Restaurants and the Minimum Wage

The Post-Dispatch reports on a proposed minimum wage cap that would apply to tipped workers, like waiters in restaurants. The cap would keep their minimum wage where it is now, so that it wouldn’t rise with inflation.

A small increase in the minimum wage, paced with inflation, isn’t going to cause massive labor market inefficiencies — but there are downsides to a continually rising minimum wage nonetheless. One is that it gives the false impression that we’re helping poor people. Most poor people don’t earn the minimum wage. And many minimum-wage earners live in households that are not poor, or earn the minimum wage only temporarily. To illustrate, the server quoted at the end of the article is a Washington University graduate student, who undoubtedly will earn a higher wage once she completes her advanced degree.

There are other policies, such the Earned Income Tax Credit, that directly help poor people. Legislators would do well to cap the minimum wage and focus on policies that can work. If you still think tipped workers are getting a bad deal, give them larger tips!