Tips make up 22% of Minnesota restaurant workers' income: analysis
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Minnesota restaurant workers make just over 20% of their overall income from tips, according to one new estimate.
Why it matters: The rise of tipping culture means that servers and bartenders are getting tipped more — and more frequently — for services like takeout orders that used to go without gratuities.
The big picture: Tips make up an increasingly large share of restaurant workers' pay nationally, per data out this month from payments company Square.
- In October, tips made up almost 23% of restaurant worker pay. That's up from 14% in 2019, according to Square's report, which examines payroll data.
Zoom in: In Minnesota, the share was just over 22%, with the average tip clocking in right around 15% of the bill.
- The state doesn't have a lower minimum wage for tipped workers, so that income comes on top of the base hourly pay required by state or local law.
Zoom out: The restaurant business fell off a cliff in 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, says Ara Kharazian, research lead at Square.
Reality check: Increasing reliance 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.
Flashback: Minnesota banned most mandatory service fees that come on top of a tip earlier this year.
- Set gratuity charges in place of an optional tip line are still allowed.
What we're watching: 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.