Tip penalty threatens economic security for Minnesotans

The economic security of tipped workers in Minnesota is threatened by House File 1027, which passed the House Job Growth and Energy Affordability Policy and Finance Committee earlier this week.

Minnesota is one of several states that does not include a tip penalty in the minimum wage. Workers who receive tips earn the same minimum wage as most other workers. The minimum wage for large employers is currently $8.00 per hour and set to increase to $9.50 by 2016.

House File 1027 would set a lower minimum wage for workers, such as restaurant servers, who receive $4.00 per hour or more in tips on average in a pay period. Their minimum wage would decrease to $8.00 per hour.

The minimum wage sets a wage floor among all workers, and for tipped workers provides a certain level of stability. This bill would erode the progress our state made last session when policymakers passed a long overdue raise to the state’s minimum wage so that workers’ wages can catch up and keep up with the cost of living.

While the minimum wage for Minnesota workers is set to increase along with the rising cost of goods starting in 2017, under House File 1027 the tip penalty wage would remain the same. So while non-tipped minimum wage workers will receive a raise each year to help them buy groceries, pay their rents and pay for other basic necessities, tipped workers subject to the tip penalty would still depend on a minimum wage of $8.00 per hour.

Last year’s increase to the state’s minimum wage brings 325,000 Minnesotans closer to economic security. House File 1027 would undo some of this important work. Policymakers should support Minnesota workers and promote economic security, not pass legislation that further lowers wages.

-Clark Biegler

About Clark Goldenrod

Clark Goldenrod is the Minnesota Budget Project's policy analyst.
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