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In the US, employees must still be paid minimum wage. Depending on the state, an employer may count tips toward this amount. If an employee reports $0 in tips,

In the US, employees must still be paid minimum wage. Depending on the state, an employer may count tips toward this amount. If an employee reports $0 in tips, the employer must pay them $7.25/hr. While I would like to believe that what you say is true, I find it hard to be true. I think the bigger issues are at play whether it's is the fact that minimum wages need to be adjusted, a more modern solution is needed to replace minimum wages, whether a job in question is simply suitable for a human to perform (in this case a doorman, they don't really have them where I live so I don't know their purpose), or maybe children (even adults) need to be taught better money management skills. I personally think that an area for quick improvement would be helping folks with managing their money. Anecdotally, I know people who haven't paid more than the minimum on student loans because they that they will automatically be forgiven in 20 years. On a $40k loan, they have easily squandered away a down payment on a house or money they could have otherwise put in their 401k.

mjevans 9y ago
I agree with most of your points. However, I'd like to start with two labor patches (in the same set). 1) Pro-rate all benefits (with 3/4ths of median 'full time' work hours as full time). 2) Eliminate that tip as part of wage 'loophole'. Tips should still be allowed, but they should be for truly exceptional things, and not a hidden cost of buying something.
- c0wb0yc0d3r 9y ago
  2) Eliminate that tip as part of wage 'loophole'. That is interesting. As I understand it now, the way tips are factored into wages, it benefits the employee more so than the employer. Society loses because the employee is supposed to report tips so they are taxed, the employer loses because they still have to pay minimum wage, and the employee wins because they are paid minimum wage and get their tips tax free. Maybe I'm just being dense, but how would this elimination be beneficial?
  - dragonwriter 9y ago
    > As I understand it now, the way tips are factored into wages, it benefits the employee more so than the employer. Society loses because the employee is supposed to report tips so they are taxed, the employer loses because they still have to pay minimum wage, and the employee wins because they are paid minimum wage and get their tips tax free. Employers of workers in customarily tipped jobs can and do use tips as a performance metric, so if the employer has to top up your tips to minimum wage, it probably also means you are also losing your job. This also motivates overreporting tips.
  - gozur88 9y ago
    >...and the employee wins because they are paid minimum wage and get their tips tax free. Not tax free. Your employer reports 8% of your total receipts to the IRS as income. It's likely less than you make in tips, but you still pay some tax.
stinkytaco 9y ago
1. 7.25 is not enough to live on. And the ability to pay less with the assumption that there will be tips does not make it better. Especially considering that in many states you can require tip-pooling, effectively removing the stated point of tips in the first place (to motivate better service). Nor does this really address the problem of tipping as a cultural phenomenon, it just doesn't really need to exist. 2. The "teach better money management skills" has really nothing to do with this problem, but is continually trotted out as some sort of solution. If you don't have enough money, there's no "managing" it. This isn't an avocado toast problem, it's a wage issue. Additionally, the incentives are a moving target. For example, with the federal government threatening to end forgiveness plans, can you blame someone for not taking advantage of the option with the potential they will be stuck with the bag, plus interest? Same goes for home ownership incentives, charitable giving incentives, and so on. If the incentive could be gone one day due to the massively complicated and political game that is the tax code, I can hardly blame someone who doesn't have money for a financial adviser for not taking advantage of those programs.
- c0wb0yc0d3r 9y ago
  I think you misunderstood what I said. I made no claim that $7.25/hr is a livable wage. That is the current federal minimum. Employers are required to pay the minimum, if they aren't, they're breaking the law. Money management is certainly no silver bullet, however, it plays a role. If you net $13k/year then you have to manage that money so you don't spend more than $13k/year. Most would agree that it is extremely tough to live on $13k/year. No matter the difficulty the money still has to be managed. In my student loan example, if you have a loan schedule of 30 years @ 6% you will pay $46k in interest on a $40k loan when only paying the minimum of $240. That same loan if paid off @ $440/mo, nets you $33k over that time period. Here you would manage your money so that you can pay as much as possible on that loan as often as possible. Making more money doesn't solve money issues, it just covers them up. Saying that there nothing to be done because the amount spent is greater than the amount earned seems rather foolish. I'm not saying that in any given situation there exists an outcome where you can manage spending less than you earn, but managing money wisely will always improve the situation.
- tbirrell 9y ago
libertyEQ 9y ago
I waited tables while in college and made $2.10/hr +tips, which usually gave me $80-90 after tipping-out the bar/'bussers.' I also currently frequent a few bars, and these folks normally net $200+/shift. The lack of guaranteed wages, also allows them to under-report their earning WRT taxes. Tipping in the service industry in the US is part of the culture, which has been historically difficult to change by declaration.
wfo 9y ago
