# Tipping and minimum wages in the US **URL:** \ **Category:** Factual Questions\ **Created:** [May 8, 2003, 1:53pm UTC](https://boards.straightdope.com/t/tipping-and-minimum-wages-in-the-us/173894 "2003-05-08T13:53:36Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Aro](https://avatars.discourse-cdn.com/v4/letter/a/b3f665/32.png) [@Aro](https://boards.straightdope.com/u/Aro)\ **Post date:** [May 8, 2003, 1:53pm UTC](https://boards.straightdope.com/t/tipping-and-minimum-wages-in-the-us/173894/1 "2003-05-08T13:53:36Z")
I was just reading the [tipping](http://boards.straightdope.com/sdmb/showthread.php?threadid=182243) thread here in GQ and had a few other supplementary questions: What is the current minimum wage in the US? Is it set by individual states or is it federally controlled? Is it a recommended level or actual enforcable by law? How many (%) of workers would be employed on this rate? Of those, how many would be in jobs deemed tip-worthy? Is tipping considered a standard thing in any professions other than those serving you food or drinks? Thanks. ---
**Author:** ![obfusciatrist](https://avatars.discourse-cdn.com/v4/letter/o/4af34b/32.png) [@obfusciatrist](https://boards.straightdope.com/u/obfusciatrist)\ **Post date:** [May 8, 2003, 2:31pm UTC](https://boards.straightdope.com/t/tipping-and-minimum-wages-in-the-us/173894/2 "2003-05-08T14:31:50Z")
There is a federally mandated minimum wage that all states must meet, but states are free to set their own, higher, minimum wage. It is enforcable by law. Don’t know about % Tipping is also expected for taxis, hotel services (maids, bell hops, concierge, etc.). I know some people tip mail carriers, and service personnel associated with their apartment/condo building. In Wisconsin you tip cows. You tip just about everybody in a casino. You do not tip food service employees in fast food places. ---
**Author:** ![sinatra69](https://avatars.discourse-cdn.com/v4/letter/s/8491ac/32.png) [@sinatra69](https://boards.straightdope.com/u/sinatra69)\ **Post date:** [May 8, 2003, 2:32pm UTC](https://boards.straightdope.com/t/tipping-and-minimum-wages-in-the-us/173894/3 "2003-05-08T14:32:54Z")
As far as who to tip,it is considered fine to tip anyone in a service industry.A beautician,barber,cab or limo driver,masseuse,bell person,maid, ect. sinatra69 ---
**Author:** ![CrazyCatLady](https://avatars.discourse-cdn.com/v4/letter/c/dfb087/32.png) [@CrazyCatLady](https://boards.straightdope.com/u/CrazyCatLady)\ **Post date:** [May 8, 2003, 2:34pm UTC](https://boards.straightdope.com/t/tipping-and-minimum-wages-in-the-us/173894/4 "2003-05-08T14:34:08Z")
The Federal minimum wage, IIRC, is $5.25/hr, and it is indeed required by law. There are tricksy ways to get around it, however, if you want to bad enough (like the “internship” I did at a vet clinic once, for a “stipend”.) The $2.13/hr +tips scheme was set back when the minimum was $4.25/hour, so you were making half of minimum wage. The general minimum has gone up since then, but not the one for tipped workers. ---
**Author:** ![Hello\_Again](https://avatars.discourse-cdn.com/v4/letter/h/85e7bf/32.png) [@Hello\_Again](https://boards.straightdope.com/u/Hello_Again)\ **Post date:** [May 8, 2003, 2:38pm UTC](https://boards.straightdope.com/t/tipping-and-minimum-wages-in-the-us/173894/5 "2003-05-08T14:38:03Z")
IIRC, If tipping is a part of the job, the federally-mandated minimum does not apply. For example, waitresses can make less than the official minimum wage. “According to the Fair Labor Standards Act, employers are not required to pay ‘tipped employees,’ such as restaurant servers, more than $2.13 an hour in direct wages.” ---
