After 23 Years of Inaction, It's Time to Increase New Jersey's Tipped Minimum Wage

JULY 16, 2014

Contact: Jon Whiten, 609-393-1145 ext 15 (office), 917-655-3313 (cell) or whiten (at)

Increasing New Jersey’s tipped minimum wage would increase the economic security of many hard-working New Jerseyans who were left out of the voter-approved minimum wage increase that took effect January 1. These workers are mostly adults and predominantly women, earn much less than their non-tipped counterparts and are more likely to live in poor households, lack health insurance and rely on government safety net benefits, according to a new report released today by New Jersey Policy Perspective (NJPP).

“Raising the tipped minimum wage would help give these mostly working poor folks a fighting chance at getting by in high-cost New Jersey and a better shot at climbing into the middle class,” says NJPP president Gordon MacInnes. “We hope these workers will soon be able to join the hundreds of thousands of low-wage workers who received a raise on January 1 because New Jersey voters approved the referendum increasing the regular minimum wage.”

The report’s key findings:

• There are an estimated 140,000 tipped workers in New Jersey

• On average, these tipped workers in New Jersey earn less 40 cents for every dollar that their non-tipped counterparts make (median personal income of $14,000 versus $36,400

• The median age of New Jersey’s tipped workers is 31

• New Jersey’s tipped workers are about twice as likely than non-tipped workers to live in poor households and lack any type of health insurance

• More of New Jersey’s tipped workers report receiving SNAP (food stamps) benefits than non-tipped workers

• New Jersey’s tipped minimum wage has not been increased in 23 years

• As a result, it has lost nearly half of its value since it was last increased in 1991

• 31 states have tipped minimum wages that are higher than New Jersey’s, while 18 states join New Jersey in having the same tipped minimum wage level as the federal government

• New Jersey has the lowest tipped minimum wage in the Northeast

“The minimum wage for tipped workers in New Jersey is $2.13 per hour, a paltry sum that has been frozen for more than 20 years and is lower than most states, including all of our surrounding states,” says Assemblywoman Shavonda E. Sumter (D-Bergen/Passaic), the sponsor of legislation to increase New Jersey’s tipped minimum wage. “It is time for New Jersey to catch up.”

Boosting the tipped minimum wage would be a big step to increase economic security and provide greater stability to tipped workers like Anastasia Braucht.

Braucht, a bartender in Brick, says that while she enjoys her job interacting with customers, relying on tips has not always been easy. “It can be hard to budget for rent and bills, especially during slow periods,” she says. “Being able to count on a more realistic regular base pay would make a world of difference in my life and in the unpredictable service industry.”

While some of the approximately 140,000 tipped workers in New Jersey end up earning at least the full state minimum wage due to state law that requires employers to make up any difference, many others do not because the law is difficult to enforce and the process by which a tipped worker asks an employer to make up the difference is complicated and falls entirely on the worker.

“While it’s true that New Jersey law requires companies to pay even their tipped workers at least the full state minimum wage, the reality of the tipped workplace means that not all workers get this very minimal rate,” says Yarrow Willman-Cole, assistant director of the Working Families Program at the Rutgers Center for Women and Work. “Taking concrete steps to level the playing field for these workers is a matter of basic common sense.”

Proposed federal legislation to increase the minimum wage to $10.10 per hour includes a provision raising the tipped minimum to 70 percent of the full minimum wage. But with the federal legislation unlikely to make serious headway, New Jersey policymakers need to step up to ensure greater economic security for the state’s low-wage tipped workers. The legislation sponsored by Assemblywoman Sumter that was approved by the Assembly Labor Committee in March to increase the tipped minimum wage in New Jersey should be a high priority for lawmakers.

“Last year’s strong voter support of a minimum wage increase should make clear to legislators that New Jerseyans support giving working folks a fighting chance,” MacInnes adds. “This proposed raise for New Jersey’s tipped workers is long overdue.”

The bill (A-857) would phase in an effective increase in the tipped minimum wage to 69 percent of the state minimum wage, which would equal $5.69 an hour if it were in effect today. (Since New Jersey’s minimum wage will now change annually based on inflation, we can’t say with certainty what the actual tipped minimum would be once this proposed increase is fully phased in by January 1, 2016.) The rest of the worker’s compensation would continue to be composed of tips, as long as all of that worker’s earnings equal at least the current minimum wage.

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