Federal Tipped Minimum Wage Has Been $2.13/hr Since 1991

The federal tipped minimum wage in the United States has been frozen at $2.13 per hour since 1991 — over 34 years without a single increase. This is the sub-minimum wage that employers are legally permitted to pay tipped workers, with the assumption that tips will make up the difference to reach the regular federal minimum wage of $7.25. In practice, this means a server's entire paycheck often goes to taxes, and their take-home income is almost entirely dependent on the generosity of strangers. This matters because it creates extreme income volatility for roughly 5.5 million tipped workers in the US. A server working the Tuesday lunch shift at a diner might earn $30 in tips for five hours of work, while a Friday dinner server at a steakhouse earns $300. Both did the same fundamental job — carrying plates and attending to customers — but their compensation differs by 10x based on factors entirely outside their control: the day of the week, the weather, the restaurant's price point, the mood of the customer. This volatility makes it nearly impossible to budget, qualify for a mortgage, or plan for any major life expense. The reason this persists is structural: the National Restaurant Association (often called "the other NRA") has lobbied aggressively for decades to keep the tipped minimum wage low. Restaurant industry profit margins average 3-5%, and labor is the largest controllable cost. By offloading 60-80% of server compensation onto customers via tips, restaurants keep menu prices lower and shift the financial risk of slow nights onto workers. Any legislative attempt to raise the tipped minimum wage faces a well-funded opposition that frames it as a threat to small restaurant owners and jobs, even though states like California and Washington that eliminated the tip credit have thriving restaurant industries. The $2.13 figure was set as part of a political compromise in 1996 when the regular minimum wage was raised. The deal was that the tipped wage would stay at its 1991 level. What was meant as a temporary freeze became permanent because no subsequent Congress has had the political will to revisit it. Meanwhile, inflation has eroded that $2.13 to the equivalent of about $1.10 in 1991 dollars, meaning tipped workers' base wage has effectively been cut in half in real terms.