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Why do tipped workers make a lower minimum wage?

If you look at a paycheck of a tipped employee in New York, you would see that their hourly wage is lower than the state’s minimum wage of $15. This is because employers of tipped workers are allowed a tip credit which results in less money out of their own pockets. While this practice has been going on for years, the governor of New York is working to get rid of the credit, arguing it results in unfair and unbalanced wage totals as well as discrimination.

According to the Department of Labor, the federal government requires that employers pay tipped employees a minimum of $2.13 per hour, although this varies from state to state. The tip credit is the difference between this cash wage and the state’s minimum wage, and this is the amount the employer is required to pay if the employee does not make enough in tips to equal the minimum wage.

While tipped workers in New York earn a higher cash wage than in many other states, it is still lower than the minimum wage, and Governor Cuomo wants this to change. According to the New York State government, he is working on eliminating the tip credit and requiring all employers to pay the minimum wage, regardless of industry. He says that the tip credit has been linked to higher rates of sexual harassment, and that women and workers of color earn less in tips, which contributes to more people living in poverty. Proponents of this plan argue this will lead to a more equitable and safer workplace.  




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