An ADP report, surveying over 100,000 full-service tipped workers, shows a decline in tips as a share of restaurant workers’ total compensation. In September, tips made up 57.4% of workers’ pay, down from 67% in August 2021. While base pay has increased due to changes like the elimination of the tip credit, tips still represent a majority of earnings. In September, the median tipped worker earned $14.48 per hour in tips and $10.74 in base pay.
Base wages for tipped workers have grown by 66% since 2020, while tips have increased by 23%. However, ADP warned that higher minimum wages for tipped workers could lead to higher menu prices and reduced demand. Despite price increases, a Popmenu survey found that customer tipping patterns remain steady.
The report also highlighted regional wage disparities. For example, tipped workers in Chicago saw a 49% wage increase, while those in Minneapolis only saw a 7% increase. In California, where there is no tip credit, base pay is higher, but tips still make up a significant portion of total earnings, showing that tipping remains ingrained even without the tip credit.
The ADP report highlights the ongoing significance of tips in restaurant workers’ compensation, despite rising base wages. While wage disparities exist across regions, tipping remains a key part of earnings, even in states without a tip credit. The challenge lies in balancing higher wages with potential price increases and demand fluctuations.