**Author:** ![Balthisar](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/balthisar/32/2825_2.png) [@Balthisar](https://boards.straightdope.com/u/Balthisar)\ **Post date:** [May 8, 2003, 2:39pm UTC](https://boards.straightdope.com/t/tipping-and-minimum-wages-in-the-us/173894/6 "2003-05-08T14:39:16Z")
> [@](#): > > \*Originally posted by obfusciatrist \* > **There is a federally mandated minimum wage that all states must meet, but states are free to set their own, higher, minimum wage.** Strictly speaking this would be a violation of states’ rights if all states had to meet it. I don’t think _any_ state _has_ to meet it, but _businesses_ that satisfy some definition of “interstate commerce” have to meet it – the “interstate commerce” makes them liable to follow federal laws. McDonald’s, for example, has to pay at least the federal minimum wage. “Mom’s Kitchen,” though, is probably not governed by federal wage rules. This is where state law comes in and sets its own minimums. Many states simply echo the minimum set by the federal government, giving the impression that it’s the federal government imposing the rules. Some states can go higher than the federal rules, even for businesses falling under the federal rules, because they still fall under the state rules. ---
**Author:** ![TaxGuy](https://avatars.discourse-cdn.com/v4/letter/t/b19c9b/32.png) [@TaxGuy](https://boards.straightdope.com/u/TaxGuy)\ **Post date:** [May 8, 2003, 2:39pm UTC](https://boards.straightdope.com/t/tipping-and-minimum-wages-in-the-us/173894/7 "2003-05-08T14:39:52Z")
One point that has been missed in all the discussions lately about tipping is that at least in the restaurant industry, tipping is best seen as essentially an accounting practice engaged in by customers, waitpersons, and restaurant owners. Instead of paying more for food and drinks, some of which will go to the waitperson, the customer pays the waitperson’s compensation directly. ---
**Author:** ![Aro](https://avatars.discourse-cdn.com/v4/letter/a/b3f665/32.png) [@Aro](https://boards.straightdope.com/u/Aro)\ **Post date:** [May 8, 2003, 2:43pm UTC](https://boards.straightdope.com/t/tipping-and-minimum-wages-in-the-us/173894/8 "2003-05-08T14:43:48Z")
> [@](#): > > \*Originally posted by CrazyCatLady \* > \*\*The $2.13/hr +tips scheme was set back when the minimum was $4.25/hour, so you were making half of minimum wage. The general minimum has gone up since then, but not the one for tipped workers. \*\* Sorry, I don’t get this distinction. Is there a scheme by which employers can pay staff half the minimum wage if they will collect tips during their work? $5.25 /hr is teh equilivant of £3.28 /hr in the UK. The UK minimum wage is £4.20 per hour, increasing to £4.50 per hour in October 2003 (over 22) or £3.60 per hour, increasing to £3.80 per hour in October 2003 (18-22). Both of these are higher than the US. Further: Do collected tips have to be registered by the employee? Are they then taxed on the tips? How does this work in practice if the tip is cash left on the table? ---
**Author:** ![Monty](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/monty/32/47_2.png) [@Monty](https://boards.straightdope.com/u/Monty)\ **Post date:** [May 8, 2003, 2:48pm UTC](https://boards.straightdope.com/t/tipping-and-minimum-wages-in-the-us/173894/9 "2003-05-08T14:48:07Z")
IIRC, the minimum wage scale has two values: one (the higher) for those whose jobs do not generate a certain percentage or higher of their income, and then another (the lower) for those whose jobs do. ---
**Author:** ![Hobie\_the\_One](https://avatars.discourse-cdn.com/v4/letter/h/e99b99/32.png) [@Hobie\_the\_One](https://boards.straightdope.com/u/Hobie_the_One)\ **Post date:** [May 8, 2003, 3:08pm UTC](https://boards.straightdope.com/t/tipping-and-minimum-wages-in-the-us/173894/10 "2003-05-08T15:08:39Z")
> [@](#): > > The $2.13/hr +tips scheme was set back when the minimum was $4.25/hour, so you were making half of minimum wage. The general minimum has gone up since then, but not the one for tipped workers. That is not true. The tipped employee wage has gone up somewhat with minimum wage. When I first became a waiter in 1984, the waiter/waitress minimum was $2.01, then increased to 2.03, 2.09, etc. It doesn’t exactly keep pace with the federal minimum wage but it does increase. As for the current minimum wage: here’s a [cite from the horse’s mouth](http://www.dol.gov/esa/minwage/america.htm). Happy reading! And now that I look [minimum wage laws for tipped employees](http://www.dol.gov/esa/programs/whd/state/tipped.htm) H ---
