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Tipped Income System Facts

Fact #1: Tipped servers already make at least the minimum wage.

  • Laws are in place in every state that ensure their base wage + tips = at least the minimum wage. When it does not, the restaurant owner is required to pay the difference.

  • Nationally, tipped servers have a median income of $27/hour.
Waiter standing next to table taking order from 2 patrons
Chefs standing around a kitchen in a tight group discussing something

Fact #2: Eliminating the tipped income system, including the tip credit, harms job growth and opportunity in the restaurant industry.

  • Since Washington, D.C. began phasing out the tip credit in May 2023, fullservice restaurant employment is down 3.4%.
  • Learn more about how the elimination of the tip credit is harming local restaurants across the country.

Fact #3: Employees enjoy higher earnings through the tipped income system than through a flat wage.

  • The median tipped server earns $27 an hour, with highest-paid earners making more than $40 per hour under the tipped income model.
  • The earning potential of a tipped income is why many people choose restaurants as a first job, a side job for extra income, a job while in school, and as a career.
  • The tip credit and tipping system also helps restaurant operators provide employees with jobs, training, and career advancement.
Waitress delivering breakfast to a table of 2 patrons.
Four restaurant workers in aprons standing in front of a series of blackboards with menu items displayed

Fact #4: Fullservice restaurant employees believe eliminating the tip credit will be a pay cut for them.

  • A recent survey of nearly 4,000 tipped employees in states facing tip credit elimination threats found overwhelming support of the current tip credit system, compared to a higher hourly base wage with a less certain outcome on tips. Key findings include:

    • 90% of tipped employees prefer the current tip credit system over other higher flat wage models.

    • 87% percent of tipped employees fear their earnings would drop if employers were required to pay a full minimum wage.

  • According to servers and bartenders in Prince George’s County and Montgomery County, MD, if the tip credit were eliminated:
    • 89% believe they will make less money
    • 80% are likely to quit their jobs and work in a jurisdiction that allows the tip credit
  • In Illinois, where a proposal to eliminate the tip credit threatens to upend restaurant operators and servers, a strong majority of tipped employees support the current system:
    • 87% agree that the current tipping system works well for them and don’t want to change it
    • 77% like that they can maximize earnings by using customer service skills
    • 86% believe they would earn less without the tip credit

Fact #5: Fullservice restaurant employees want to keep the tipped income model.

Waitress standing in a restaurant looking at the camera holding a tray of food
Tipping Serves Up Opportunity is a project of the National Restaurant Association.
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