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"tipped labor must be paid a minimum of $2.13 per hour, as long as the hourly wage plus tipped income result in a minimum of $7.25 per hour." [1]

[1] https://secure.wikimedia.org/wikipedia/en/wiki/Minimum_wage_...

Guess what happens to those that the employer has to pay to make up the difference?

The same thing that happens to a salesperson that doesn't sell enough to justify their (usually small) salary.

Their total compensation must be at least minimum wage to comply with the law. Tipping is very common, so you could probably pay wait staff $0/hr legally.

Yeah, minimum wage for non-tipping jobs is $7.25 where I live, and somewhere around $2 for jobs that rely on tips. Since a 10 - 20% tip is the norm, a server only needs to serve maybe $40 of food every hour to hit that minimum wage. For the sake of reference, most meals are around $6 on the cheap end, and $10 - $15 is common at a nicer-but-affordable place.

So, yeah, it's low, but as long as the server is doing a decent job, people will tip, and at a decent restaurant, they can actually do better than the (honestly pretty low) normal minimum wage.