{"id":7826,"date":"2023-11-21T15:55:08","date_gmt":"2023-11-21T20:55:08","guid":{"rendered":""},"modified":"2025-05-06T16:40:50","modified_gmt":"2025-05-06T20:40:50","slug":"the-varied-landscape-of-minimum-wages-and-tip-credits-in-the-us","status":"publish","type":"short-read","link":"https:\/\/alpha.pewresearch.org\/pewresearch-org\/short-reads\/2023\/11\/21\/the-varied-landscape-of-minimum-wages-and-tip-credits-in-the-us\/","title":{"rendered":"The varied landscape of minimum wages and tip credits in the U.S."},"content":{"rendered":"\n<figure class=\"wp-block-image size-640-wide\"><img data-dominant-color=\"524d4e\" data-has-transparency=\"false\" style=\"--dominant-color: #524d4e;\" loading=\"lazy\" decoding=\"async\"  srcset=\"https:\/\/alpha.pewresearch.org\/pewresearch-org\/wp-content\/uploads\/sites\/20\/2023\/11\/SR_23.11.21_TipCredits_feature-jpg.webp?resize=480,270 480w, https:\/\/alpha.pewresearch.org\/pewresearch-org\/wp-content\/uploads\/sites\/20\/2023\/11\/SR_23.11.21_TipCredits_feature-jpg.webp?resize=782,440 782w, https:\/\/alpha.pewresearch.org\/pewresearch-org\/wp-content\/uploads\/sites\/20\/2023\/11\/SR_23.11.21_TipCredits_feature-jpg.webp?resize=960,540 960w, https:\/\/alpha.pewresearch.org\/pewresearch-org\/wp-content\/uploads\/sites\/20\/2023\/11\/SR_23.11.21_TipCredits_feature-jpg.webp?resize=1200,675 1200w, https:\/\/alpha.pewresearch.org\/pewresearch-org\/wp-content\/uploads\/sites\/20\/2023\/11\/SR_23.11.21_TipCredits_feature-jpg.webp?resize=1280,720 1280w\" sizes=\"(max-width: 480px) 480px, (max-width: 782px) 782px, 640px\" height=\"360\" width=\"640\" src=\"https:\/\/alpha.pewresearch.org\/pewresearch-org\/wp-content\/uploads\/2023\/11\/SR_23.11.21_TipCredits_feature-jpg.webp?w=640\" alt=\"A server at Gregory's Restaurant &amp; Bar in Somers Point, New Jersey, picks up a customer's order. (Rachel Wisniewski\/The Washington Post via Getty Images)\" class=\"wp-image-8599 not-transparent\" \/><figcaption class=\"wp-element-caption\">A server at Gregory&#8217;s Restaurant &amp; Bar in Somers Point, New Jersey, picks up a customer&#8217;s order. (Rachel Wisniewski\/The Washington Post via Getty Images)<\/figcaption><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">While <a href=\"https:\/\/alpha.pewresearch.org\/pewresearch-org\/2023\/11\/09\/factors-affecting-whether-and-how-much-americans-tip\/\">service quality is the main driver of Americans\u2019 tipping decisions<\/a>, about three-in-ten U.S. adults also cite workers\u2019 pay <em>before <\/em>tips as a major factor they consider, according to a recent Pew Research Center survey. But just how much that is can vary widely, because of the interplay of state and federal rules on minimum wages and tips.<\/p>\n\n\n<div style=\"border-width:1px;padding-bottom:var(--wp--preset--spacing--20);padding-left:var(--wp--preset--spacing--30);padding-right:var(--wp--preset--spacing--30);padding-top:var(--wp--preset--spacing--20);--block-gap: inherit\" class=\"wp-block-prc-block-collapsible has-background has-ui-beige-very-light-background-color has-border-color has-ui-beige-dark-border-color\" id=\"how-we-did-this\" data-wp-interactive=\"{&quot;namespace&quot;:&quot;prc-block\\\/collapsible&quot;}\" data-wp-context=\"{&quot;collapsibleId&quot;:&quot;how-we-did-this&quot;,&quot;isOpen&quot;:false}\" data-wp-class--is-open=\"context.isOpen\" data-wp-init--scroll-into-view=\"callbacks.onInitScrollIntoView\"><div