Restaurant Workers Are More Likely to Be in Poverty than Other Workers:
People of Color Are Most Likely in Lowest Paid Positions, Women Are Most Likely in Jobs That Depend on Tips
Restaurant workers earn less and are less likely to receive benefits than workers in other industries, a new Economic Policy Institute report finds. In Low Wages and Few Benefits Mean Many Restaurant Workers Can’t Make Ends Meet, EPI economist Heidi Shierholz examines the demographic and occupational breakdowns of restaurant jobs, including how much workers earn, what jobs they do, whether they receive benefits, and whether they and their families are able to make ends meet. Shierholz finds that people of color are disproportionately in the lowest paid jobs, and women are most likely to be in jobs where they depend on tips.
“This look at the restaurant industry provides a clear lens into the low-wage labor market and shows just how hard it is for restaurant workers to provide for their families,” said Shierholz. “The picture becomes even more troubling when you look at women and minorities in this industry, as they are much more likely to live in or near poverty.”
The median hourly wage in the restaurant industry, including tips, is $10.00, compared with $18.00 outside of the restaurant industry. After accounting for demographic differences, restaurant workers have hourly wages that are 17.2 percent lower than those of similar workers outside the restaurant industry. The largest restaurant industry occupation is waiter/waitress, which makes up nearly a quarter (23.3 percent) of all restaurant jobs, and has a typical wage, including tips, of $10.15 an hour. The lowest-paid occupation is cashiers/counter attendants, at $8.23 an hour, while the highest paid are managers, at a typical wage of $15.42 per hour—which is still lower than the overall median wage outside the restaurant industry.
Occupations within the restaurant industry are highly gendered and have strong racial and ethnic concentrations. Women are much more likely than men to be cashiers/counter attendants, hosts, and wait staff and make less than men in every restaurant occupation except for dining room attendants/bartender helpers, where they make roughly the same. Blacks are disproportionately likely to be cashiers/counter attendants, the lowest-paid occupation in the industry. Hispanics are disproportionately likely to be dishwashers, dining room attendants, or cooks, also relatively low-paid occupations. White non-Hispanics are disproportionately likely to be hosts/hostesses, wait staff, bartenders, or managers, which are among the industry’s more highly paid occupations.
More than two in five restaurant workers, or 43.1 percent, live below twice the poverty line—more than twice the 19.9 percent share outside the restaurant industry. (Twice the official poverty threshold is commonly used by researchers as a measure of what it takes for a family to make ends meet.) Non-naturalized immigrants in the restaurant industry are the most likely to be poor or near-poor, with 59.3 percent living below twice the poverty line. Blacks and Hispanics within the restaurant industry are also very likely to be poor or near-poor, with 55.6 percent and 56.5 percent living below twice the poverty line, respectively. 45.9 percent of women who work in restaurants live below twice the poverty line, compared with 40.0 percent of men.
Just 14.4 percent of restaurant workers receive health insurance from their employer, compared with roughly half (48.7 percent) of other workers. Of unionized restaurant workers, 41.9 percent receive health insurance at work, substantially higher than the share among nonunionized restaurant workers. Only 8.4 percent of restaurant workers are included in a pension plan at their job, one-fifth the rate of pension coverage outside the restaurant industry, 41.8 percent. Of unionized restaurant workers, 31.6 percent are covered by a pension plan, substantially higher than the share among nonunionized restaurant workers.
The share of workers in poverty significantly drops for unionized restaurant workers, demonstrating the critical role collective bargaining can play in improving workers’ living standards. The report provides policy solutions to improve the quality of restaurant jobs, including increasing the minimum wage and eliminating the tipped minimum wage, increasing the overtime salary threshold, passing comprehensive immigration reform with a path to citizenship for undocumented workers, and requiring employers to provide paid sick days. Shierholz also highlights the need to combat just-in-time scheduling, a growing practice where employers give workers little advance notice of their schedules and instead call them into work during nonscheduled times and send them home early when business is slow.
“It’s important to note that restaurants can and sometimes do provide high-quality jobs that afford workers the opportunity to make a decent living,” said Shierholz. “It is no coincidence that unionized restaurant workers have higher wages, are much more likely to receive benefits, and are less likely to live in poverty. We can improve the quality of restaurant jobs by strengthening workers’ right to organize.”
Twenty-Three Years and Still Waiting for Change: Why It’s Time to Give Tipped Workers the Regular Minimum Wage, Sylvia A. Allegretto and David Cooper
Top Restaurant Industry CEOs Made 721 Times More than Minimum-Wage Workers in 2013, Lawrence Mishel, Ross Eisenbrey, and Alyssa Davis