>In the US, employees must still be paid minimum wage. Depending on the state, an employer may count tips toward this amount. If an employee reports $0 in tips, the employer must pay them $7.25/hr. While I would like to believe that what you say is true, I find it hard to be true. Sure this is technically correct according to the way the law is written but it ignores the reality which is that a large group of criminals ignore the law on a daily basis and face no consequences. Wage theft is MASSIVE and widespread across America especially for low wage workers, who often rely on tips (but it even effects high wage workers too!). More money is stolen in the US through wage theft than all other methods combined. Business owners (especially small business owners) steal from their employees by not paying them when they quit (oh I guess we just lost your last paycheck, sorry, we'll get it to you soon I promise), stealing tips, intimidating employees into not reporting wages under the minimum, refusing to pay legally mandated overtime or refusing to allow legally required breaks or a variety of other ways owners can use their power to illegally extract unpaid labor from their employees. The solution is to abolish tips and require business owners pay their workers fair wages, or help the workers bargain collectively to ensure this themselves.
- dvtv75 9y ago
  Not in the US, but these have happened to me in my last three jobs (mostly in Dunedin, New Zealand): * steal from their employees by not paying them when they quit * intimidating employees into not reporting wages under the minimum * refusing to pay legally mandated overtime * refusing to allow legally required breaks I'm owed between $20,000 and $40,000 by two (New Zealand) employers in particular, who refused to pay for or record my extra hours worked, and one of them threatened me with physical harm if I went to the government watchdog. One of them was a small business, the other a multimillionaire. It was the latter who paid less than the minimum every day I worked, and demanded I work as many free hours as he could force me to. It's not just physical harm with him, because he also promised to destroy my reputation around town if I so much as stepped out of line. Yeah, I'm a sucker for not resigning on the spot. I know.
  - taejo 9y ago
    That seems like it'd be enough money to be worth going to court.
notyourday 9y ago
There's zero reason to have elevator operator in Manhattan Co-op.
- usuallymatt 9y ago
  I thought the exact same thing...or rather, why have one anywhere at all?
Sangermaine 9y ago
>In the US, employees must still be paid minimum wage. Depending on the state, an employer may count tips toward this amount. If an employee reports $0 in tips, the employer must pay them $7.25/hr. While I would like to believe that what you say is true, I find it hard to be true. You are beyond naive if you really think that because these laws are on the books they’re not being routinely and widely flouted or ignored. If you really find it hard to be true that employers will try to spend less on employees, you’re not capable of participating in this discussion because you lack even basic familiarity with the real world.
- jstarfish 9y ago
  Yeah, I had a few thousand dollars in unpaid overtime withheld by an employer; the Department of Labor helped me file a complaint, assigned me a representative, ignored all of my phone calls, and I never heard from them again. I tried to get a labor lawyer to intervene but the total losses weren't enough for them to bother litigating. They sent a demand letter and it was ignored. Next option would have been small claims but I didn't have the time or inclination to fight it anymore at that point. I can't imagine a waitress would fare much better. As long as a shady employer keeps their take below $10k, it seems they are untouchable.
  - c0wb0yc0d3r 9y ago
    I'm sorry to hear about your experience, but I don't think that it represents the nation at large. Here is why... According to the most recent census data I could find (2015), there are approx. 27M businesses in the US[1]. Assuming half those businesses are wage thieves, that would mean 13.5M businesses are currently in violation of the the law. The DOL can place a $10k sanction on the business owner for a first infraction[2]. This would then mean that the US gov't stands to make $135B by placing sanctions on these businesses. To catch each business, let's say it costs the DOL $2500/business. After looking into each and every business, they would run a total of $67.5B. Now they have made $67.5B after all expenses have been made. To put that in perspective, the US gov't has put aside $9.7B for the DOL in 2018[3]. As you might figure on your own, $67.5B is nearly 7 (6.9587628865979381443298969072165 if you want to be super accurate) times the DOL's 2018 budget. Now if you mean to tell me that the gov't is going to leave that sort of money on the table, then you and I need to figure out how we benefit from this. You might well be thinking something along the lines of "The gov't is inefficient, etc. There is no way they could reclaim all that." You're right this is definitely a perfect world scenario, but even if they could only claim 1%. That still makes up a 10th of next years DOL budget. For the gov't , these numbers only get better as more businesses commit these crimes. Now we have to look at this from the perspective of a business. Again there is only roughly 27M in the US. To make it fiscally responsible to take the $10k bet of sorts the business must save at least $10k/violation, obviously. For the sake of this argument let's say violations are handed out per person per month. ((404)7.25)+(((3024)-(404))(7.251.5)) = $7250, that is how much you make at minimum wage including overtime... If you worked literally every hour of every day for a month (30 days, technically). So if we assume the business thinks a person is going to report the violation, they are better off just paying minimum wage upfront. Let's reel this in a bit and say you work 40/wk/mo in overtime. ((404)7.25)+((404)(7.25*1.5)) = $2900. So now the business definitely comes out ahead. They would risk $7000 by trying to save, what, $1000? Remember, this is an extreme case, not everyone is going to work 80 hours a week. Even if a business isn't more likely to hire another person to cover your 40 hours of overtime a week, they can only save $580/mo compared to the $10k/violation. I know that there are businesses that will literally do anything under the sun to make a buck, but I find it hard to believe that even half of businesses would go against some of the math above. [1]: https://www.census.gov/data/tables/2015/econ/susb/2015-susb-annual.html https://www.census.gov/data/tables/2015/econ/susb/2015-susb-... [2]: https://webapps.dol.gov/elaws/elg/minwage.htm#Penalites https://webapps.dol.gov/elaws/elg/minwage.htm#Penalites [3]: https://www.dol.gov/sites/default/files/FY2018BIB_0.pdf https://www.dol.gov/sites/default/files/FY2018BIB_0.pdf

