As the small restaurant sector reels from the devastating economic effects of the coronavirus pandemic, a report published Thursday by advocates for tipped workers and a $15 minimum wage revealed that phasing out subminimum wages for such workers—which can be as low as a little over $2 an hour—does not cause businesses to close.
In fact, the report—published by the Food Labor Research Center at the University of California, Berkeley and One Fair Wage—found that the five states with the greatest rate of decline in open hospitality businesses during the pandemic are all states with a subminimum wage.
That wage was set at $2.13 under a 1996 federal law resulting largely from lobbying by then-National Restaurant Association president Herman Cain. According to the U.S. Department of Labor, six states—Alabama, Georgia, Lousiana, Mississippi, South Carolina, and Tennessee—still set their wage for such workers at $2.13, with no requirement for employers to guarantee workers' combined pay reaches the $7.25 federal minimum wage threshold after tips.
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