Arizona lags when it comes to tipping

Arizonans are among the nation's stingier tippers, and gratuity makes up a smaller percentage of restaurants workers' total income here than in all but a few states, per data out last week from payments company Square

Yes, but: Servers in Arizona had the fifth-highest average wage in the country at $49,080 in 2023, below only Vermont, Washington state, the District of Columbia and New York, according to the U.S. Bureau of Labor Statistics. 

Catch up quick: Tips make up an increasingly large share of restaurant workers' pay.

• The restaurant business fell off a cliff during the pandemic, but it bounced back fast. Americans went back to dining out, and restaurants scrambled to hire, driving up wages and prices.
• In recent months, the industry has seen a slowdown. But overall, restaurants have seen an increase in sales volume over the post-pandemic years that has translated into more customers per hour — and more tips, says Ara Kharazian, research lead at Square.

Why it matters: The rise of tipping culture means that servers and bartenders are getting tips more frequently for services — like takeout orders — that used to go without gratuities.

By the numbers: In October, tips made up 23% of restaurant worker pay nationally — up from 14% in 2019, according to Square's report, which examines payroll data.

• But in Arizona, tips made up 20.2% of pay, more than only six other states and the District of Columbia. 
• And the average tip amount in Arizona was 15.29%. 
• That tied with Minnesota, and was higher than only 10 states and D.C. 

Zoom in: Voters this month overwhelmingly rejected Proposition 138, a restaurant industry-backed measure that would've lowered the minimum wage for tipped workers. 

• Tipped workers can already be paid $3 per hour less than the minimum wage. 
• Prop. 138 would've reduced that minimum wage by 25%, as long as employers could show that a tipped worker is getting at least $2 per hour above the minimum. 

• Under the measure, workers who earned less than $16.35 per hour in a week would've gotten more money, while those who earned more would lose money, according to The Arizona Republic.

Meanwhile, a labor union-backed effort to raise the minimum wage for all Arizona workers, while prohibiting employers from paying tipped workers less, fell short after it failed to collect enough signatures to refer the measure to the ballot. 

Reality check: Relying more on tips leaves workers in a more precarious position.

• "If you're a restaurant worker who's already in an industry subject to a lot of ups and downs, a large component of your income coming from tips isn't gonna simplify that," says Kharazian.

Between the lines: One of President-elect Trump's more popular campaign proposals was to eliminate taxes on tips.

• Looking at this data, that would mean exempting nearly a quarter of restaurant workers' income from taxes — a meaningful chunk.