Realizing The Dream: How the Minimum Wage Impacts Racial Equity in the Restaurant Industry and In America

2013 marks the 50th anniversary of the March on Washington for Jobs and Freedom. One of the demands of that march was for a minimum wage high enough to secure a healthy and vibrant nation of workers who could provide for their families and participate in the nation’s prosperity. Despite this historic effort, income inequality retards many of the gains of the civil rights movement.

The federal minimum wage for all workers has stagnated at $7.25 per hour, and the sub-minimum wage for tipped workers has remained frozen at $2.13 per hour for over two decades. As a result, millions of Americans find themselves struggling in poverty even while working a full-time job. Though many work 40 hours or more each week, their wages are low enough that they must rely on food stamps and other public benefits to sustain themselves and their families. The minimum wage, at its current level, economically excludes and marginalizes millions of people who could instead be generators of growth throughout the economy. This burden falls disproportionately on people of color, since they represent 42% of minimum wage earners yet only make up 32% of the total workforce.

The restaurant industry is one of the largest and fastest growing sectors of the United States economy, employing over 10 million workers. The industry is the largest employer of people of color, and the second largest employer of immigrants. Unfortunately, the restaurant industry is the largest low-wage employer, accounting for 39% of all workers earning at or below the minimum wage. Workers of color and immigrants are disproportionately concentrated in the industry’s lowest paying positions. Forty percent of all tipped workers are people of color, and over 23% of all tipped workers are immigrants, a disproportionate number compared to the 16% of immigrants in the total workforce. Overall, 58% of workers with incomes below the poverty line, and over 50% of tipped workers and restaurant workers with incomes below the poverty line are people of color. 

Nearly six million workers would be lifted out of poverty if the minimum wage were raised to $10.10 as has been proposed in Congress, of which 60%, or over three and a half million would be people of color. Over 500,000 of these would be restaurant workers, and nearly 300,000 of these would be workers of color. Nearly 50% of tipped workers lifted out of poverty would be workers of color. Examining all tipped workers and their families, over 400,000 individuals of color would be lifted out of poverty, and 150,000 of these would be children. Among restaurant workers and their families, over 700,000 people of color would be lifted out of poverty, and over 250,000 would be children.

On all counts, an increase to the minimum and tipped minimum wage is a sensible solution. It would raise millions out of poverty, including hundreds of thousands of children and their families; it would especially help African Americans and Latinos (populations that played a pivotal role in the 2012 elections), and lift up communities that have been marginalized and denied the opportunity to escape poverty. Similarly, any effort to block certain groups, such as tipped workers, from receiving the benefits of an increase to the  tipped minimum wage would mean hundreds of thousands of children and their families would continue to suffer a dream denied.

Download the full report here.

This report was released on June 19th, 2013 by ROC United along with the Applied Research Center (ARC), Asian Pacific American Labor Alliance (APALA), Center for New Community (CNC), Color of Change, The Greenlining Institute, Jobs With Justice (JWJ), National Council of La Raza (NCLR), Praxis Project, and the United Workers Congress released a report studying the impacts of the full and tipped minimum wage on communities of color.

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