Living on $2.13 an hour, plus tips

May 5, 2014: 3:17 PM ET
minimum wage tiffany kirk
Tiffany Kirk, who is raising a three-year-old daughter, finds it hard to make ends meet because her bartending tips fluctuate.
NEW YORK (CNNMoney)

The tips that Tiffany Kirk earns at the "Howl at the Moon" piano bar determine whether she'll be able to keep the lights on at home.

That's because the 24-year-old bartender and single mom's minimum hourly wage at the Houston nightspot is $2.13.

Kirk is one of 3.3 million workers who earn about that amount, which is also the federal minimum wage for tipped workers. Other workers in this category include hair salon employees, waiters, car wash workers, and wheelchair attendants at airports. These workers rely primarily on tips for their income.

Under labor law, employers have to make sure that workers earn at least $7.25 -- the federal minimum wage for all workers. So, if workers don't earn enough in tips, employers must make up the difference and pay what is known as a "tip credit." While Kirk's employer pays her the differential, many don't.

And most efforts to raise the minimum wage have ignored tipped workers.

For example, Maryland's governor on Monday signed a bill that will gradually raise the minimum wage to $10.10, but it exempted tipped restaurant workers from qualifying for the higher wage. Instead, the state froze their minimum wage at $3.63 an hour, a move supported by the restaurant industry.

Related: Minimum Wage: Congress stalls, states act

The industry's efforts aren't new. Several big restaurant companies, including YUM! Brands (YUM), which owns Taco Bell, KFC and Pizza Hut; Darden Restaurants (DRI), which owns Olive Garden and Red Lobster; and Cracker Barrel Old Country Store (CBRL), lobbied against last year's effort in Congress to raise the federal minimum wage, according to Senate lobbying reports.

The restaurant industry similarly and successfully lobbied to freeze the minimum wage for tipped workers in 1996 and 2007 when Congress approved federal minimum wage increases. As a result, the federal tipped minimum wage has remained at $2.13 per hour since 1991.

Related: What is the minimum wage in your state

Only a handful of states -- Minnesota, Hawaii, Alaska, California, Montana, Nevada, Oregon and Washington -- either already require or have enacted laws that will require employers to pay all workers at least the state's minimum wage, whether they receive tips or not.

The road to a minimum wage

Kirk, who is raising a three-year-old daughter, finds it hard to make ends meet because her bartending tips fluctuate.

But her living costs remain about the same. She spends about $1,700 a month on her car payment, utilities, rent, food, and other necessities. In a good month, she might bring home $2,000, which means there's little left over. She has no savings account.

"Being a waitress can be very demeaning, especially for a woman behind the bar," Kirk said. "Customers can be rude to you and not even leave a tip. But you depend on the tips, so you grin and bear it."

Just this past week, Kirk says a group of patrons ran up a $386 bar tab. They left just a $14 tip.

Still Kirk said she is fortunate that the owner of "Howl at the Moon" follows the law and pays her at least the Texas minimum wage of $7.25 if her tips don't add up.

Many businesses don't. From 2010-2012 the Labor Department's Wage and Hour Division conducted nearly 9,000 investigations of restaurants. It found that nearly 84% had some sort of wage and hour violation -- 1,170 of the violations pertained to the tip credit, resulting in $5.5 million in recovered back wages.

Related: Subway leads in underpaying workers

The White House said in a report that people in "predominantly tipped occupations are twice as likely as other workers to experience poverty, and servers are almost three times as likely to live in poverty."

The National Restaurant Association doesn't buy these arguments. "Tipped employees at restaurants are among the highest-paid employees in the establishment, regularly earning between $16 and $22 an hour," the association said in a statement.

Kirk doesn't earn nearly that much. Her pay ends up being just a little more than the median $8.94 an hour for wait staff across the United States.

Her choices are tough. "Last Christmas I couldn't buy my daughter a toy. I know she doesn't know, but it really hurts your pride," she said.

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