes the report. The types of jobs that depend on the generosity of the customer are generally lower paid, and women take the brunt of it, earning 84 cents for every dollar earned by men. The wage gap also widens for Latinas, Native Americans, and Asian Pacific Islanders compared to non-Hispanic white women.

The precariousness in this sector of the population has reached the election campaign and the Republican candidate, Donald Trump, has sought to attract their vote by promising that he will eliminate taxes on tips. “This is the first time I have said this, and hotel employees and people who receive tips are going to be very happy because when I get into office we are not going to charge taxes on tips,” he said on Sunday before thousands of followers at a campaign rally in Las Vegas.

In a statement, Ted Pappageorge, the secretary of the Culinary Workers Union, which brings together more than 60,000 workers in Nevada, responded: “For decades, the Culinary Union has fought for tipped workers’ rights and against unfair taxation. Relief is definitely needed for tip earners, but Nevada workers are smart enough to know the difference between real solutions and wild campaign promises from a convicted felon.”

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