Title: Is Tipping Fair?
Podcast: Today, Explained by Vox
Hosts: Jacqueline Hill and Peter Balin
Release Date: July 27, 2025
Description: Today, Explained is Vox's daily news explainer podcast. Hosts Sean Rameswaram and Noel King guide listeners through the most important stories of the day.
Introduction
In this episode titled "Is Tipping Fair?", hosts Jacqueline Hill and Peter Balin explore the intricate dynamics of the tipping system in the United States. They examine whether the current practices are equitable for workers and discuss the ongoing debates surrounding tipped wages and tipping culture.
The Current State of Tipping and Tipped Minimum Wage
The conversation begins with an overview of the tipped minimum wage system, where workers like servers and bartenders receive a lower base wage under the assumption that tips will compensate for the difference. Peter Balin explains:
"A server at a fine dining restaurant in Wisconsin where servers make $2.33 an hour. And what you take home is really just your tips." (03:00)
This system is intended to ensure that tipped workers earn at least the standard minimum wage when tips are factored in. However, enforcement is often weak, leading to widespread wage theft and financial instability for workers.
Initiatives and Policies in Washington, D.C.
The hosts delve into the specific case of Washington, D.C., where advocacy groups like Rock D.C., led by Sophie Miyoshi, have been at the forefront of pushing for higher wages for tipped workers. Balin outlines the history:
"In 2016, DC agreed to raise their minimum wage to $15 an hour for everyone except tipped workers. They said the minimum wage for tipped workers would top off at $5 an hour." (05:32)
Sophie Miyoshi and her organization responded by spearheading a ballot initiative to increase the tipped minimum wage to match the general minimum wage. Despite opposition from the Restaurant Association—which argued that higher wages would lead to business closures and job cuts—the initiative passed in 2018 (06:43). However, the D.C. City Council later overturned this change due to intense lobbying efforts (06:59).
The COVID-19 pandemic shifted tipping behaviors, as increased customer tips helped sustain struggling restaurants. This momentum led to a second ballot initiative in 2022, successfully raising the tipped minimum wage incrementally to $12/hour by 2028 (08:32). Nonetheless, business owners like Tony Tomeldon faced significant financial strain:
"In one year, my payroll doubled. I mean, for the first time in 15 years here, I raised prices." (09:35)
This pressure contributed to the closure of establishments like Brookland's Finest (10:05).
Impact on Restaurants and Workers
While business owners grapple with increased payroll costs, workers have experienced tangible benefits. Max Halle, a bartender at the Grand Duchess, shares his perspective:
"It's been good for me. I can buy more groceries on time. My tax returns look a little cleaner." (11:10)
However, some workers fear that higher base wages might lead customers to tip less, potentially reducing their overall income. Despite these concerns, data indicates that median hourly wages for servers and bartenders have risen since the policy's implementation, though they remain below a living wage.
Challenges in Policy Implementation
Peter Balin emphasizes the complexities involved in changing the tipped wage system:
"Implementing change, it's messy. And if you're going to raise the tip minimum wage via a ballot measure in a place with a strong restaurant lobby, well, be ready for some backlash." (12:56)
Despite the challenges, Washington, D.C.'s restaurant scene has neither collapsed nor flourished dramatically, suggesting a nuanced impact of the wage increases (12:50).
Historical Context of Tipping
The episode provides a historical backdrop to the tipping system. Nina Mast from the Economic Policy Institute articulates:
"Tipping goes back to the pre-Civil War times in the US. There were wealthy Americans who were vacationing in Europe and noticed the practice of tipping for good service. They brought it back to the US as a trendy practice among the elite." (24:01)
Post-Civil War, tipping became a tool to underpay African American workers in service industries. The Fair Labor Standards Act of 1938 established minimum wage laws but excluded sectors reliant on tipping, solidifying a system where workers depended heavily on customer gratuities for their income.
Taxation on Tips
Richard Rubin, a tax policy expert, discusses recent legislative changes regarding tip taxation:
"Before 2025, wages and tips were effectively the same thing for tax purposes. Congress changed this by treating tips as 'voluntary payments' or 'gifts,' exempting the first $25,000 of tips from income tax." (20:27)
However, this policy includes limitations:
- Thresholds: The tax exemption starts to phase out at higher income levels (e.g., single individuals earning over $150,000 and married couples over $300,000).
- Payroll Taxes: Tips remain subject to payroll taxes, affecting workers regardless of their income tax status.
Rubin questions the sustainability and equity of these changes, noting potential disparities between tipped and non-tipped workers:
"What makes a tipped worker special for tax purposes? It creates inequity within the workforce." (19:41)
Consumer Perspectives on Tipping
The hosts address common misconceptions about tipping. Sophie Miyoshi points out:
"People don't realize that they're actually paying the lion's share of their server's wages through their tips. When you fail to tip, you're denying them their wage." (29:41)
This challenges the notion that tipping should solely be a reward for good service, highlighting the systemic dependency of servers on customer gratuities.
Conclusion
The episode underscores that the tipping system in the U.S. is deeply rooted in historical inequities and is maintained by both economic interests and cultural norms. While initiatives to raise the tipped minimum wage demonstrate progress, they also reveal the significant pushback from the restaurant industry. The conversation invites listeners to reconsider the fairness and sustainability of the current tipping practices.
Jacqueline Hill aptly summarizes the complexity of the issue:
"There’s a whole economic reality behind the tipped wage." (13:17)
Notable Quotes with Attributions and Timestamps
- Peter Balin: "A server at a fine dining restaurant in Wisconsin where servers make $2.33 an hour. And what you take home is really just your tips." (03:00)
- Sophie Miyoshi: "There's so many problematic things about the tipped minimum wage." (04:36)
- Tony Tomeldon: "In one year, my payroll doubled. I mean, for the first time in 15 years here, I raised prices." (09:35)
- Max Halle: "It's been good for me. I can buy more groceries on time. My tax returns look a little cleaner." (11:10)
- Sophie Miyoshi: "People don't realize that they're actually paying the lion's share of their server's wages through their tips." (29:41)
- Richard Rubin: "Tips are like a gift... it's not taxable income to you." (20:27)
This detailed summary captures the essence of the "Is Tipping Fair?" episode, highlighting key discussions, insights, and conclusions while providing context and direct quotes for a comprehensive understanding of the topic.