Racial Equity in the Service Sector: An Evaluation of Subminimum Wage Policy and its Impact on Workers of Color

Principal Investigators
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The restaurant industry is one of the largest private sector employers but is also the lowest paying, largely due to the subminimum wage for tipped workers. A direct legacy of slavery, the subminimum wage is still just $2.13 an hour at the federal level and below $5 an hour in 43 states. The subminimum wage has created large wage gaps between white workers and workers of color due to the segregation of workers of color into lower-tipping, more casual restaurants, and due to customer bias in tipping.  

This project will evaluate the two-tiered wage policy and its impact on racial equity, by comparing the racial wage gap and related health impacts, especially during COVID, on service workers between the seven states that require all workers to be paid a full minimum wage with tips on top and the 43 states that allow a subminimum wage. This research will help to inform discussions around policy being considered in 7 states and at the federal level to eliminate the subminimum wage for tipped workers.