Tipped employees always has always suffered from the inadequacy of the U.S. social security net and min wage requirements even before this Covid-19 pandemic has started. Today we can not only see how the government has failed to support them, but also we can all agree that how vulnerable they are in recessions.
As a postdoctoral fellow researching the medical consequences of precarious employment, such as tipped-service work, I think tipped employees need more support in order to survive the Covid-19 pandemic and whatever happens afterwards.
Sick at work
Before the first coronavirus case arose on American soil, food service jobs were one of the country’s 25 lowest-paid jobs.
When cases began to develop, early public health recommendations for staff included urging them to work at home and stay at home when they were sick.
But most food service staff neither had the opportunity to working from home nor access to paid leave. While the March Coronavirus recovery bills contained regulations for paid leave for employees affected by COVID-19, they needed the health care provider to sign off.
In some U.S states, almost a third of food service staff lack healthcare coverage, which means they likely won’t get a sign-off.
In part due to lack of health care, a survey published in March showed that as many as 60 per cent of service and retail employees were going to work while sick.
Support can fail
However as the pandemic deepened in the United states, most states ordered people to stay at home, forcing the closure of eateries and other businesses. As a consequence, rate of unemployment for food service locations increased from 6.2 percent in January to 35.4 percent in April, with 21.8 percent remaining jobless as of July.
Workers losing their jobs will generally depend on unemployment benefits to make up at least half of their missed wages. Nevertheless, employees who rely on inconsistent tips will quickly slip through cracks. It’s because to receive unemployment insurance a person must have a certain amount of non-tip wages. And in 43 states, it’s valid to pay tipped employees less than the minimum wage, and in 15 they could be paid as little and as low as US$ 2.13 an hour – which is the federal minimum for all those who get $30 tips in a month at least $30.
Although federal rules stipulate that workers receive full minimum wage and companies cover the difference once tips fall low, but it is very challenging to enforce it. Around a decade earlier, the Department of Labor evaluated 9,000 full-service restaurants around the region to ensure adherence with the obligations to make up any deficiencies in tipped income. About 84 percent had one or more offences.
The percentage of breaches is probably more. The burden of reporting the discrepancy between the collective salaries received and the effective minimum wage is on the worker, and tipped employees are almost always unsure that their company should make a difference when they do not meet the required wage standards.
In March, congress passed a law that transiently laid back the eligibility criteria for unemployment insurance and added $600 per week to the varying levels of state benefits. For many jobs, this was even better than they had received even before pandemic.
Although tipped employees are within and between those who have profited from this increased access to unemployment insurance during the pandemic, as many as 44% of workforce who applied for unemployment insurance since March were rejected or are still waiting till the 31 July.
Return to work
Yet, while restaurants are re-opening in some states, and a numbers of employees will return to their jobs, wage uncertainty for tipped workers will persist.
The number of clients – and the potential tips – was reduced significantly in the reopened restaurants. Businesses had to lower the duration and number of shifts, and also the capacity of their dining rooms, caused by physical distancing requirements.
Customers who are worried about their health are less likely to dine out. However, as we have seen in the 2008 recession, consumers who are negatively hit by the pandemic will be less likely to spend money on food.
That’s even more obvious in the case of tipped employees employed by high-volume, low-cost restaurant chains such as Denny’s or Olive Garden, where in many states a tipped employee would have to receive a 15% tip from even more than two tables an hour in order to earn only a meagre $7.25.
Increase the sub-minimum wage
For all these reasons, tipped employees claim that this is not acceptable to pay them less than the min wage.
Today, 82% of tipped employees are employed in states that allow sub-minimum wages, of which 33% are at a minimum level of $2.13. Researches, even my own, have already shown that a slight increase in the sub-minimum wage will not only lift income levels, but could also decrease poverty-related depression and even boost the wellness of infants born to all those working in such jobs.
And while low salaries are not the only major barrier for workers, it is obvious that incomes that can quickly disappear in a recession are not sustainable.
Just before the pandemic, tipped employees were about twice more likely to live in poverty than untipped employees. COVID-19 also contradicts the idea that tipped work can provide a reliably acceptable income level for survival.