KERA's Think Why businesses love it when you tip their workers
Aug 20, 2025
Eyal Press, a contributing writer for The New Yorker and author of 'Dirty Work,' discusses the hidden impacts of the 'Big, Beautiful Bill' on tipped workers. He reveals that eliminating tip taxes may actually lower service wages, benefitting restaurant owners more than employees. The conversation explores the complexities of the restaurant industry's minimum wage, the powerful lobby influencing these dynamics, and the challenging path towards fair wages for tipped workers. Press also highlights the ongoing debate around the One Fair Wage Movement and systemic inequalities in tipping.
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Tipping Often Subsidizes Employers
- In 16 states tipped workers can legally be paid as little as $2.13 an hour, making tips effectively their main income.
- Economists say tipping primarily subsidizes employers rather than reliably helping the lowest-paid workers.
No-Tax Tips Miss The Poorest Workers
- About 38% of tipped workers don't earn enough to owe federal income tax, so exempting tips from tax misses the lowest-paid.
- Higher-earning tipped workers like casino dealers benefit most from eliminating tip taxes.
Policy Could Push More Jobs Into Tipped Pay
- Removing taxes on tips creates an incentive for employers to shift pay into untaxed tipped work.
- That could expand below-minimum-wage employment disguised as tipping.
