Famed restaurateur Danny Meyer made headlines late last year when he announced that he was eliminating tipping in all his restaurants. His announcement was a triumph for labor advocates, showing that tipping is central to the broader issue of wage inequality.

While tipping remains a favored practice in the United States, it has created a system of unfair pay that disproportionately affects women and people of color—a system that has roots in America’s ugly history of slavery and racial discrimination. 

Tipping and harassment go hand-in-hand

The American restaurant industry is one of the largest and fastest growing sectors of the economy, employing nearly 10 percent of the workforce. Yet it is also the lowest paying industry, with the highest proportion of workers earning wages at or below the federal minimum.

The industry has successfully argued that tipped workers shouldn’t be paid the minimum wage, since they make more than the difference in tips alone. Lobbying bodies like the National Restaurant Association have pushed hard to perpetuate this myth, often by citing another fantasy: that tipped workers make upwards of $100,000 a year. While a small percentage of fine dining servers (who are typically white and male) can make this kind of money, most of the nearly 6 million tipped restaurant workers are women of color who work in casual dining establishments and make a median wage of just $8.75 an hour—including tips.

For female workers, the consequences of this system go far beyond low wages. That’s according to Saru Jayaraman, co-director of Restaurant Opportunities Centers United (ROC United) and author of the new book Forked: A New Standard for American Dining. As Jayaraman explains, with such low pay, female servers are forced to live completely off their tips—and to get those tips, are pressured to tolerate sexual harassment and inappropriate behavior from customers. In fact, the restaurant industry is the single largest source of sexual harassment claims in the US.

The racist origins of tipping in America

Most people don’t know that America’s time-honored tradition of tipping is rooted in our country’s racist history of slavery. But while tipping is so ingrained in many aspects of American commerce today, it actually didn’t originate here: It began in the aristocratic homes of feudal Europe, when lords would give their servants a little extra money when they went above and beyond their duties.

When the practice was brought to the United States in the 19th century, the American public was deeply uncomfortable with it. Many saw tipping as undemocratic and therefore un-American. A powerful anti-tipping movement erupted, fueled by the argument that employers, not customers, should be paying workers. But American restaurants and railway companies fought particularly hard to keep tipping, because it meant they didn’t have to pay recently freed black slaves who were now employed by those industries.

Europe eventually did away with tipping. But in America, pressure from powerful corporate interests resulted in a two-tiered wage system for tipped and non-tipped workers, institutionalizing a highly racialized system of economic exclusion. Formalized in 1938 in the first minimum wage law as part of the New Deal, this separate and unequal system stated that employers were not obligated to pay a base wage to workers whose minimum wage was met through tips.

Tipped workers need the federal minimum wage

Nearly 80 years later, today the wage for tipped workers has increased from zero to a measly $2.13 an hour. The consequence of this subminimum wage is an enshrined system of unequal pay that is largely taken for granted today.

That system has allowed the restaurant industry to normalize business practices that prioritize profitability at all costs, even at the expense of employees. Indeed, the National Restaurant Association has been quite successful in arguing that paying servers a regular minimum wage would hurt business, and that servers already make more than the minimum wage through tips. Yet an investigation of 9,000 restaurants by the US Department of Labor found that about 84  percent had violated their legal obligation to ensure that tipped workers were making the minimum wage in combined salary and tips.

By legally requiring restaurants to pay tipped workers the full minimum wage, seven states have rejected this two-tiered system. The result has not been lost business, or shuttered restaurants: According to research from ROC United, when compared to restaurants in states that don’t pay the minimum wage to tipped workers, the restaurants in these seven states have higher sales per capita, higher job growth (including for tipped workers), and even higher rates of tipping. Clearly, restaurants can survive and even thrive when they pay tipped workers the federal minimum wage.

Toward an inclusive, equitable economy

While much of the debate about wage inequality has focused on tipping, getting rid of tipping is not enough. Meaningful change will demand a mix of policy, industry, and consumer responses, which means we need to:

• Raise the current $2.13 subminimum wage for tipped workers to the regular minimum wage. ROC United has been instrumental in advocating for the elimination of the two-tiered wage system through the One Fair Wage campaign.
• Promote and provide restaurant owners with high road business practices that lead to profitability. ROC United created an alternative national restaurant association of high road employers called Restaurants Advancing Industry Standards in Employment (RAISE) who advocate for fair and responsible labor practices.
• Educate and empower consumers to make informed dining decisions. Diners United, ROC United’s consumer association, mobilizes its networks and promotes resources like the Diners Guide to Ethical Eating and the Consumer Pledge to leverage consumer power and advocate for livable wages and improved working conditions for restaurant workers.

As long as we have a wage system rooted in slavery and exclusion, true economic and social equality will be out of reach. But in this unprecedented moment of political and public awareness, meaningful change is within reach.

This post is based on the work of Restaurant Opportunities Centers United and its co-founder Saru Jayaraman’s latest book, Forked: A New Standard for American Dining.