Tag: Tipping

More readers chip in:

The tipping debate seems to rear its head somewhere online every year or so now, and I’ve never understood what the big fucking deal is. I’m a former server, bartender, and front-of-house manager; I’ve worked at family restaurants and bars in the Midwest and a tourist trap in New York City (which was probably the most fun job I’ve ever had). My experience is far from exhaustive – there are plenty of people who’ve been in the industry longer and worked at more places in more parts of the country – but I have some idea what I’m talking about, and I am staunchly pro-tipping. Here’s why:

1. I’ve never heard a server complain they weren’t making enough. Whenever I hear some concerned soul expressing anxiety over how servers need to stop getting tipped and be paid a real minimum wage, I’m reminded of the activists who want to stamp out all sex work without asking any sex workers how they feel about it. There were a lot of things that bugged me about waiting tables, but the money I made was never one of them. Yes, you can have a bad shift. Generally speaking, though, my coworkers and I came out making substantially more per hour in tips than we would have getting paid minimum wage. (I will absolutely grant that this may not be the case at every establishment, especially right now – but I would guess that’s more a function of the economy than of tipping itself.)

2. Tipping gives everyone more freedom and flexibility. As you rightly noted, if restaurants have to pay higher hourly wages, they are going to build that additional expense into the cost of the meal. So the customer will still end up spending the money. As a customer, wouldn’t you rather be able to exercise control over where your money goes? With tipping, if you get crappy service, you pay for your food and can leave your server what little or none they deserve. Without tipping, you’re paying for your food and you’re paying a premium for the service, regardless of quality. (Also: If the anti-tipping crowd really thinks all the additional money from raising prices would make its way into servers’ pockets, I think they’re deluding themselves about how businesses work.)

3. Tips are fun!

I never see anyone talk about this, but tips are largely what makes waiting tables fun. It’s a little game – I think I’m doing a good job. How much are they gonna leave me? Tipping encourages upselling, which is good for the business, good for the economy, and, frankly, a plus for diners. (I’ve never seen anyone uncomfortably coerced into ordering dessert or another drink; I have known hundreds of customers who just needed a little nudge and were very glad for it.) And it’s so much fun to pick up the cash or the credit card slip after they leave. Plus, for all the cheap jerks out there, there are also many people who overtip, especially on special occasions. Sure, hypothetically they still could do so if we abolished tipping as a general practice – but in reality, it wouldn’t happen nearly as often.

Waiting tables is a sales business, and salespeople tend to be motivated by commission. Tips are our commission. Why do people want to take that away, just so (1) we can make less money, (2) they can be forced to pay more for bad service, and (3) we can enjoy our jobs less?

Another is less enthusiastic about the practice:

I wish tipping would go away. It would level the playing field in other ways.

Currently, I overtip because I drink water with restaurant meals – no soda, no alcohol, no coffee or tea, no milkshake. So my check is smaller even though I’m in the seat for the same amount of time as a person having a glass of wine with the meal. I feel I shouldn’t shortchange the waitstaff for my abstinence.

The thing is, I’ve noticed some places the tips appear to be dumped into a common container and pooled. This may help reduce fraud and split the money equally, but it doesn’t reward the server who recognizes me and gives good service. Furthermore, it means my more generous tips just subsidize someone else’s cheapness.

Set the price based on what running the restaurant costs. Stop tipping in all but the really high-end restaurants, and consider stopping it there. Tipping in restaurants is kind of like John Oliver’s “America Ball” lottery, where the servers in high-end venues get richer, but servers at all other restaurants don’t receive increases consonant with the cost of living because people refuse to tip generously, can’t afford to tip, or are living so long their ingrained tipping habits result in undertipping. There are also teens who go on group trips – say, a sports clinic at a nearby college – eat someplace where they are waited on, and totally stiff the servers because either they’re poor, short of money or ignorant because they’re used to paying for fast food, where the labor cost is part of the posted prices.

I hope this would mean that places like sandwich shops and bagel stores, which never had tipping but have to pay minimum wage, would stop with the tip jar by the register, too. Delis and doughnut shops never used to do that kind of begging until the minimum wage stagnated and someone decided taking your order was the same as providing table service. I guess that proves I’ve become an old fogey, too, if not a jackass in one respect.

