The $2.35 wage was classified for specific jobs (mainly food service industry) where workers are tipped by customers. Often these workers, my brother included, take cash tips at the end of the night and none of that gets reported to the IRS. It's just the way waiters/servers do things. States know this; they by law allow restaurants, bars, etc. to get away with the $2.35 wage because they know the workers are supplementing their income with cash tips from customers. It's not sad, it's lucrative for the worker. They pay less taxes and appear on paper to be below the poverty line with their wages, when in fact, they aren't -- they just use cash to live off of, not the check their employer cuts them.