**Author:** ![Gary\_T](https://avatars.discourse-cdn.com/v4/letter/g/3ec8ea/32.png) [@Gary\_T](https://boards.straightdope.com/u/Gary_T)\ **Post date:** [May 8, 2003, 3:37pm UTC](https://boards.straightdope.com/t/tipping-and-minimum-wages-in-the-us/173894/11 "2003-05-08T15:37:34Z")
_Do collected tips have to be registered by the employee?_ Yes, the IRS requires it. _Are they then taxed on the tips?_ Yes _How does this work in practice if the tip is cash left on the table?_ Well, some folks are more “tax honest” than others. 🙂 ---
**Author:** ![desdinova](https://avatars.discourse-cdn.com/v4/letter/d/8baadc/32.png) [@desdinova](https://boards.straightdope.com/u/desdinova)\ **Post date:** [May 8, 2003, 3:39pm UTC](https://boards.straightdope.com/t/tipping-and-minimum-wages-in-the-us/173894/12 "2003-05-08T15:39:41Z")
The federal minimum wage is $5.15/hour, not $5.25. [Here’s](http://www.dol.gov/esa/minwage/q-a.htm) an FAQ from the U.S. Department of Labor that ought to answer a lot of these questions. Here’s some statistics regarding how many people in the U.S. are earning minimum wage. Regarding tips: these are _supposed_ to be reported as income, and are therefore subject to federal (and if applicable, state) income tax. In practice, many employees do not do this. Many restaurants require tips to be turned in to the manager by the waiter or busboy, however, and the management then divides them between the employees who earn less than minimum wage. These policies vary entirely between different restaurants or other employers. In preview, **Gary T** beat me to the punch! ---
**Author:** ![CrazyCatLady](https://avatars.discourse-cdn.com/v4/letter/c/dfb087/32.png) [@CrazyCatLady](https://boards.straightdope.com/u/CrazyCatLady)\ **Post date:** [May 8, 2003, 9:05pm UTC](https://boards.straightdope.com/t/tipping-and-minimum-wages-in-the-us/173894/13 "2003-05-08T21:05:26Z")
**Hobes** , darlin’, I didn’t say it never went up, I just said it has not gone up since minimum wage was $4.25/hour, which is to say in the last 5-6 years. And yes, **Aro** , they can pay you less than half the minimum wage if you collect enough tips to bring you up to minimum wage. Your paychecks are calculated so that applicable taxes on your tips are withheld, so when I was working 55 hours a week at Cracker Barrel it was unusual for my actual checks to be $20 or less, and one server regualarly got blank checks. Her hourly wage wasn’t enough to pay the taxes on her tips. Yes, you have to report your tips as income, or the IRS will come administer the smackdown to you. You’re taxed on 8% (or 8.5%, it’s been a few years since I was a tipped employee) of your sales, or your reported tips, whichever is greater. Many servers do not in fact report their full tips, instead reporting 8-10% of their sales. It means they pay less in taxes, but it also means that when they need a loan or other credit, their income level appears lower than it really is. ---
**Author:** ![CrazyCatLady](https://avatars.discourse-cdn.com/v4/letter/c/dfb087/32.png) [@CrazyCatLady](https://boards.straightdope.com/u/CrazyCatLady)\ **Post date:** [May 8, 2003, 9:08pm UTC](https://boards.straightdope.com/t/tipping-and-minimum-wages-in-the-us/173894/14 "2003-05-08T21:08:44Z")
Oy. It _wasn’t_ unusual for my checks to be $20 or less. Preview is our friend. ---
**Author:** ![Aro](https://avatars.discourse-cdn.com/v4/letter/a/b3f665/32.png) [@Aro](https://boards.straightdope.com/u/Aro)\ **Post date:** [May 9, 2003, 7:59am UTC](https://boards.straightdope.com/t/tipping-and-minimum-wages-in-the-us/173894/15 "2003-05-09T07:59:22Z")
> [@](#): > > \*Originally posted by CrazyCatLady \* > **And yes, Aro, they can pay you less than half the minimum wage if you collect enough tips to bring you up to minimum wage.** This sounds horrendous to me. I always assumed waitresses in the US were paid minimum wage and any tips were a bonus over that to bring their salary up to reasonably decent level. So tipping is pretty much compulsory in restaurants even if the service provided is diabolical. The level of service would only dictate the _amount_ tipped by the customer, not whether or not a tip was given. ---
