Good morning Chair and members of the committee. Thank you for the opportunity to testify in favor of A-5433, which phases out subminimum wages for tipped workers. Eliminating the tipped minimum wage will help to alleviate poverty, reduce racial and gender pay disparities, and reduce wage violations in industries prone to exploitation. New Jersey tipped workers have a wage of $5.62 an hour – an appallingly low number in a state with a high cost of living.
A-5433 will reduce employee abuse and wage theft.
- Tipped workers are subject to high rates of wage theft. According to Rutgers’ research from 2021, restaurants and bars had the highest rate of minimum wage violations outside of private households.
- With the current subminimum tipped wage system, workers bear the burden of tracking their hours and tips to ensure they are fairly compensated, followed by filing complaints to claw back the wages they rightly earned. (This is confusing for businesses as well!)
A-5433 will reduce poverty for tipped workers.
- Tipped workers have historically received lower total wages than their non-tipped peers and are more likely to live in poverty.
- They are also disproportionately women and people of color, whose low wages deepen the racial and gender pay gap.
- Subminimum wages are associated with dramatically higher poverty for tipped workers.
A-5433 will allow workers and tipped industries to thrive.
- States with one fair wage for tipped workers and untipped workers alike have shown higher growth in restaurants and restaurant employment than states with lower tipped wages.
- States heavily reliant on food service and hospitality (Nevada, Hawaii, California) have adopted one fair wage and continued to see restaurant growth.
- Higher base wages will not prevent workers from receiving tips. Gratuities are by definition gratuitous, and consumers can continue to provide tips for service.
Phasing out the subminimum tipped wage will be a win for workers and businesses alike.
