Summary

• Purpose: End the sub‑minimum wage system by repealing the federal tip credit, ensuring all workers earn at least the federal minimum wage.
• Net fiscal impact (annual): Low: ~$1.0B | Mid: ~$2.5B | High: ~$4.0B+
• Primary beneficiaries: 4–5 million tipped workers, rural small businesses receiving transition support, and taxpayers through reduced subsidy outlays.

Mechanism of savings

• Increased payroll tax revenue: Higher reported wages expand Social Security and Medicare contributions.
• Reduced safety‑net reliance: Workers earning a stable minimum wage rely less on SNAP, EITC, and Medicaid.
• Compliance enforcement: Quarterly wage reporting and fines deter underpayment, raising compliance and taxable income.
• Transition fund: $500M annually for 3 years cushions rural businesses, preventing layoffs or closures.
• Transparency: All fund disbursements published in a searchable database.

Assumptions

• Baseline: ~4.3M tipped workers nationwide; average tipped wage ~$7/hr vs. $7.25 federal minimum.
• Wage increase: Average $1–$2/hr raise for tipped workers.
• Payroll tax effect: Each $1/hr increase yields ~$2B in additional taxable wages annually.
• Safety‑net offset: 10–20% reduction in SNAP/EITC participation among tipped workers.
• Transition costs: $500M annually for 3 years, then sunset.

Calculations

• Low case: $2B payroll tax gain – $1B safety‑net reduction – $500M transition = ~$1B net savings.
• Mid case: $3B payroll tax gain – $1.5B safety‑net reduction – $500M transition = ~$2.5B net savings.
• High case: $4B payroll tax gain – $2B safety‑net reduction – $500M transition = ~$4B+ net savings.

Risks and mitigation

• Rural business strain: Transition fund, capped at $500M/year, targeted to payroll upgrades and temporary subsidies.
• Noncompliance: Quarterly reporting, $10K fines, whistleblower protections.
• Political pushback: Emphasize transparency, rural support, and taxpayer savings.

Measurement and reporting

• KPIs: Average tipped worker wage, payroll tax receipts, SNAP/EITC participation rates, transition fund disbursements.
• Cadence: Annual Department of Labor report; public searchable database updated quarterly.

Bottom line

The Fair Wage for All Act ends a loophole that’s kept millions of workers in poverty wages. By guaranteeing fair pay, it raises taxable income, reduces federal subsidies, and saves billions annually — all while protecting rural businesses during the transition.