House Votes to Eliminate One Legacy of Slavery — Subminimum Wages

The House of Representatives passed historic legislation on Thursday that would gradually more than double the federal minimum wage from $7.25 to $15 an hour by 2024. An increase in the federal pay floor would be a major victory for labor and racial justice movements, but a key portion of the bill is often overlooked: language that would phase out subminimum wages for tipped workers and workers with disabilities. The lingering existence of subminimum wages is a legacy of slavery that advocates say must be eliminated to close the gender pay gap and combat sexual harassment and exploitation.

House Democrats and a small handful of centrist Republicans passed the Raise the Wage Act by a 231-199 vote. The bill faces an uphill battle in the Senate, but with polls showing that a majority of voters say a $15 minimum wage hike is long overdue, the vote is likely to make wages and inequality a top issue in the 2020 elections. Nearly 34 million workers would benefit from higher wages if the legislation becomes law, according to the independent Economic Policy Institute. The Congressional Budget Office (CBO) estimates that 1.3 million people would be pulled out of poverty, nearly half of them children.

Conservatives warn that the wage hike would be a job killer in lower-income states, but researchers expect benefits to ripple through the economy as workers gain more spending power and become more productive, reducing poverty rates and even improving public health. A federal $15 dollar minimum wage would be a major victory for the Fight for $15 movement and organized labor, but the phase-out and elimination of subminimum wages has particular implications for gender equity and racial justice, as well as certain workers with disabilities currently paid far below the minimum wage.

Under the Fair Labor Standards Act (FLSA) — the existing federal law on minimum and subminimum wages that has been updated only a few times since passing in 1938 — tipped workers such as food servers may be paid as little as $2.13 an hour, as long as tips bring their hourly wage up to the federal minimum. However, advocates say enforcement of this standard is lax and wage theft in restaurants and other tipped industries is rampant. The Raise the Wage Act would phase out the subminimum wage and guarantee that all workers earn at least $15 an hour by 2024, plus tips.

With 13 million workers nationwide, the restaurant industry is the largest and fastest-growing in the nation and provides many of the lowest-paying jobs, according to Saru Jayaraman, president of Restaurant Opportunities Centers United (ROC). About 70 percent of tipped restaurant workers are women, who struggle with the highest rates of economic instability sexual harassment of any industry, largely because they must tolerate abuse and harassment from customers in order to make enough tips to survive.

Tipping, Jayaraman explains, became popular in the United States after the abolition of slavery, when white property and business owners were looking for ways to continue paying Black people next to nothing for their labor.

“The practice of tipping, originally borrowed from European aristocrats who used it as a bonus or extra, mutated in the United States to become a replacement for wages for the emancipated Black workforce post-slavery,” Jayaraman told reporters this week. “The Raise the Wage Act, which represents the first time since emancipation that either house of Congress is moving to eliminate [this] legacy of slavery, is an incredible achievement.”

National Employment Law Project (NELP) estimated in 2015 that 4.3 million people in the U.S. work predominately for tips. While most work for restaurants, others work as car washers, airport attendants, valet parking attendants and nail salon workers. Workers in subminimum wage jobs who rely on tips are disproportionately women and people of color and are much more likely to live in poverty than their non-tipped counterparts.

Advocates say the current federal subminimum wage system has created a two-tiered economic system that stratifies wealth largely along lines of race and gender. In response, fast food workers across the country have organized with the Fight for $15movement, demanding higher wages and better working conditions for low-wage workers in the restaurant industry. 

“We are where we are today, at the cusp of this historic victory, because of all the workers who have said enough is enough and have stopped asking for what they think Congress will give them, and demanding what they deserve,” said Judy Conti, NELP’s government affairs director.

The Rev. William Barber II, a prominent civil rights organizer and co-chair of the Poor People’s Campaign, said it has “taken 400 years” for Black workers to see their hourly wages rise from $0 to $2.13 under a system “designed post-slavery.” Barber said what has harmed Black communities economically has also harmed tipped workers of all races and backgrounds, adding that today the majority of poor people in the U.S. are white women with children. 

Indeed, working women continue to earn on average just 80 percent of what their male counterparts do, in part because women make up two-thirds of tipped workers and are overrepresented in low-paying jobs, according to the National Women’s Law Center. 

“This bill allows us to undo a legacy of slavery and Jim Crow that never should have been, but has also had an impact on non-people of color,” Barber said during a call with reporters. “This bill is an opportunity to address systemic poverty and systemic racism together, [which] should always be viewed through a single lens.” 

The legislation advanced by the House this week would close a loophole in federal labor law that allows certain employers — who often receive federal subsidies — to pay workers with disabilities less than minimum wage. Under section 14(c) of the FLSA, certain workers with disabilities can earn as little as a dollar per hour or less if employers determine that their productivity is lower than workers without a disability and receive permission from the government. The Department of Labor reports that over 420,000 workers are employed under the program, and some estimates put their average hourly wage at about $2.15 per hour

The 14(c) program was originally intended to encourage employment of disabled veterans, but as Truthout has reported, the program has become a pipeline for sweatshop labor that exploits an underserved population to boost profits for massive corporations. The program remains controversial within disability communities, because some families fear their loved ones would not have a job without it. However, the Raise the Wage Act would seek to provide opportunities for workers with disabilities to be “competitively employed and participate more fully in their communities, according to a congressional fact sheet.

A vast majority of House Republicans voted against the Raise the Wage Act, arguing that its wage hike would be a job-killer, particularly in poorer states and rural areas. They pointed to the CBO’s estimate that zero to 3.7 million jobs could be lost as the federal minimum wage increases, with a median estimate of 1.3 million lost jobs. (The CBO also estimates that the same number of people — 1.3 million — would see their incomes climb beyond the federal poverty threshold under the legislation.)

Barber said such “scare tactics” have been around since Congress debated the abolition of slavery. Conservatives opposed to a minimum wage hike, he said, ignore that massive corporations that pay low wages are essentially subsidized by the government when their workers are forced to rely on government safety net programs such as Medicaid.

“There’s always been this attempt for some to hold on to this gross inequality and use these scare tactics — you’re going to have less jobs, prices are going to go up — and none of this is rooted in reality and research, they are scare tactics,” Barber said.

The debate in the House has largely focused on raising the minimum wage to $15 over five years, not abolishing subminimum wages. However, Jayaraman said legislation has been introduced in 30 states to end the two-tiered wage system that allows tipped workers to be paid below the minimum. Seven states and a handful of municipalities have already voted to end subminimum wages for tipped workers, often along with their own minimum wage hikes.

Jayaraman and Conti said the restaurant industry has continued to grow in states like Oregon, Washington, Nevada, and other states that raised the minimum wage for all workers, and in California, reports of sexual harassment in restaurants have been cut in half.

“This is a policy that has all upsides and no downsides,” Conti said.