class=\"wp-block-prc-block-collapsible__title\" data-wp-on--click=\"actions.onClick\"><div>How we did this<\/div><button class=\"wp-block-prc-block-collapsible__icon\"><span data-wp-bind--hidden=\"context.isOpen\"><i class=\"icon icon-library__light icon__circle-plus\"><svg style=\"width: 1em; height: 1em;\"><use xlink:href=\"https:\/\/alpha.pewresearch.org\/pewresearch-org\/wp-content\/plugins\/prc-icon-library\/build\/icons\/sprites\/light.svg#circle-plus\"><\/use><\/svg><\/i><\/span><span data-wp-bind--hidden=\"!context.isOpen\" hidden><i class=\"icon icon-library__light icon__circle-minus\"><svg style=\"width: 1em; height: 1em;\"><use xlink:href=\"https:\/\/alpha.pewresearch.org\/pewresearch-org\/wp-content\/plugins\/prc-icon-library\/build\/icons\/sprites\/light.svg#circle-minus\"><\/use><\/svg><\/i><\/span><\/button><\/div><div class=\"wp-block-prc-block-collapsible__content\">\n\n<p class=\"wp-block-paragraph\">As a supplement to our <a href=\"https:\/\/alpha.pewresearch.org\/pewresearch-org\/2023\/11\/09\/tipping-culture-in-america-public-sees-a-changed-landscape\/\">recent survey on tipping culture<\/a>, we wanted to get a sense of how rules around pay for tipped employees vary throughout the United States.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Our primary source for this analysis was the&nbsp;<a href=\"https:\/\/www.dol.gov\/agencies\/whd\/flsa\">Wage and Hour Division<\/a>&nbsp;of the U.S. Labor Department, which enforces the Fair Labor Standards Act and other federal labor laws. We also consulted labor departments in states, such as&nbsp;<a href=\"https:\/\/dol.ny.gov\/minimum-wage-0\">New York<\/a>&nbsp;and&nbsp;<a href=\"https:\/\/www.oregon.gov\/boli\/workers\/Pages\/minimum-wage-schedule.aspx\">Oregon<\/a>, where minimum wage rates vary by location.<\/p>\n\n<\/div><\/div>\n\n\n<p class=\"wp-block-paragraph\"><strong>Under&nbsp;<\/strong><a href=\"https:\/\/www.dol.gov\/agencies\/whd\/compliance-assistance\/handy-reference-guide-flsa#3\"><strong>federal law<\/strong><\/a><strong>, the minimum wage for most workers is $7.25 an hour.<\/strong> However, employers of workers who \u201ccustomarily and regularly\u201d receive at least $30 a month in tips can pay those workers just $2.13 an hour in direct wages, as long as they also receive the equivalent of at least $5.12 an hour in tips. That way, their full pay at least equals the $7.25 minimum. That $5.12 is called the \u201ctip credit,\u201d and if an employee does not earn at least that much in tips, the employer must make up the difference.<\/p>\n\n\n\n<figure class=\"wp-block-image alignright size-640-wide is-resized\"><a href=\"https:\/\/alpha.pewresearch.org\/pewresearch-org\/short-reads\/2023\/11\/21\/the-varied-landscape-of-minimum-wages-and-tip-credits-in-the-us\/sr_23-11-21_tipcredits_1-png\/\" rel=\"attachment wp-att-8597\"><img data-dominant-color=\"dfdbd4\" data-has-transparency=\"false\" loading=\"lazy\" decoding=\"async\"  srcset=\"https:\/\/alpha.pewresearch.org\/pewresearch-org\/wp-content\/uploads\/sites\/20\/2023\/11\/SR_23.11.21_TipCredits_1.png?resize=480,639 480w, https:\/\/alpha.pewresearch.org\/pewresearch-org\/wp-content\/uploads\/sites\/20\/2023\/11\/SR_23.11.21_TipCredits_1.png?resize=782,1041 782w, https:\/\/alpha.pewresearch.org\/pewresearch-org\/wp-content\/uploads\/sites\/20\/2023\/11\/SR_23.11.21_TipCredits_1.png?resize=840,1118 840w\" sizes=\"(max-width: 480px) 480px, (max-width: 782px) 782px, 640px\" height=\"852\" width=\"640\" src=\"https:\/\/alpha.pewresearch.org\/pewresearch-org\/wp-content\/uploads\/sites\/20\/2023\/11\/SR_23.11.21_TipCredits_1.png?w=640\" alt=\"A map of the U.S. showing that, for tipped workers, minimum wage varies by state.