Raising the Tipped Minimum Wage Would Lift Thousands of PA Workers Out of Poverty, Three-Quarters of Them Women

States With Highest Tipped Minimum Show No Negative Employment Impact
Date of Press Release: 
September 17, 2013

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HARRISBURG, PA (September 17, 2013) — Raising the minimum wage for tipped workers in Pennsylvania will lift thousands out of poverty without any negative employment impact, according to a policy brief from the Keystone Research Center.

The analysis comes as Pennsylvania Senator Christine Tartaglione introduced a proposal today to lift the Pennsylvania tipped minimum wage from 39% to 70% of the overall minimum wage.

The Keystone report, Nickel and Dimed in Pennsylvania: The Falling Purchasing Power of the Tipped Minimum Wage, finds that Pennsylvania has 158,000 tipped workers, over three-quarters of them women. Wages are low and poverty high among tipped workers, in part, because Pennsylvania’s tipped minimum wage of $2.83 per hour has not changed since 1998.

“While the regular minimum wage in Pennsylvania increased starting in 2007, the tipped minimum wage remained stuck in neutral,” said KRC labor economist Mark Price, who authored the briefing paper. “As a result, workers have lost nearly a third of their purchasing power over the past 15 years.”

Contrary to some perceptions, nearly nine in 10 tipped workers (87%) are adults and over a quarter (27%) of tipped workers are 40 years of age or older. Nearly four in 10 tipped workers are married and/or single parents.

Partly as a result of Pennsylvania’s low tipped minimum wage, the median hourly earnings of all tipped workers equals only $10 per hour – including tips – far below the state’s overall median wage of $16.61 per hour. Low wages, plus in many cases less than full-time work, leads to poverty rates of 17% among all tipped workers in Pennsylvania and 20% among female tipped workers in the restaurant sector (“food service”).

“The good news from other states is that raising the tipped minimum wage is an effective tool for raising earnings, lifting people out of poverty, and reducing inequality – and it has no impact on employment,” said Price.

The Keystone briefing paper found that states with a tipped minimum wage equal to the overall minimum wage have a median wage for tipped workers of $11.33 per hour compared to the $10-per-hour median wage among those workers in Pennsylvania. The poverty level of tipped minimum wage workers is roughly 12% in states where the tipped minimum wage equals the overall minimum wage compared to 17% in Pennsylvania.

Tipped workers make up the same share of the workforce in states where the tipped minimum wage is equal to the overall minimum wage as they do in other states. This indicates that raising the minimum wage does not reduce the number of tipped minimum wage jobs, Price said.

“Raising the tipped minimum wage is especially important,” Price said, “because low-wage Pennsylvania women have seen their wages fall even during the current recovery.” The earnings of low-wage Pennsylvania women fell by nearly 5% ($0.53 cents per hour) since 2010.

“Raising the tipped minimum wage to 70% of the overall Pennsylvania minimum wage is not a panacea for low-wage Pennsylvania workers,” Price added. “It is a modest, conservative step that would benefit tens of thousands of low-wage women, lifting roughly 4,000 of them out of poverty.”