They Were Making Poverty Wages, Plus Tips, Before COVID-19. Now What?

Sarah May-Seward was making just $45 per shift, working a few days a week at what she calls a little hole-in-the-wall neighborhood bar and grill in White Lake, Michigan. She did a bit of everything: bartended, worked the fryer, waited tables.

The base pay wasn’t much stretched over an 8- to 10-hour shift, and the tips were hit or miss ― a few dollars on a Monday night to a few hundred dollars on a Saturday. But the job offered flexibility. May-Seward cares for her daughter, Gabby, who has disabilities and uses a wheelchair. She could grab shifts when her husband, a firefighter, was home or her mother-in-law could come over.

“It’s a small business. We know the owner very well. We’re close-knit; we cover for each other,” she told HuffPost. “If my daughter was sick and I needed to stay home, we’re alway able to do that. That’s why I started working there.”

Then the restaurant apocalypse hit. May-Seward’s bar shut down in March because of the coronavirus pandemic, along with restaurants all over the country. At first, the 38-year-old didn’t think she would even qualify for unemployment benefits. Even though she does declare some of her tips in her taxes, she assumed she didn’t make enough money.

No industry has been immune from job loss in this health crisis, but for service workers like May-Seward, it’s been particularly awful. Restaurant workers have lost jobs at a rate three times as high as in any other industry. Millions are out of work ― and most of these people were working for tips. On the books, some make as little as $2.13 an hour, the federal tipped minimum wage since 1996. Some states offer a bit more. Other workers might earn a flat fee per shift ― or just get paid off the books, under the table.

Even as states “open up,” these workers aren’t just going to go back and start earning their pre-pandemic wages. Restaurants will likely be seating diners in a reduced capacity. Even if they go back to work, they’ll face a lower volume of customers and a higher risk of getting sick.

In the meantime, getting unemployment benefits for workers making poverty wages is a struggle. Service workers are the least likely of any type of worker to apply for unemployment, according to data from the Labor Department released in 2018. Often they get lost in a maze of underfunded state unemployment agencies; some are even told they make too little to qualify for benefits.

May-Seward was no exception. She had heard Michigan Gov. Gretchen Whitmer talking about how service workers could get benefits in this crisis. She spent days calling the unemployment office. When she finally got through, May-Seward learned her income was just under the threshold to qualify for benefits, which are based on the full state minimum wage, $9.65 an hour. The tipped minimum wage in Michigan is $3.67.

This is a common problem for tipped workers, said Saru Jayaraman, president of One Fair Wage, an activist group fighting to eliminate the tipped minimum wage altogether.

Her group has heard from service workers around the country who have problems like May-Seward’s. “Many are saying, ‘The state unemployment system is telling me my wages are too low to meet the threshold.’ Or they earn cash tips. And the state says they didn’t earn enough,” Jayaraman said.

The problem is particularly acute, she said, among women of color who are more likely to be working in places where cash tips are more common, and workers are even less likely to fully report their tips.

Wait staff and bartenders often say they don’t accurately report all their tips to the Internal Revenue Service because it’s difficult to actually track them and some employers discourage it.

But the real issue is that no one should be earning $2 an hour in 2020. “This should be an indication these workers aren’t making enough to begin with,” Jayaraman said.

The practice of forcing workers to be paid primarily in tips, solely at the discretion of customers, has its roots in racism ― a way to keep African American workers underpaid after emancipation. And it’s long been favored by the restaurant industry.

The racist underpinnings continue to this day ― African Americans tend to be tipped less than white service workers.

Today, the poverty-level wages disproportionately fall on women, who make up two-thirds of the workers who rely on tips.

“We pay the largest workforce of women $2,” she said. “Now these women are getting nothing because they earn too little.”

Stimulus Lifeline

Tipped workers got thrown what seemed like a major lifeline in late March, when the $2 trillion economic stimulus package was enacted. It included a significant expansion in unemployment benefits for those who normally wouldn’t be eligible, such as gig workers or part-timers. And, this is key, the law kicked in an extra $600 a week for those who became unemployed because of the COVID-19 pandemic.

For some, this was huge. More than what they were making in tips. Or maybe the money isn’t as good as in the before times, but still it’s good enough to make the rent and pay for necessities.

“I’m doing fine. I’m doing OK. What I’m doing right now is like a mediocre week,” said Kenneth John Jimenez, a 36-year-old bartender in Brooklyn describing his current financial situation.

Jimenez is getting his $600 benefit, plus around $300 a week in regular unemployment. Previously, he was making the New York tipped minimum wage ― a relatively generous $9 an hour ― and tips.

With over a decade of experience tending bar, Jimenez says he’s in a better position than most. First, he declared about 10% of what he earned in tips, making him eligible for a relatively decent amount of state unemployment.

Many of his peers work for a shift fee, often under the table ― or they declare less and aren’t able to pull in as much in benefits.

Also, Jimenez lives in New York, which has done a relatively good job in getting benefits to jobless workers. And if you live in a state where things aren’t running as smoothly, getting that extra $600 is a challenge.

Calling And Calling And Calling

For May-Seward, in Michigan, getting the $600 was an epic journey involving a lot of phone calls.

“I thrive off stress, so it’s cool,” she said.