mjevans 9y ago

I agree with most of your points. However, I'd like to start with two labor patches (in the same set). 1) Pro-rate all benefits (with 3/4ths of median 'full time' work hours as full time). 2) Eliminate that tip as part of wage 'loophole'. Tips should still be allowed, but they should be for truly exceptional things, and not a hidden cost of buying something.

c0wb0yc0d3r 9y ago
2) Eliminate that tip as part of wage 'loophole'. That is interesting. As I understand it now, the way tips are factored into wages, it benefits the employee more so than the employer. Society loses because the employee is supposed to report tips so they are taxed, the employer loses because they still have to pay minimum wage, and the employee wins because they are paid minimum wage and get their tips tax free. Maybe I'm just being dense, but how would this elimination be beneficial?
- dragonwriter 9y ago
  > As I understand it now, the way tips are factored into wages, it benefits the employee more so than the employer. Society loses because the employee is supposed to report tips so they are taxed, the employer loses because they still have to pay minimum wage, and the employee wins because they are paid minimum wage and get their tips tax free. Employers of workers in customarily tipped jobs can and do use tips as a performance metric, so if the employer has to top up your tips to minimum wage, it probably also means you are also losing your job. This also motivates overreporting tips.
- gozur88 9y ago
  >...and the employee wins because they are paid minimum wage and get their tips tax free. Not tax free. Your employer reports 8% of your total receipts to the IRS as income. It's likely less than you make in tips, but you still pay some tax.