\" class=\"wp-image-8597 not-transparent\" style=\"--dominant-color: #dfdbd4; width:420px\" \/><\/a><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>In 14 states, the federal rules are the last, or almost-last, word on minimum wages for tipped workers.<\/strong> (<a href=\"https:\/\/www.dol.gov\/agencies\/whd\/state\/minimum-wage\/tipped#foot6\">Oklahoma has slightly different rules for very small businesses<\/a>.) But the federal law is a floor, not a ceiling, and states are free to set their own, higher minimum wages and tip credit rules.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The result is a patchwork system where, for example, a restaurant server in Waukegan, Illinois, is entitled to a $13 minimum wage \u2013 $7.80 in direct wages from the restaurant, plus a $5.20 tip credit. But for a server 17 miles away in Kenosha, Wisconsin, the minimum is $7.25 \u2013 with $2.33 in direct wages from the restaurant, plus a $4.92 tip credit.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong><em>Related:&nbsp;<\/em><\/strong><em><a href=\"https:\/\/alpha.pewresearch.org\/pewresearch-org\/2023\/11\/28\/do-you-tip-more-or-less-often-than-the-average-american\/\" target=\"_blank\" rel=\"noreferrer noopener\">Do You Tip More or Less Than the Average American?<\/a><\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Thirty states and the District of Columbia currently have minimum wages that are higher than the federal standard,<\/strong> ranging from $8.75 an hour in West Virginia to $17 an hour in D.C. In 17 of those states and D.C., the tip credit also is higher: Virginia\u2019s minimum wage, for example, is $12 an hour, but employers can use tips to offset up to $9.87. That means the minimum cash wage payable by the employer, $2.13, is the same as under federal law.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Six states not only have higher hourly minimums but lower tip credits than the federal standard.<\/strong> In Arizona, for instance, the minimum wage is $13.85, but employers can use tips to offset just $3 of that amount. And six other states use the federal minimum wage of $7.25 but have smaller tip credits than federal law authorizes.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Seven states \u2013 most of them in the West and all with higher state minimum wages than the federal one \u2013 don\u2019t allow tip credits at all.<\/strong> That means tipped workers are paid the full minimum wage from their employers and can keep tips on top of that.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><em>CORRECTION (Nov. 28, 2023): A previous version of the map in this analysis included an incorrect category label that said &#8220;Tip credit higher than federal.&#8221; The label has been updated to &#8220;Tip credit lower than federal.&#8221; <\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>While service quality is the main driver of Americans\u2019 tipping decisions, about three-in-ten U.S. adults also cite workers\u2019 pay before tips as a major factor they consider.