Proposed Rule Would Worsen U.S. Wage Theft

Why does state capitalism fail to adequately deliver the liberty, egalitarianism, and fraternity that were desired by the people who overthrew feudalism and slavery? Could it be that the relationship between employer and employee is still too similar to that of lord and serf and master and slave? Is this relationship at the core of production the undercurrent for many societal problems?

Low-paid working women are often at the greatest risk for abuse, particularly if they are in service professions.

At the same moment, the Trump administration is pushing a rule that could make tipped workers even more vulnerable to harassment. In early December, the Labor Department—urged on by the restaurant lobby—announced a plan that could allow employers to steal tips from their workers. Under the new rule, employers could pool all tips and distribute this money to other workers, including non-tipped workers—or keep it for themselves. The Economic Policy Institute estimates that the rule could allow employers to pocket $5.8 billion in workers’ tips each year, in an industry where 66 percent of workers are women and 25 percent of workers are women of color.

This could result not only in the theft of tipped workers’ wages—even though they are already nearly twice as likely to live in poverty as other workers—but it could also increase their likelihood of being sexually harassed. Tipped workers are often at the mercy of customers to make ends meet financially, and the new rule would add additional pressure from employers and managers who would control the distribution of tips. That could drive conditions from bad—accommodations and food service workers already account for 1 out of 7 sexual harassment charges filed with the U.S. Equal Employment Opportunity Commission—to worse.

And the proposal’s effects don’t stop with tipped workers. If employers choose to redistribute the tips to other non-tipped employees, they could classify them as tipped workers and knock their base wage down to $2.13 per hour. This could raise their risk for sexual harassment as well as wage theft because, while employers are legally required to ensure tipped workers are paid the minimum wage, evidence shows employers often don’t.

There is, of course, another option: Instead of rushing through a rule that will lower wages and increase vulnerability to harassment for tipped workers—all with a very limited period for public feedback—the Trump administration could focus on paying tipped workers fair wages. That means eliminating their separate minimum wage, which is something the minimum wage bill before Congress would do. Evidence shows this would work: In the seven states that have abolished the separate tipped minimum wage—where employers are now required to pay their workers at least minimum wage—tipped workers take home higher pay and are less likely to experience harassment. Pair that with solutions to reduce sexual harassment in the workplace, and you’re poised to make progress not only on economic security but also on reducing the number of workers who have to say #MeToo.

The option I ideally prefer is different: Let the workers themselves run the enterprises democratically so that the key power rests with them. Most people are motivated primarily by self-interest (though whether that ends up being beneficial or harmful to others is another question) and would not seek to vote against themselves by choosing unnecessarily low wages.