Point of sale platform Square releases new data quarterly on earnings and tips for workers across the country – and the latest results show restaurant workers are earning substantial tips and well above minimum wages across the country.
Square finds that the median restaurant employee is earning a $14.20 per hour base wage – and $18.16 per hour once tips are factored in. The average hourly earnings are well-above the regular minimum wage, even in states that use the federal minimum wage of $7.25 and tipped wage of $2.13 per hour:
Square also analyzes how much of workers’ income comes from tips by state (although it does not differentiate between full-service restaurant employees which may be affected by state tip credits and limited-service restaurant employees who are more likely to be subject to the regular minimum wage):
- States where tips make up the highest percentage of overall wages are Wyoming (33%), South Dakota (31%), Alaska (31%), and Kansas (30%).
- States where tips make up the lowest percentage of overall wages were Oklahoma, Mississippi, Arkansas, and Nebraska.
Perhaps more informative, Square also measures annually which states have the highest average tipping percentages in restaurants (including full-service and limited-service). Unsurprisingly, states that have eliminated their tip credit fall to the bottom of the list:
- Six out of seven states that have eliminated tip credits are in the bottom half of states based on their average tip percentage: Alaska, Oregon, Minnesota, Washington, Nevada, and California
- California is last in the nation for its average tipping percentage of just over 14%
- The District of Columbia, which just began the process of eliminating its tip credit in 2023 is in the bottom three with an average tipping percentage of 14.2%, only beating Hawaii and California.
This new data comes as anti-tip credit proposals were resoundingly defeated in 2024 – as restaurant employees say they don’t want to eliminate the tip credit and endanger their tips. A survey of tipped restaurant workers across the country found 87% believed they would earn less if the tip credit in their state were eliminated.