stinkytaco 9y ago

1. 7.25 is not enough to live on. And the ability to pay less with the assumption that there will be tips does not make it better. Especially considering that in many states you can require tip-pooling, effectively removing the stated point of tips in the first place (to motivate better service). Nor does this really address the problem of tipping as a cultural phenomenon, it just doesn't really need to exist. 2. The "teach better money management skills" has really nothing to do with this problem, but is continually trotted out as some sort of solution. If you don't have enough money, there's no "managing" it. This isn't an avocado toast problem, it's a wage issue. Additionally, the incentives are a moving target. For example, with the federal government threatening to end forgiveness plans, can you blame someone for not taking advantage of the option with the potential they will be stuck with the bag, plus interest? Same goes for home ownership incentives, charitable giving incentives, and so on. If the incentive could be gone one day due to the massively complicated and political game that is the tax code, I can hardly blame someone who doesn't have money for a financial adviser for not taking advantage of those programs.

c0wb0yc0d3r 9y ago
I think you misunderstood what I said. I made no claim that $7.25/hr is a livable wage. That is the current federal minimum. Employers are required to pay the minimum, if they aren't, they're breaking the law. Money management is certainly no silver bullet, however, it plays a role. If you net $13k/year then you have to manage that money so you don't spend more than $13k/year. Most would agree that it is extremely tough to live on $13k/year. No matter the difficulty the money still has to be managed. In my student loan example, if you have a loan schedule of 30 years @ 6% you will pay $46k in interest on a $40k loan when only paying the minimum of $240. That same loan if paid off @ $440/mo, nets you $33k over that time period. Here you would manage your money so that you can pay as much as possible on that loan as often as possible. Making more money doesn't solve money issues, it just covers them up. Saying that there nothing to be done because the amount spent is greater than the amount earned seems rather foolish. I'm not saying that in any given situation there exists an outcome where you can manage spending less than you earn, but managing money wisely will always improve the situation.
tbirrell 9y ago

libertyEQ 9y ago

I waited tables while in college and made $2.10/hr +tips, which usually gave me $80-90 after tipping-out the bar/'bussers.' I also currently frequent a few bars, and these folks normally net $200+/shift. The lack of guaranteed wages, also allows them to under-report their earning WRT taxes. Tipping in the service industry in the US is part of the culture, which has been historically difficult to change by declaration.

wfo 9y ago

>In the US, employees must still be paid minimum wage. Depending on the state, an employer may count tips toward this amount. If an employee reports $0 in tips, the employer must pay them $7.25/hr. While I would like to believe that what you say is true, I find it hard to be true. Sure this is technically correct according to the way the law is written but it ignores the reality which is that a large group of criminals ignore the law on a daily basis and face no consequences. Wage theft is MASSIVE and widespread across America especially for low wage workers, who often rely on tips (but it even effects high wage workers too!). More money is stolen in the US through wage theft than all other methods combined. Business owners (especially small business owners) steal from their employees by not paying them when they quit (oh I guess we just lost your last paycheck, sorry, we'll get it to you soon I promise), stealing tips, intimidating employees into not reporting wages under the minimum, refusing to pay legally mandated overtime or refusing to allow legally required breaks or a variety of other ways owners can use their power to illegally extract unpaid labor from their employees. The solution is to abolish tips and require business owners pay their workers fair wages, or help the workers bargain collectively to ensure this themselves.