(Photo by Flickr user Lightsight)

Like Mr Pink:

Readers continue the thread:

I hope Dishheads aren’t overlooking the fact that institutionalized tipping constitutes a progressive – yes, progressive! – anti-jackass tax of sorts. Conspicuous consumption compels many of those who can best afford to subside service industry jobs to do so. Those who can’t, won’t, and let’s be honest: everyone goes into restaurants knowing what’s expected. Anyone who says they’re being lied to about bottom line prices is simply too proud to admit they’re being cheap.

Academics can argue until they’re blue in the face about the theoretical benefits of eliminating tipping, and perhaps higher-class restaurants where published academics like to dine wouldn’t be impacted as those staffs tend to be well-trained, experienced, and highly professional. But would you really eat at greasy spoons and dive bars where everyone was stuck working for the same wage regardless of performance? I sure as hell wouldn’t, and no one should underestimate the good vibes that come with knowing you’ve given a big tip to someone who truly deserved one, doubly so when you’re pinching your own pennies.

Another focuses on the issue of fudging income:

As one reader mentioned, many tipped workers under-report their tips, allowing them tax-free income. (I’ve always mildly resented how easy it is for the waiters I know to do this, but since none of them are getting rich waiting tables I don’t get too agitated about it.) However, there’s a real downside for the under-reporters that many of them (especially young people) rarely appreciate:

When they apply for a loan it is hard for them to prove adequate income, and when it comes time to collect Social Security retirement income they will show lower lifetime earnings and receive a smaller check as a result. In the big scheme of things I suspect most tip earners would be better off getting paid a regular minimum wage, perhaps with modest tips allowed as per the European approach.

Another refines an earlier point:

Your labor lawyer reader wrote, “The employer has to cover the difference to whatever the local minimum wage is, so any raises to minimum wage are also raises for tipped workers (e.g. once Seattle’s minimum wage reaches $15 per hour, employers will have to make sure their tipped employees leave with $15/per hour).” Point of fact: the state of Washington’s state minimum wage – higher than the national – does not include a tip credit. So a server makes regular minimum wage, plus tips.

Another has more on state laws:

There are a few states, including California, where tipped employees are subject to the same minimum wage laws as everyone else. When you go out to eat in these states, the social expectations in terms of tipping are exactly the same as everywhere else. I’m sure most people aren’t even aware that the law is different. So in this instance, yes, the restaurant is paying its servers more, but it does nothing to relieve customers of the additional 15- to 20-percent cost. (In fact, it may be more expensive to tip here in California because, as you pointed out, higher labor costs may lead to higher-priced menu items and we calculate tips as a percentage of those more expensive items.)

Another channels Mr White:

I will leave it to others to hash out the micro- and macro-economic pros and cons of tipping. I just want to give a little recognition to the waitresses – and it is almost always waitresses – slinging coffee, eggs, and pancakes on the breakfast shift in every town in the U.S. Working the breakfast shift is a hard, physically grueling job. But, because breakfast is cheap, breakfast servers are unlikely to make much in tips – even if people are tipping 15 percent. A good breakfast waitress can get the whole day started right. So, tip generously.

A reader writes:

I tip fairly generously and don’t really mind tipping when I go out. But why does the blame on low restaurant worker wages always fall to the jackass diner? Why not on the jackass restaurant owner? Is there any other industry where we put none of the blame for wages on the owner? If I had my choice, we would eliminate all tipping and just raise the prices to make up the difference. (If you get a chance, listen to the great Freakonomics podcast on tipping.)

Another also takes exception:

Excuse me? The jackasses in this situation are two:

one, the politicians who short-changed professions when writing minimum-wage laws. If they add waiters to the law, half (or more) of this problem goes away.

The other are the restaurants, who use the fact that tipping is required to falsely advertise prices. Force them to pay their waiters a proper wage and throw in requiring taxes to be included in the price, and then we’ll talk. But when a restaurant falsely claims I can eat there for, say, $20 per person, and it turns out that after taxes and, yes, tipping, it’s more like $35 … I think I’m entitled to feel cranky that I was lied to.

As to whether I’m an undertipper? Well, the target keeps moving, doesn’t it? I was used to 10%. Now it is 15% minimum. Soon, it sounds like it will be 20%, with various interest groups already calling for 25%.

Since the above jackasses won’t do their jobs, I’m the one left holding the invisible bill to pay these people? And I still get called a jackass for doing so? This is the primary reason why I have stopped going to places that have waiters, if I can help it.