**Author:** ![jjimm](https://avatars.discourse-cdn.com/v4/letter/j/ba8739/32.png) [@jjimm](https://boards.straightdope.com/u/jjimm)\ **Post date:** [May 9, 2003, 9:45am UTC](https://boards.straightdope.com/t/tipping-and-minimum-wages-in-the-us/173894/16 "2003-05-09T09:45:51Z")
> [@](#): > > \*Originally posted by Aro \* > **This sounds horrendous to me. I always assumed waitresses in the US were paid minimum wage and any tips were a bonus over that to bring their salary up to reasonably decent level.** Note objections raised when I proposed [exactly that](http://boards.straightdope.com/sdmb/showthread.php?threadid=182613#post3392449) in GD. ---
**Author:** ![Hobie\_the\_One](https://avatars.discourse-cdn.com/v4/letter/h/e99b99/32.png) [@Hobie\_the\_One](https://boards.straightdope.com/u/Hobie_the_One)\ **Post date:** [May 9, 2003, 12:53pm UTC](https://boards.straightdope.com/t/tipping-and-minimum-wages-in-the-us/173894/17 "2003-05-09T12:53:23Z")
**Crazy Cat Lady** I knew you weren’t saying that it never went up. What caused the confusion is that I live in pennsylvania and the tipped minimum is $2.83 so it had gone up to more that 1/2 of the $4.25 you mentioned. I should have read my own cite! ---
**Author:** ![li\_l\_Dickie\_Dirtz](https://avatars.discourse-cdn.com/v4/letter/l/2bfe46/32.png) [@li\_l\_Dickie\_Dirtz](https://boards.straightdope.com/u/li_l_Dickie_Dirtz)\ **Post date:** [May 9, 2003, 1:55pm UTC](https://boards.straightdope.com/t/tipping-and-minimum-wages-in-the-us/173894/18 "2003-05-09T13:55:26Z")
I have a tangetially related question (which I believe I know the answer to, but I’ll ask anyway): I’m allowed to give up to $11,000/yr to as many individuals as I want with no tax consequences for any of us – I don’t have to pay any additional tax on that money and the recipient isn’t liable for any income tax on the money. Why can’t the waitstaff consider my tip as part of my $11,000/yr gift to them and not declare it? I realize that probably most tips left in cash don’t get reported to the IRS so this is happening de facto, but why can’t it be above board? ---
**Author:** ![missbunny](https://avatars.discourse-cdn.com/v4/letter/m/76d3ee/32.png) [@missbunny](https://boards.straightdope.com/u/missbunny)\ **Post date:** [May 9, 2003, 3:13pm UTC](https://boards.straightdope.com/t/tipping-and-minimum-wages-in-the-us/173894/19 "2003-05-09T15:13:00Z")
Waitstaff have to pay taxes based on their sales AND on whatever tips they get. Even if they get zero tips, they still have to pay taxes on the minimum amount that the IRS considers them to have made (whether they actually did or not), which is 8% of sales. You can call your tip a “gift” if you like, and the waitperson can say, “Yes, LDD gave me a gift of $15.00 - NOT a tip - when he came into my restaurant and had a $90.00 check,” but the IRS is still going to say, “That’s nice, goodie for you, but you still have to pay taxes on 8% of $90.00.” Also, the IRS frowns upon people who claim ONLY 8% all the time, and they really frown on restaurants who claim that all their employees ONLY made tips equivalent to 8% of sales. It’s a good way to get audited. ---
**Author:** ![Dogface](https://avatars.discourse-cdn.com/v4/letter/d/9d8465/32.png) [@Dogface](https://boards.straightdope.com/u/Dogface)\ **Post date:** [May 9, 2003, 3:22pm UTC](https://boards.straightdope.com/t/tipping-and-minimum-wages-in-the-us/173894/20 "2003-05-09T15:22:56Z")
First, an employer is only required to pay Federal Minimum Wage if some aspect of the business is interstate or foreign commerce. Furthermore, if the business is not a hospital, nursing home, school, or public agency, it has to have sales of at least $500,000.00 per year ([http://www.toolkit.cch.com/text/P05\_4033.asp](http://www.toolkit.cch.com/text/P05_4033.asp)). However, in these businesses many types of employees can be paid federal “subminimum wage”, including jobs that are presumed to get tips, full-time students, employees in American Samoa and some in Puerto Rico, “learners”, apprentices, and “certain workers with disabilities”. Second, states are permitted to have state minimum wages that are LOWER than the federal minimum wage. Some states still do. Any business that is not required to pay federal minimum wage is likely to be required to pay state minimum wage. For most states, the two are equal. Some states have a higher minimum wage, some have a lower minimum wage. [Next page](https://boards.straightdope.com/t/tipping-and-minimum-wages-in-the-us/173894.md?page=2)