Demanding an End to the ‘Tipped Wage’

Two of the nail technicians who demonstrated on Tuesday for a higher minimum tipped wage. (Photo by Ana B. Nieto via El Diario)

“Confusion,” “financial uncertainty,” “wage theft,” “depending on generosity, not on the job,” “poverty,” “vulnerable,” “instability.” All these words come up in the first few minutes of any conversation with a nail technician or a car wash worker who depends on customer tips.

On Tuesday, many of them spoke about their tight working situation at one of the hearings the state government is carrying out after Gov. Andrew Cuomo called for an evaluation and a possible change in the law that stipulates the minimum wage of employees who receive tips in New York.

This wage, called “tipped wage” and which depends on the company’s location and number of employees, is several dollars lower than the minimum wage in other industries in New York, in which the minimum wage will be $15 starting next year.

Restaurants pay employees this so-called “subminimum wage” as well, but not everyone affected in the industry is complaining about the same thing. Opinions there are more often divided on whether the tip credit should be kept or not. The tip credit allows employers to pay employees less than minimum wage.

In Tuesday’s hearing, which took place at Hostos Community College in the Bronx, the only partition in place separated entrepreneurs and workers, as the bar and restaurant industry was excluded in order to focus on employees who receive less generous tips. Their gratuity is barely taxed and is not fixed as it is in restaurants. On many occasions, employees never receive them.

“Giving someone a mani-pedi with massage means that you spend a little over an hour with one customer. Sometimes they say they are going to an ATM but never come back,” complained María, one of the 174 people scheduled to testify.

 Glenda Sefla, 30, from Ecuador, explained that she makes $90 for 10 hours of work, and that tips depend on the day and the season. “In the summer, I can make $50 [in tips] and in the winter, sometimes up to $30. With a minimum wage, I would be able to rest assured that I don’t have to rely on a tip, which should be extra, not part of my salary.” Sefla, who lives with relatives, admitted that she has no choice but to refrain from buying many things, among them health insurance. “It is quite frustrating to live off the kindness of the customers.”

Mexican immigrant María Hernández is thinking about changing careers because she only makes $80 without tips on a 10-hour workday. She has two children, a teenager and a 5-year-old, and says that she does not see them on weekends because that is when she works the most and no one in the industry can afford to take those days off. “On average, I make $6 in tips for a little over an hour’s worth of work on a manicure and a pedicure,” she explained. “The lower the price of the service, the lower the tips people leave,” she lamented.

Hernández said that one of the first things she does in the day is check the weather forecast. “If there are storms, forget about a tip.”

Wage theft

Deborah Axt, co-executive director of Make the Road NY, explained to the government panel on Tuesday that the tipped wage system creates a great deal of confusion and that it is so complicated that some workers ignore exactly how much they earn. In addition, it has been demonstrated that such lack of clarity “makes it impossible to eradicate wage theft,” which is high among these workers.

“The system is hard to understand. There is no clarity regarding how much you make. There are many immigrants who have trouble understanding and are vulnerable workers. No one knows if they are being paid the right amount,” complained nail technician Yendi Peralta, who stated that it is impossible to live off gratuities because “I pay rent, my phone, the subway, laundry, and no one is going to charge me less.”

Some “carwasheros” – car wash workers – said that they, too, endure similarly difficult working conditions.

Ernesto Salazar, from El Salvador, explained that three years ago he and his coworkers won the right to unionize, and that their contract states that they will be paid $13 with tips. “If we don’t fight, nothing changes. It does not happen on its own.” He is concerned that many workers in his same industry lack a contract like the one he has, earn subminimum wages and make many sacrifices at a job in which wage theft is easy to perpetrate.

“There are people who depend on tips, but that is not right. You still have to pay your bills even when there is no gratuity,” he said, and added, referring to restaurant employees who want things to remain as they are: “It is worrisome that waiters are unable to understand that in such an expensive city they are expected to live off people’s generosity, not their work.”

Entrepreneurs from the nail salon industry, mostly Asian and wearing blue shirts, attended the hearing to defend the current system.

In his statement, business owner Donald Yu, director of the Korean-American Nail Salon Association of NY, argued that most nail salon owners are families who have a small business and are trying to “survive in these hard times.”

Yu pointed to problems such as rent increases, property taxes and the price of goods, in addition to tough competition. He also said that many workers make more money with the tip credit than without it.

“If we don’t have [the tip credit], prices will have to go up, customers will complain, and they will tip less or leave no tip at all,” he read from his notes. The businessman did not rule out that some salons may have to close, causing job losses, stating that margins “are very narrow.” When asked what his margin was, he said that it was less than 20 percent.

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