After Tips, Does Anyone Actually Earn the Minimum Wage?

Not really, which makes Michigan’s elimination of the tipped wage by 2030 all the more ridiculous

By Tom Gantert

October 30, 2024

Henry Ford went up to Rapid River in the U.P. on a business trip in 1935, during the heart of the Great Depression. There, he stopped at a local diner and left a $1 tip.

When news reached the Escanaba Daily Press, the newspaper splashed it on its front page, noting it was the largest tip on record in that community. The recipient of the 72-year-old Ford’s gratuity was one “Miss Julia Thill,” a waitress who had recently been noted for her beauty. The newspaper perhaps hinted to why she was the focus of Ford’s benevolence when it reported Miss Thill had recently been crowned the queen of the Bay de Noc Fishing Festival. Not exactly Miss America, but still a badge of honor for any female Yooper.

Newspaper clipping reading: "Ford Acquires Sawmill Relics at Rapid River;
Gives Waitress $1 Tip
Rapid River folks were
all
astir yesterday when they learned that no
other than
Henry
A Visitor in U. P.
Ford himself visited that village on Thursday and contracted for the purchase of an old, obsolete engine and boiler from
Stone
Anderson, Rapid River sawmill operator.
The machinery will be shipped down to Dearborn to join the collection of other ancient relies. it is understood.
The Detroit automobile manufacturer came down from the Huron Mountain club, where he has been spending his summer's vacation.
He was accompanied
by two other men, whose names were not learned.
When the manufacturer introduced himself
as Mr.
Ford. An
derson thought that he was a Trenary man, bearing a resem-blance, who was merely joking.
Anderson became convinced as to the distinguished visitor's identity when he began
negotiating
for the purchase of the old engine and boiler, howerer.
It is reported that Mr. Ford
Henry Ford
ate at a Rapid River restaurant and tipped the waitress. Miss Julia Thill, who was queen of the Bay de Noquet Fishing Festival recently.
the sum of one
SELASSIE BIDS
dollar.
It was the largest tip
on record in that community.
TO AVERT WAR
It was learned late last night that Ford made a down payment on the machinery he purchased from Anderson and that he will pay the balance when the steam boiler and other minor pieces of equipment is delivered to his antique village at Dearborn.
Offers Economic Concessions in Ethiopia to Italy
BY RICHARD G. MASSOCK
(Associated Press Foreign Staff)"

The world has changed since Ford landed on the front page with his $1 tip nearly 90 years ago.

That tip, adjusted for inflation today ($23), would hardly raise an eyebrow of anyone in the service industry. The cash-grab for the customer wallet has now extended far past the old-guard: waiters, waitresses, bus boys, valets, hotel baggage handlers, and cabbies. Gas stations in Michigan are now offering a “tip” prompt on debit card transactions.

In Michigan, tipping is back on the front page, triggered by a Michigan Supreme Court ruling this summer, which increased the minimum wage and phased out the tipped minimum wage by 2030.

The tipped minimum wage in Michigan is currently $3.93 an hour. It is paid to employees who “customarily and regularly receive gratuities from a guest, patron, or customer for services rendered to that guest, patron, or customer.” That’s a list that feels like it is growing by the minute.

Jimmy John’s drive-thru employees are now asking me to sign my debit-card receipt where there is a section labeled, “TIP.” Those transactions used to last as long as it took to swipe my card. Why the need for my John Hancock? Because there’s a tip at stake.

Michigan’s minimum wage for non-tipped workers is $10.56 an hour in 2024. But very few are actually paid that little. Even McDonald’s starts employees at $12 an hour.

That will change in February, when the minimum wage for non-tipped workers increases to $12.48 an hour, due to the ruling. Currently, Washington D.C. has the highest minimum wage at $17 an hour.

In some states, cities can set their own minimum wage. Tukwila, Washington, set a minimum wage of $20.29 an hour in 2024.

In Michigan, municipalities are prohibited from setting their own minimum wages that private businesses would have to follow. Democrats tried to pass a bill last year to change that, but it didn’t get traction.

But you can bet if that law is changed, a slew of progressive cities will hike minimum wage within their boundaries. Ann Arbor currently imposes a “living wage” of $17.73 an hour for employers who take contract work with the city and aren’t provided health care.

Ann Arbor’s “living wage” is about what the average Michigan waitress currently earns: $17.02 an hour, as of May 2023, according to the latest data available from the U.S. Bureau of Labor Statistics. There were 67,010 waiters and waitresses in Michigan in 2023.

But their posted earnings are likely a low-ball estimate, because billions in tips are not declared in the service industry. The IRS estimated there was $23 billion in undeclared tips in 2006. If that estimate is extended to 2024, there would be $35.5 billion in undeclared tips, when adjusted for inflation. Given that there’s about 2.2 million waiters and waitresses in the U.S., simple back-of-the-napkin math estimates about $16,000 a year in tips, on average, goes undeclared by each waiter or waitresses.

This is an important voting bloc: Both presidential candidates have said they will not tax tips if elected.

Despite working for the tipped minimum wage, waiters and waitresses are far from the lowest-paid hourly-worker profession in Michigan. That distinction belongs to the motion-picture projectionist, which earned, on average, $12.70 an hour, as of May 2023. That was less than fast-food counter workers ($13.90 an hour) or dishwashers ($13.92 an hour).

Lansing politicians haven’t heard much from motion picture projectionists, probably because there were only 320 of them left in Michigan in 2023.

The poor projectionist also may be the only profession left in Michigan that isn’t trying to figure out how to ask for a tip.

Coming to a theater near you: The projectionist may ask as you leave the theater, “Did you like that showing of ‘Deadpool & Wolverine’? The credit-card reader has a question for you…”

Tom Gantert is a contributing writer for Michigan Enjoyer.