We’ve all been there. Maybe it’s when you grab a coffee in the morning or when you finish up a dinner out with friends. Maybe it’s when you least expect it, like at the merch table at a concert. You tap your card, only to be confronted with the dreaded tip screen. There’s a lot of talk about how much to tip and if you even should tip (more on that later), but why do we add gratuity in America in the first place?
Nina Mast has the answer. She’s an analyst at the Economic Policy Institute, a left-leaning think tank in Washington, DC. The point of the tip is to make up the difference between the minimum wage and the tipped minimum wage. “The tipped minimum wage is the lower minimum wage that employers can pay tipped workers with the expectation that tips will bring their pay up to the regular minimum wage rate,” she says. “Under federal law, the tipped minimum wage is $2.13 an hour. So tipped workers need to earn an additional $5.12 in tips to bring them up to the federal minimum wage, which is $7.25 an hour.”
On this week’s episode of Explain It to Me, Vox’s weekly call-in podcast, we find out how this system began and why we still have it.
Vox Explain It To Me Podcast
July 28, 2025
Nina Mast, an analyst at the Economic Policy Institute, has studied the methods of the restaurant-industry lobby closely. She’s an expert on child labor, which has grown increasingly pervasive in recent years, as states have loosened restrictions on the number of hours that teens can legally work on school nights, and permitted their involvement in alcohol service and hazardous jobs such as roofing. In Iowa, Florida, and several other states, the restaurant lobby has pushed for these policies, she told me, in part to address what the lobby claims were labor shortages caused by the pandemic.
The New Yorker
July 28, 2025
The Economic Policy Institute estimates that Starbucks has likely had more complaints of illegal union-busting filed against it than any other company in the National Labor Relations Board’s 90-year history.
Common Dreams
July 28, 2025
The survey, conducted this month, shows increases across nearly all metrics. It comes as reports show teachers earn 73 cents for every dollar made by similarly educated professionals, according to the Economic Policy Institute.
NC Newsline
July 28, 2025
Finally, how you make money matters. For instance, people who work multiple jobs won’t necessarily get the overtime deduction.
“If somebody works 50 hours a week at one job, they get overtime for those 10 extra hours. But for someone who has two jobs at 25 hours each, they get no overtime pay,” said Heidi Shierholz, president of the Economic Policy Institute.
If the law is renewed or becomes permanent — and with bi-partisan support there’s a chance it may — Shierholz worries it could shift workplace dynamics. Some workers may ask for more overtime, and employers might encourage it so they can hire fewer employees and spend less on benefits. Shierholz also says the law could further incentivize tipping over paying a guaranteed wage.
“So this is just not going to be the kind of game changer for working people that it’s been touted as,” she said.
Marketplace
July 28, 2025
Nationally, more than 14 million workers are paid less than $15 per hour, including overtime, tips and commissions, according to the Economic Policy Institute’s Low Wage Workforce Tracker. Nearly 27 million make less than $17.
The Triangle Tribune
July 28, 2025
A LendingTree survey found that the city has more Black-owned businesses than anywhere else in the country. But that doesn’t mean economic equity has been achieved. According to the Economic Policy Institute, Black residents in Atlanta face an unemployment rate of 5 percent, nearly double the 2.6 percent rate for white residents.
Blavity
July 28, 2025
- The Economic Policy institute estimates that $102,734 is the income level required for an adequate standard of living. That income translates to $11,420 in combined federal and state income taxes in the Fresno metro area.
The Sun Joaquin Valley Sun
July 28, 2025
It’s an especially compelling idea when you consider that most working Americans are struggling to get by, while CEOs were paid 351 times as much as the typical worker in 2020, according to the Economic Policy Institute. But what would happen if this model were scaled up, not just to one business, but to the entire U.S. economy?
GO Banking Rates
July 28, 2025
Article Sources:
- Economic Policy Institute. “Summer 2025 Minimum Wage Increases.”
Investopedia
July 28, 2025