Study urges pay increase for Jersey's 'tipped' workers

New Jersey has 140,000 "tipped" workers.
New Jersey has 140,000 "tipped" workers. (Associated Press)
Posted: July 17, 2014

New Jersey's servers, bellhops, and bartenders earn lower hourly wages than their counterparts in Pennsylvania and Delaware, pushing them into poverty, according to a report released Wednesday.

"Instead of dealing with the needs of people who work for tipped wages, we've largely ignored them," said Gordon MacInnes, president of New Jersey Policy Perspective, the organization that released the report.

Under New Jersey law, the state's 140,000 "tipped" workers must be paid a minimum of $2.13 an hour, which is also the federal minimum wage for tipped workers and hasn't changed since 1991.

Federal laws allow tipped workers to earn less an hour than the legal minimum due to all workers, on the assumption that their tips will bring them up to or beyond the regular federal minimum wage, now $7.25 an hour.

The report comes at a time when there are federal and state initiatives to raise the minimum wage for tipped workers.

For example, in New Jersey, a bill mandating that the tipped wage be set at 69 percent of the minimum wage is awaiting a vote in the state Assembly. Similar bills have been proposed in Pennsylvania, but have languished.

These initiatives have been opposed by business groups that say raising the minimum wage will cause employers to eliminate jobs and cut hours.

The increase passed by New Jersey's voters in November raised the minimum wage to $8.25 an hour from $7.25, but the increase did not apply to tipped workers.

"What we know is that the [median amount] earned by tip workers is $14,000 a year," MacInnes said, compared with the $36,400 median personal income earned by the rest of New Jersey's workers, according to the study.

The report said New Jersey's tipped workers are more likely to live in poorer households, receive food stamps, and lack health insurance than other New Jersey workers.

In New Jersey, the report said, 70.7 percent of people working for tips are women and the median age for all tipped workers is 31.

Tipped workers are also susceptible to wage theft, said Cherry Hill lawyer Robert O'Brien, a partner in O'Brien, Belland & Bushinsky L.L.C.

O'Brien and his partners were part of a team of lawyers who sued Chickie's & Pete's, the Philadelphia sports bar and restaurant chain with several outlets in New Jersey.

The chain ultimately agreed to pay $8.52 million in back wages and damages to resolve a U.S. Labor Department investigation and to settle federal lawsuits accusing the company of docking a portion of workers' tips and failing to properly pay minimum wages.

"In these kinds of industries, there are problems," O'Brien said.

Hourly Tipped Pay

Hourly amounts for nearby states, plus Washington state,

which has the highest.

Washington $9.32

New York $4.90

Maryland $3.63

Washington, D.C. $2.77

Pennsylvania $2.83

Delaware $2.23

New Jersey (and

18 other states) $2.13

U.S. minimum $2.13

SOURCE: U.S. Labor Dept.



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