Minimum wage hikes arrived Jan. 1, but tipped workers largely left out
The tradition of tipping service workers has its roots in the Civil War era
Minimum wage increases that took effect Jan. 1 will give millions of workers modest raises across states and cities.
Advocates say tipped workers will see little benefit, remaining stuck with subminimum wages as living costs climb.
Polling shows broad, bipartisan support for higher wages, including ending the tipped wage system altogether.
As minimum wage increases rolled out on Jan. 1 in states and cities across the country, millions of workers start the new year with slightly higher paychecks. But labor advocates say the raises will leave behind a large segment of the workforce — tipped workers who continue to earn subminimum wages and rely on unpredictable gratuities to survive.
In 22 states, minimum wages are scheduled to increase in 2026, delivering annual gains ranging from several hundred to several thousand dollars for full-time workers. The changes reflect years of state and local action as Congress has failed to update federal wage standards.
The federal minimum wage has remained stuck at $7.25 an hour since 2009. For tipped workers, federal law still allows employers to pay as little as $2.13 an hour before tips — a system critics say is outdated, inequitable, and rooted in discriminatory labor practices.
Millions still earning poverty-level wages
New data from The Make America Affordable Now PAC highlights the scale of the wage challenge. Nearly half of all U.S. workers — about 67 million people — earn less than $25 an hour, according to the group’s findings.
That wage level, advocates say, falls well short of what workers need to afford basic necessities in most parts of the country.
The MIT Living Wage Calculator shows that no county in the United States offers a living wage below $20 an hour for a single adult. For a worker with one child, even the least expensive counties require earnings of at least $33 an hour to cover essentials such as housing, food, childcare, health care, and transportation.
As rents, groceries, and childcare costs continue to rise faster than wages, modest minimum wage increases often fail to keep pace, particularly for workers at the bottom of the pay scale.
Tipped workers face unique vulnerabilities
Advocates argue that tipped workers are especially exposed to economic instability. Because their base pay is so low, fluctuations in customer traffic, seasonal downturns, and economic slowdowns can quickly push workers into financial distress.
They also point to higher rates of wage theft, harassment, and poverty among tipped workers compared with non-tipped employees.
The subminimum wage system, critics say, traces back to post–Civil War labor practices designed to exclude newly freed Black workers from full wage protections. While some states have eliminated the tipped wage altogether, most still allow the lower standard.
Tax proposals draw scrutiny
Supporters of tipped workers have raised concerns about President Trump’s proposed “no tax on tips” policy, arguing it does little to address the core issue of low wages.
While the proposal has gained political attention, advocates say it functions more as a headline than a solution. Nearly two-thirds of tipped workers do not earn enough to owe federal income taxes, meaning many would see little to no benefit from a tax exemption.
Advocates argue that focusing on taxes avoids confronting the underlying reality that many service workers are paid too little by employers to meet basic needs without tips.
Public support for higher wages remains strong
Despite political gridlock at the federal level, public backing for higher wages appears broad and durable.
Polling conducted by Lake Research Partners shows that proposals to raise wages to a true living wage consistently win majority support across party lines, even after voters hear arguments from both supporters and opponents.
Support is especially strong among women, people of color, Latino voters, and voters under 40 — demographic groups that have played an increasingly influential role in recent elections.
More than half of voters nationwide say raising the minimum wage is a high or medium priority, according to the polling, suggesting that wage policy remains a mainstream economic issue rather than a niche concern.
Advocates push for broader reforms
Supporters of higher wages say the upcoming minimum wage increases, while welcome, underscore the need for more comprehensive reform.
The Living Wage for All Coalition says it is building a long-term national campaign aimed at raising wage standards, eliminating the subminimum wage, and ensuring that tipped workers earn a full minimum wage before tips.
Advocates argue that without structural changes, incremental increases will continue to lag behind rising living costs, leaving millions of workers struggling even as headline wage numbers tick upward.
As new wage floors take effect in January, the debate over who benefits — and who is left out — is likely to intensify, particularly as economic pressures remain a defining issue for working families heading into the new year.