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What is the minimum tipped wage: Here’s what you should know

The minimum wage is the amount of money an employer must pay an employee. In the U.S., there is a federal minimum wage, a minimum wage set by each state, and cities may adopt their own regulations to raise wages in their territories.

However, in addition to the minimum wage, there is also the minimum tipped wage, which is the minimum employers must pay to employees who make more than $30 per month as tips.

While the U.S. federal minimum wage is $7.25 an hour, the minimum tipped wage is only $2.13, which is noticeably lower. The implication is that such workers will compensate for their income with tips because the U.S. has a tipping culture.

Why minimum tipped wage exists, explained

Minimum tipped wage emerged as a response to the tipping culture that was spreading across the United States at the time. This approach allowed employers in the hospitality industry to avoid paying employees, who, in turn, compensated by receiving tips.

Proponents of minimum tipped wage, which is lower than the minimum wage for workers outside the hospitality industry say that unlike workers in other industries, hospitality workers can influence their income by providing better service.

Thus, it encourages workers to provide better service so that they can then earn more income as tips.

What are the disadvantages of minimum tipped wage

However, many economists and labor rights activists criticize the distinction between minimum wage and minimum tipped wage, arguing that it promotes an entrenched tipping culture.

In fact, the employers of such workers imply that they will receive additional income from tips, and the workers, in turn, encourage (and sometimes even insist) that customers and visitors leave tips.

In this way, tips are transformed from an “extra incentive” into a part of a tipped worker’s income, without which he or she would not get enough money to live on.

What are minimum tipped wages in the US states

As I said, the federal minimum tipped wage is $2.13, however a lot of stays adopted their own minimum wage. Below, you can see the table of the minimum tipped wages in the US states.

StateMinimum tipped wage
Alabama$2.13
Alaska$10.34
Arizona$9.15
Arkansas$2.63
California$14.00 (for employers with more than 26 employees, $13.00 for others)
Colorado$9.30
Connecticut$8.23
Delaware$2.23
DC (Washington)$5.00
Florida$6.98 per hour
Georgia$2.13
Hawaii$9.35
Idaho$3.35
Illinois$6.60
Indiana$2.13
Iowa$2.13
Kansas$2.13
Kentucky$2.13
Louisiana$2.13
Maine$6.08
Maryland$3.63
Massachusetts$5.55
Michigan$3.75
Minnesota$10.08 (employers with revenue more than $500,000)/$8.21 (for employers with revenue under $500,000)
Mississippi$2.13
Missouri$5.15
Montana$8.75
Nebraska$2.13
Nevada$9.00
New Hampshire$3.26
New Jersey$4.13
New Mexico$2.55
New York$8.35
North Carolina$7.25 
North Dakota$7.25 
Ohio$4.40
Oklahoma$7.25
Oregon$12.75
Pennsylvania$2.83
Puerto Rico$2.13
Rhode Island$3.89
South Carolina$2.13
South Dakota$4.73
Tennessee$2.13
Texas$2.13
Utah$2.13
Vermont$5.88
Virginia$2.13
Washington$13.69
West Virginia$2.62
Wisconsin$2.33
Wyoming$2.13

As you can see, the states with the highest minimum tipped wage are:

  1. California -$14/$13 (for employers with less than 26 employees)
  2. Washington – $13.69
  3. Oregon – $12.75
  4. Alaska – $10.34

However, there are also a lot of states that have a minimum tipped wage of $2.13 (federal minimum).

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