Features, Law and Politics, New York, Retail

New Report Highlights Sub-Minimum Wage’s Crushing Inequity

July 8, 2018

By Joe Maniscalco

New York, NY – One Fair Wage proponents, this week, published a new report further detailing the absurdity of allowing some employers in the state to pay tipped workers a sub-minimum wage.

Tipped workers lead march to end sub-minimum wage.

Opponents of NYS’s sub-minimum wage laws are agitating for systemic changes to end poverty.

Under New York State Law, workers at car washes and nail salons — two industries experiencing unprecedented growth in recent years — are part of “Miscellaneous Industries” that do not qualify for New York’s increased minimum wage.

For both car wash workers and nail salon technicians throughout the state, that means levels of poverty far exceeding the rest of the New York State workforce. 

“I am completely dependent on customer tips to make a living … to pay the rent and other household expenses, nail technician Gita Y., said in a statement coinciding with this week’s report from the Restaurant Opportunity Centers United, the NY Healthy Nail Salons Coalition and and the Car Wash Campaign. “There have been times when it was not enough to buy lunch and even train fare. We respect our employers because we get work from them, but we do not get respected in return.”

Highlights of the new report finds that:

*This confusing system of wages leads full-time tipped workers to live in poverty at rates much higher than the general workforce. This system is also associated with rampant wage theft either due to outright malfeasance, awed accounting systems, or inadvertent misapplication of the law.

*The US nail salon industry is a burgeoning sector with over $8.5 billion in revenue in 2017.13 In the last eight years, the industry has experienced a 33 percent increase in revenue and in the last 25 years has seen the number of salons more than triple. Currently, there are an estimated 5,569 nail salons in New York, 2,000 of which are in New York City.16,17 The sector’s growth is also reflected in the workforce. The number of manicurists and pedicurists in New York grew to 18,370 workers in 2017, a 17 percent increase over the previous four years.18 Since 2011, the number of workers in dedicated nail salons has grown by 92 percent.

There have been times when it was not enough to buy lunch and even train fare. We respect our employers because we get work from them, but we do not get respected in return. — Nail technician Gita Y.

*Though the median wage for nail salon workers in New York is $9.94,24 New York City nail salon workers are routinely paid a day rate ranging from $35-$80, and in some extreme cases as low as $30, before tips for work days often exceed- ing 10 hours.Interviews conducted by The New York Times with over 100 nail salon workers uncovered “rates of pay so low that the so-called tip calculation is virtually meaningless.” Overtime pay is also virtually non-existent for workers, even though the average nail salon worker in New York City works 45 hours a week, and, in some cases, up to 84 hours a week. Furthermore, nail salon work is also seasonal in New York, leaving workers at the mercy of massive fluctuations in income. Yet even during the slow winter months, workers are expected to be at the salon for over 40 hours a week and are usually not compensated by owners, as required by law, when their earnings including tips fall short of the full minimum wage.”

*Car wash operators nationwide report annual increases in the number of cars being washed and the revenue they bring in, with market research firms projecting $11 billion in revenue for 2018. Over the last four years, the number of car wash workers in New York has grown by 17 percent.5

*Despite this growth and profitability in the industry, most car wash operators continue to pay their workers the sub-minimum wage. In fact, there is only one known example in New York City of a car wash operator paying their workers the full minimum wage plus tips. This was achieved as the result of a union negotiated contract and included paid vacation benefits. This car wash continues to thrive while paying its workers the full minimum wage, demonstrating that the industry can done in the absence of a tipped wage.

“Many people don’t tip at all because they don’t know that these workers earn a sub-minimum wage,” said Camille Rivera, RWDSU national political director. “Workers cannot depend on tips to bring them up to the minimum wage. Couple this with rampant wage theft, and workers are left in poverty, despite working a full-time job. This is counter to the American Dream.”

Governor Andrew Cuomo, earlier this year, ordered a series of seven Department of Labor (DOL) hearings investigating the validity of the existing sub minimum wage for tipped workers.

July 8, 2018

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