Another:

Tipping is another cost-of-living expense that competes with the cost of living raise that regular workers are not getting. I tip pretty high even for bad service (which I get more often than good service, mostly because restaurants are understaffed to save even more money). So the headline should be: “restaurants are being jackasses for being like every other company and squeezing the low person on the totem pole.”

One thing to consider: if restaurants were forced to pay a higher wage, they would likely compensate by raising the price of their meals, especially since most restaurants operate on really tight margins. So the customer could be paying the same amount in the end – less tip, but a higher base price. Another reader changes tack:

Labor lawyer here. The tip credit is one of the most misunderstood areas of wage and hour law. The tip credit only covers what the employer has to pay the employee. The Fair Labor Standards Act (FLSA) still requires that the employee walk away with minimum wage for the week. So, for example, where the tip credit minimum wage is $2.13 this does not mean that employees at these joints earn just $2.13 per hour; they are required to be paid no less than full minimum wage. That means if their tips fall short of minimum wage, the employer has to make up the difference.

So an employee at a cheap diner may sometimes make more than minimum wage in tips, and sometimes less, forcing the employer to make up the difference. An employee at a high-end restaurant will often make more than minimum wage once tips are included, but the employer only has to pay them $2.13 per hour. The employer has to cover the difference to whatever the local minim wage is, so any raises to minimum wage are also raises for tipped workers (e.g. once Seattle’s minimum wage reaches $15 per hour, employers will have to make sure their tipped employees leave with $15/per hour).

As such, it really shouldn’t matter whether we ever raise the tipped minimum wage again, because the law already requires that tipped workers receive regular minimum wage at the end of the day. Instead we can focus on raising the minimum wage, or expanding the earned income tax credit, or both.

In practice, however, this is more complicated because there is a lot of labor law violations in the sectors where tipped workers work, both with employers underpaying employees and employees under-reporting tips. Raising the tipped minimum wage might ensure that tipped workers get paid a certain amount on the books. It often strikes me as a bit of a misguided to address issues of fraud and under-reporting with a new minimum wage, instead of better protections against fraud and wage theft themselves, though it seems that some of this misguided thinking comes from the fact that people believe that tipped workers are only entitled to $2.13 in minimum wage.

The minimum wage for tipped workers has remained stagnant for 23 years:

Tipped workers have been getting short-changed for years. At least that’s what the gap between the federally mandated regular minimum wage and federally mandated tipped minimum wage would suggest.

When the tip credit, as that difference is often called, was created in 1966, it split hotel, restaurant and other service industry salaries up so part was paid by their employers and another part was paid by their customers. The legislation was intended to protect service industry workers who had previously been unprotected under the Fair Labor Standards Act (FLSA). And the split was originally 50-50 – meaning employers and customers shared the cost of each tipped worker’s minimum salary.

But the burden is increasingly falling on America’s restaurant goers and other service industry customers. “Today this two-tiered wage system continues to exist, yet the subsidy provided by customers in restaurants, salons, casinos and other businesses that employ tipped workers is larger than it has ever been,” a new report (pdf) by the Economic Policy Institute says. The tip credit has surged from fewer than $3 in the late 1980s to more than $5 today, largely because the tipped minimum wage hasn’t increased in 23 years.

Instead of traditional tipping, Jay Porter’s restaurant “applied a straight 18% service charge to all dining-in checks, and refused to accept any further payment.” He found that “service improved, our revenue went up, and both our business and our employees made more money.” The reasons why:

• Researchers have found (pdf) that customers don’t actually vary their tips much according to service. Instead they tip mostly the same every time, according to their personal habits.

• Tipped servers, in turn, learn that service quality isn’t particularly important to their revenue. Instead they are rewarded for maximizing the number of guests they serve, even though that degrades service quality.

• Furthermore, servers in tipping environments learn to profile guests (pdf), and attend mainly to those who fit the stereotypes of good tippers. This may increase the server’s earnings, while creating negative experiences for the many restaurant customers who are women, ethnic minorities, elderly or from foreign countries.

• On the occasions when a server is punished for poor service by a customer withholding a standard tip, the server can keep that information to himself. While the customer thinks she is sending a message, that message never makes it to a manager, and the problem is never addressed.

Joyner adds:

I’m not sure if this would work as well at different price points or in different communities but the logic is unassailable.