dvtv75 9y ago
Not in the US, but these have happened to me in my last three jobs (mostly in Dunedin, New Zealand): * steal from their employees by not paying them when they quit * intimidating employees into not reporting wages under the minimum * refusing to pay legally mandated overtime * refusing to allow legally required breaks I'm owed between $20,000 and $40,000 by two (New Zealand) employers in particular, who refused to pay for or record my extra hours worked, and one of them threatened me with physical harm if I went to the government watchdog. One of them was a small business, the other a multimillionaire. It was the latter who paid less than the minimum every day I worked, and demanded I work as many free hours as he could force me to. It's not just physical harm with him, because he also promised to destroy my reputation around town if I so much as stepped out of line. Yeah, I'm a sucker for not resigning on the spot. I know.
- taejo 9y ago
  That seems like it'd be enough money to be worth going to court.

notyourday 9y ago

There's zero reason to have elevator operator in Manhattan Co-op.

usuallymatt 9y ago
I thought the exact same thing...or rather, why have one anywhere at all?

Sangermaine 9y ago

jstarfish 9y ago
Yeah, I had a few thousand dollars in unpaid overtime withheld by an employer; the Department of Labor helped me file a complaint, assigned me a representative, ignored all of my phone calls, and I never heard from them again. I tried to get a labor lawyer to intervene but the total losses weren't enough for them to bother litigating. They sent a demand letter and it was ignored. Next option would have been small claims but I didn't have the time or inclination to fight it anymore at that point. I can't imagine a waitress would fare much better. As long as a shady employer keeps their take below $10k, it seems they are untouchable.
- c0wb0yc0d3r 9y ago
  I'm sorry to hear about your experience, but I don't think that it represents the nation at large. Here is why... According to the most recent census data I could find (2015), there are approx. 27M businesses in the US[1]. Assuming half those businesses are wage thieves, that would mean 13.5M businesses are currently in violation of the the law. The DOL can place a $10k sanction on the business owner for a first infraction[2]. This would then mean that the US gov't stands to make $135B by placing sanctions on these businesses. To catch each business, let's say it costs the DOL $2500/business. After looking into each and every business, they would run a total of $67.5B. Now they have made $67.5B after all expenses have been made. To put that in perspective, the US gov't has put aside $9.7B for the DOL in 2018[3]. As you might figure on your own, $67.5B is nearly 7 (6.9587628865979381443298969072165 if you want to be super accurate) times the DOL's 2018 budget. Now if you mean to tell me that the gov't is going to leave that sort of money on the table, then you and I need to figure out how we benefit from this. You might well be thinking something along the lines of "The gov't is inefficient, etc. There is no way they could reclaim all that." You're right this is definitely a perfect world scenario, but even if they could only claim 1%. That still makes up a 10th of next years DOL budget. For the gov't , these numbers only get better as more businesses commit these crimes. Now we have to look at this from the perspective of a business. Again there is only roughly 27M in the US. To make it fiscally responsible to take the $10k bet of sorts the business must save at least $10k/violation, obviously. For the sake of this argument let's say violations are handed out per person per month. ((404)7.25)+(((3024)-(404))(7.251.5)) = $7250, that is how much you make at minimum wage including overtime... If you worked literally every hour of every day for a month (30 days, technically). So if we assume the business thinks a person is going to report the violation, they are better off just paying minimum wage upfront. Let's reel this in a bit and say you work 40/wk/mo in overtime. ((404)7.25)+((404)(7.25*1.5)) = $2900. So now the business definitely comes out ahead. They would risk $7000 by trying to save, what, $1000? Remember, this is an extreme case, not everyone is going to work 80 hours a week. Even if a business isn't more likely to hire another person to cover your 40 hours of overtime a week, they can only save $580/mo compared to the $10k/violation. I know that there are businesses that will literally do anything under the sun to make a buck, but I find it hard to believe that even half of businesses would go against some of the math above. [1]: https://www.census.gov/data/tables/2015/econ/susb/2015-susb-annual.html https://www.census.gov/data/tables/2015/econ/susb/2015-susb-... [2]: https://webapps.dol.gov/elaws/elg/minwage.htm#Penalites https://webapps.dol.gov/elaws/elg/minwage.htm#Penalites [3]: https://www.dol.gov/sites/default/files/FY2018BIB_0.pdf https://www.dol.gov/sites/default/files/FY2018BIB_0.pdf