After she was told she earned too little to qualify for benefits, May-Seward heard Jayaraman, of One Fair Wage, interviewed on one of her favorite podcasts, “Lovett or Leave It,” hosted by Jon Lovett, a former speechwriter for President Barack Obama.

She emailed Jayaraman, applied for help to the group’s fund for workers and offered to volunteer with them. She is now the unemployment lead for Michigan for the organization. “It’s an unpaid title, but I like it,” she said.

She’s also running for office, for township trustee, she said. The only Democrat in the race in her pro-Trump district.

Two weeks later, when the stimulus package was signed into law, she applied for the new benefits. She was denied again.

She didn’t give up. May-Seward called the governor’s office. Twice. One Fair Wage helped her get in touch with someone at the unemployment office. But it still took a ton of phone calls.

“I wound up calling for three days straight, constantly, every 20 seconds,” May-Seward said. “On the third day, at 5:55 at close of business, I got on the line with somebody.”

Finally, a few weeks later at the beginning of this month, May-Seward, she started getting her money. May-Seward is now getting $160 a week through Michigan’s expanded unemployment benefits plus the $600.

What happened to May-Seward is happening around the country, Jayaraman said. Workers who made too little to qualify for regular benefits are getting mistakenly denied the pandemic benefits ― and have to jump through hoops to rectify the issue.

Some Just Give Up

“Every time I’ve called [the unemployment office,] I’ve been hung up on,” said Gwyneth Duesbery, who was working as a host at a steakhouse in Grand Rapids, Michigan, before the COVID-19 pandemic guidelines closed it down.

She filed for unemployment just two days after the restaurant closed. A month or so later, she heard back: Denied. She said she doesn’t know why.

Duesbery, who recently graduated from college with a degree in sociology, said she was also told to apply for the pandemic benefits with broader eligibility criteria but has sort of given up on the whole process.

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“For the first while, I was doing it frequently and trying to call, and then I got frustrated with the system and it wasn’t working and I couldn’t figure it out,” she said. For now, her boyfriend is still working and able to cover rent and expenses; and she was able to get emergency assistance through One Fair Wage’s program. “We’re lucky.”

Tipped workers often think they don’t qualify for benefits ― but they do, said Michele Evermore, a senior policy analyst at the National Employment Law Project, who specializes in unemployment insurance.

Technically, states will let tipped workers file a form attesting to how much they make in tips.

“It’s a weird thing that not that many people know about,” she said. And even if they do, reporting tips accurately can be tricky ― workers need the numbers to line up with what they’ve already reported to the IRS, she said.

Evermore said that, even in regular non-pandemic times, workers who are in lower-income sectors are less likely to apply for unemployment benefits. Non-unionized workers are also less likely to apply.

Still, Evermore said workers should give it a shot. “It’s important for people to at least try to get benefits and not to discourage them,” she said, citing the record-high levels of unemployment. The numbers are putting knots in her stomach, she said.

The Future Is Grim

The extra $600 a week, which has been described by Senate Minority Leader Chuck Schumer (D-N.Y.) as “unemployment insurance on steroids,” expires in July. And, even though the unemployment rate is expected to top 20% soon, it’s not clear if Congress is going to extend the benefit.

Republicans are saying that they believe the money is keeping people from taking jobs.

But there aren’t jobs yet for most restaurant workers ― particularly ones in New York and other hard-hit areas.

A 45-year-old restaurant worker who lives in Brooklyn and worked until March in an upscale restaurant in Manhattan said that when the extra $600 runs out, he’ll probably have to leave the city entirely and move in with his mother in California.

Yet he said he kind of feels guilty because the unemployment benefits, for now, mean he’s better off than most. He asked that his name not be published because he thinks it’ll hurt his chances of getting rehired.

“I feel the Grim Reaper behind me, but it feels like something terrible has got to happen,” he said. Of the five restaurants his employer owns, he was told that only one is reopening this summer, he said. There’s just not going to be the same level of work as before.

Without the pandemic benefit, he’d only be getting around $100 a week in unemployment in New York State. His rent is $1,200 a month.

Whether or not they’re getting unemployment benefits, all these workers said they were scared. What happens when the money runs out? What if there’s a second wave that sends everybody back into lockdown?

“There’s a lot up in the air,” said Jimenez, the bartender in Brooklyn. “The one thing I’m scared about is if things get bad all over again and then we’re closed till God knows when.”

May-Seward is less worried about what happens when the benefits run out than she is about going back to work.

The area Michigan where she lives has been rife with anti-lockdown protests from people outraged over the idea of wearing masks and who don’t want to stay home anymore.

May-Seward is afraid of having to police customers to stay socially distant. “It’s really risky to police anybody. We see what happened in the news,” she said, pointing to reports that some workers have been attacked and even shot by customers who were unwilling to stay back or stay masked.

She’s worried about her health, too. “We’re high risk,” she said. May-Seward has asthma. Her daughter has disabilities and recently fought off a debilitating bout of pneumonia and is at high-risk if she contracts the coronavirus.

There’s also the issue of tips coming back. When restaurants do reopen, there will likely be requirements on how many people can dine at once ― meaning less volume and fewer tips.

“The restaurant industry was the first to shut down, and it’s going to be the last to come back fully,” she said.

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This article originally appeared on HuffPost.