<\/p>\n","protected":false},"author":658,"featured_media":8599,"comment_status":"closed","ping_status":"closed","template":"","meta":{"sub_headline":"","sub_title":"","_prc_public_revisions":[],"_ppp_expiration_hours":0,"_ppp_enabled":false,"ai_generated_summary":"","apple_news_api_created_at":"2023-11-21T20:55:26Z","apple_news_api_id":"76ee786b-dbcd-40a1-a5a7-f60edcb272c7","apple_news_api_modified_at":"2023-11-28T20:06:48Z","apple_news_api_revision":"AAAAAAAAAAAAAAAAAAAACg==","apple_news_api_share_url":"https:\/\/apple.news\/Adu54a9vNQKGlp_YO3LJyxw","apple_news_cover_media_provider":"image","apple_news_coverimage":0,"apple_news_coverimage_caption":"","apple_news_cover_video_id":0,"apple_news_cover_video_url":"","apple_news_cover_embedwebvideo_url":"","apple_news_is_hidden":false,"apple_news_is_paid":"","apple_news_is_preview":false,"apple_news_is_sponsored":"","apple_news_maturity_rating":"","apple_news_metadata":"\"\"","apple_news_pullquote":"","apple_news_pullquote_position":"","apple_news_slug":"","apple_news_suppress_video_url":false,"apple_news_use_image_component":false,"apple_news_api_pending":"1713063251","relatedPosts":[{"key":"_xgb8ufo6t","link":"https:\/\/alpha.pewresearch.org\/pewresearch-org\/2023\/11\/09\/tipping-culture-in-america-public-sees-a-changed-landscape\/","postId":444538,"title":"Tipping Culture in America: Public Sees a Changed Landscape","date":"2023-11-09T09:55:38","label":"Report"},{"key":"_uklih5wy3","link":"https:\/\/alpha.pewresearch.org\/pewresearch-org\/2023\/11\/28\/do-you-tip-more-or-less-often-than-the-average-american\/","postId":445224,"title":"Do You Tip More or Less Often Than the Average American?","date":"2023-11-28T09:57:53","label":"Feature"},{"key":"_d2816n9d7","link":"https:\/\/alpha.pewresearch.org\/pewresearch-org\/short-reads\/2023\/11\/14\/americans-who-have-worked-for-tips-themselves-are-usually-more-likely-to-leave-one\/","postId":444627,"title":"Americans who have worked for tips themselves are usually more likely to leave one","date":"2023-11-14T11:05:54","label":"Short Reads"}],"datacite_doi":"","datacite_doi_citation":"","_prc_seo_qr_attachment_id":0,"spoken_article_player_enabled":true,"displayBylines":true,"footnotes":"","prc_watchers":[],"_prc_fork_parent":0,"_prc_fork_status":"","_prc_active_fork":0},"categories":[234,248,238],"bylines":[842],"collection":[],"datasets":[2734],"_post_visibility":[],"formats":[467],"_fund_pool":[],"languages":[],"regions-countries":[515],"research-teams":[],"workflow-status":[],"class_list":["post-7826","short-read","type-short-read","status-publish","has-post-thumbnail","hentry","category-business-workplace","category-gig-sharing-economies-2","category-income-wages","bylines-drew-desilver","datasets-american-trends-panel-wave-133","formats-short-read","regions-countries-united-states"],"label":"Short Read","post_parent":0,"word_count":594,"canonical_url":"https:\/\/alpha.pewresearch.org\/pewresearch-org\/short-reads\/2023\/11\/21\/the-varied-landscape-of-minimum-wages-and-tip-credits-in-the-us\/","art_direction":{"A1":{"id":8599,"rawUrl":"https:\/\/alpha.pewresearch.org\/pewresearch-org\/wp-content\/uploads\/sites\/20\/2023\/11\/SR_23.11.21_TipCredits_feature-jpg.webp","url":"https:\/\/alpha.pewresearch.org\/pewresearch-org\/wp-content\/uploads\/sites\/20\/2023\/11\/SR_23.11.21_TipCredits_feature-jpg.webp?w=564&h=317&crop=1","width":564,"height":317,"caption":"A server at Gregory's Restaurant &amp; Bar in Somers Point, New Jersey, picks up a customer's order. 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