As “no tax on tips” policy begins, advocates say real relief requires ending the subminimum wage and paying workers a true living wage
As minimum wage increases are set to take effect on Jan. 1 in states and cities across the country, millions of workers will see modest raises in the new year. However, fair wage advocates say millions of tipped workers will remain largely excluded, continuing to earn subminimum wages that force them to rely on unpredictable tips as the cost of living rises.
In 22 states, minimum wages are scheduled to increase in 2026, with full-time workers seeing annual pay gains ranging from several hundred to several thousand dollars. Yet the federal minimum wage remains frozen at $7.25 an hour, unchanged since 2009, while tipped workers can still legally be paid as little as $2.13 an hour, a system advocates describe as a direct legacy of slavery.
Nationwide, nearly 50 percent of workers earn less than $25 per hour, according to new findings from
The Make America Affordable Now PAC. The report shows that
67 million workers across the United States earn below that threshold, underscoring why affordability has become a defining economic issue.
The gap between wages and real living costs is stark. According to the
MIT Living Wage Calculator, there is no county in the United States where a single adult can afford to meet basic needs on less than $20 an hour. Even in the nation’s least expensive counties, a worker with one child would need at least $33 an hour to cover essentials like rent, food, childcare, and transportation.
Advocates argue that policies like President Trump’s “no tax on tips” proposal fail to address the underlying problem of poverty wages. While the policy has drawn attention, they say it is a headline rather than a solution, particularly since
nearly two-thirds of tipped workers do not earn enough to owe federal income taxes.
Public support for higher wages is broad and durable. Recent
polling conducted by Lake Research Partners finds that proposals to raise wages to a true living wage level consistently win majority support across party lines, even after voters hear both supportive and opposing arguments. Support is especially strong among women, people of color, Latino voters, and voters under 40, groups that are driving turnout in recent elections. More than half of voters nationwide say raising the minimum wage is a high or medium priority, underscoring that wage policy is not a fringe issue but a central economic concern for working families.
Supporters of higher wages say the moment calls for broader action. The
Living Wage for All Coalition says it is building a long-term, national campaign to raise wage standards, end the subminimum wage, and ensure that tipped service workers earn a full and fair minimum wage with tips on top, especially as rising costs continue to outpace incremental wage increases.
