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Voters upped minimum wage in four states, but not all workers won

Midterm Elections Minimum WageMidterm Elections Minimum Wage
Protesters rally for a higher minimum wage outside a Burger King in Chicago in September 2014. Photograph by M. Spencer Green — AP/file

Election Day proved to be a big win for Republicans, as the GOP took control of the Senate and secured at least 10 additional seats in the House. But they weren’t the only victors on Tuesday night. State ballot initiatives proposing higher minimum wages were undefeated, as voters approved proposals in four states—all of which lean Republican.

The success of minimum wage ballot initiatives on Tuesday paired with the triumph of the GOP made for an odd combination, since Republicans have stifled efforts to raise the federal minimum wage. The federal rate has been stuck at $7.25 for the past five years.

Voters’ inclination for higher worker pay and Republican candidates suggests that “the minimum wage is not a partisan issue,” says Tsedeye Gebreselassie, a senior staff attorney for the National Employment Law Project, whose lobbying arm supports a higher minimum wage. “It’s become a no-brainer for voters,” she says. “If you look at a place like Arkansas, [Democrat] Mark Pryor lost, but minimum wage passed soundly.” The ballot issue in that state was approved with 65% of the vote.

But the successful minimum wage ballot initiatives also demonstrated something else: workers who earn tips are still relegated to the minimum wage’s second tier.

Employees who don’t receive tips will be given raises in the four states that passed minimum wage hikes on Tuesday. Meanwhile, workers who get tips will see an increase in their base pay in just two of those states.

Even before Tuesday’s election, Alaska required tipped workers to be paid the full minimum wage, so when voters approved the ballot initiative to increase the state’s minimum hourly rate from $7.75 to $9.75 by January 1, 2016, they gave all workers earning minimum wage—including waiters and waitresses—a $2 raise.

Tipped workers also got a pay bump in South Dakota. In voting for the state minimum wage to go from $7.25 to $8.50 by the start of 2015, the state’s voters also okayed setting the tipped minimum wage at 50% of the full minimum wage. That means employees who receive gratuity will be paid a base of $4.25—up from $2.13—when the approved increase is put in place.

But at the state level, this is where good news for tipped workers abruptly ends.

Nebraskans voted Tuesday to increase its minimum wage from $7.25 to $9 by January 1, 2016, but the ballot measure they considered didn’t touch the tipped minimum wage; it will stay at $2.13.

Likewise, in Arkansas, voters approved raising the minimum wage from $6.25 to $8.50 by 2017, but they left intact the tipped minimum wage of $2.63.

The federal tipped minimum wage used to be set at 50% of the full minimum hourly rate. But in 1996, the restaurant industry lobby convinced lawmakers to unlink the two. When President Bill Clinton signed a law that increased the minimum wage from $4.25 to $4.75, he froze the tipped minimum wage. It stayed at $2.13—where it had been since 1991 and where it remains today, now amounting to just 29% of what other federal minimum wage earners make.

Ideally, minimum wage workers who receive tips are supposed to take home the full minimum wage, with gratuity from customers covering the difference between the wage rates for tipped workers and those who don’t receive tips. That doesn’t always happen, and it means that when standard minimum wages increase but tipped minimum wages stay the same, customers—not employers—must provide a larger share of tipped workers’ pay.

Despite the lack of movement at the federal level, Gebreselassie of NELP says that the issue of tipped workers’ pay is receiving increased attention. She points to South Dakota’s new, higher minimum wage for tipped workers as just one example. The topic got a boost from a White House report in March that touted the benefits a higher federal tipped minimum wage would have on women, who make up 72% of the tipped workforce.

“It’s not just a wage issue. It’s a women’s equity issue too,” Gebreselassie says. Still, the increased attention has not created major waves just yet. “There is more awareness,” she says, “but not enough to get us to the point where people know that it’s a terrible policy that keeps flying under the radar.”