Just to be clear, someone in that situation does not get a 20% pay cut unless their employer is breaking the law.
What actually happens is that the $20 in tips per night is deducted from the minimum wage that your employer has to pay you. So the difference is in the immediacy of the funds, not the quantity—there is eventual replacement for everybody working minimum wage or lower, as the amount that employers are legally able to screw the person out of reduces.
Of course, immediacy is a poverty problem, the families in this situation are living paycheck to paycheck and cannot easily handle a couple paychecks that are 20% lighter. The same people who complain about tips are usually not people who want to expand social services and safety nets to allow that to change, so it's all a little bit of a complicated kerfuffle...