Pew Research Report on Minimum Wages and Tipping in the U.S.

Approximately 30% of U.S. adults also consider workers' pay before tips as a significant factor when making tipping decisions, according to a recent report published by Pew Research Center. There is, however, a significant variation in workers' pay across the country as a consequence of the interaction of state and federal rules on minimum wage and tips.

Per federal law, the minimum wage in the United States is $7.25 per hour for most workers. In contrast, employers of workers who "customarily and regularly" receive at least $30 a month in tips may pay them just $2.13 an hour in direct wages, if they also receive the equivalent of $5.12 an hour in tips. As a result, their full pay equals at least the $7.25 minimum. When an employee does not earn at least this amount in tips, the employer must make up the difference. This $5.12 is called the "tip credit."

There are 14 states where the federal minimum wage rules are the last, or almost the last, word on tip wages. States, however, can set their own minimum wage and tip credit rules, since the federal law is merely a floor and not a ceiling.Therefore, workers' pay can vary greatly across the country.

Restaurant servers in Waukegan, Illinois, are entitled to a minimum wage of $13 per hour - $7.80 in direct wages plus $5.20 in tip credit. The minimum wage for a server in Kenosha, Wisconsin, 17 miles away, is $7.25 - plus a tip credit of $4.92.

There are currently 30 states and the District of Columbia that have higher minimum wages than the federal standard, ranging from $8.75 an hour in West Virginia to $17 an hour in the District of Columbia. The tip credit is also higher in 17 of those states and in D.C.

A total of six states have both higher hourly minimums and lower tip credits than the federal standard. Six other states use the federal minimum wage of $7.25 but allow smaller tip credits than federal law allows.

In seven states, most of them located in the West, tip credits are not allowed at all. The tipped workers get paid the full minimum wage from their employers and can keep their tips.

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