The Problem With Tipping
It's time to revisit the American system of tipping. Well, it's actually time to revisit a bunch of things, beginning with the current minimum wage.
You may not know this, but labor laws allow employers to pay less than minimum wage if the employee receives tips. Here in Kentucky, that means a business can pay tipped employees as little as $2.13 per hour. The minimum wage for tipped employees is a paltry sum the purpose of which is to make sure income taxes are withheld. When you sit down in a restaurant in Kentucky, $2.13 per hour is your server's base pay. By and large, a server's livelihood comes through the generosity of their patrons.
Meanwhile, employees who don't receive tips are scraping by on the same starting pay as was being paid 15 years ago.
Ever since COVID caused quarantines and closures, it has become more common for places that sell food to set out a tip jar, and add a tip screen to the credit card process on carry out orders. At first, we customers were grateful and appreciated the businesses that stayed open. Now it's the second half of 2023 and COVID isn't causing the closure of any businesses, but the tip jars haven't gone away. If anything, they have continued to proliferate. I was recently prompted for a tip when completing a purchase at my local record store. Instead of prompting the customer with "Enter tip amount" the prompt should say "How much extra would you like to volunteer to pay?"
Why have we not returned to normal? Because people making $7.50 an hour want enough income to survive. It's hard to blame someone for that.
The history of tipping is classist and racist. Can you hear the pearl clutching condescension of a depression era industrialist's wife saying ”Honey, toss the help a little something.”
It is a system that continues to be perpetrated by an entire industry that has found a way to avoid paying its employees.
Don’t get me wrong, I’ve earned my livelihood in the restaurant business nearly my whole life - as a cook, a dishwasher, a server, a buser and a bartender. But as someone who has earned $2.13 an hour and worked countless shifts where the dishwasher ended up making more than me, this expectation of tipping everyone devalues the work done by workers who rely on tips for the bulk of their income. On the one hand you have a server making $2.13 an hour who spent the better part of an hour catering to someone's every whim, and on the other hand you've got someone making minimum wage who spent 5 minutes putting to go containers in a bag. Do they both deserve the same 20% tip?
Why don't they have a tip bucket sitting out at the grocery store, or at Valvoline when I get my oil changed? They work hard and perform a service, too. I’m not sure how their wages compare to restaurant work, but I do know that these businesses charge enough for their product as to include all the revenues necessary to provide a competitive wage for their workers. It's called a successful business model. It's unbelievable to me that the typical restaurant business model includes the expectation that customers augment the wages of its hospitality workers. This a fundamental problem in the way American restaurants are operated.
Nothing could be worse than tipping when it comes to building a strong team. An employer's goal should be to create an equitable division of labor and wages among the staff. Ensuring that tipped employees attend to secondary responsibilities is a management chore. Even if the labor could be divided evenly the difference in take home pay will create inequity and inequity builds resentment. Should a server with lower sales be assigned fewer duties? Or should they be assigned extra duties so that stronger servers can generate sales? Tipping sets a mindframe within service staff that a bare minimum of effort is acceptable, essentially pitting employees against employers in an antagonistic standoff.
When the occasional customer doesn't tip, it does great damage to server morale. There isn't a server in the game who hasn't prejudged the generosity of new customers. No other business in the world relies on voluntary payments, but restaurants include an out for the selfish and greedy. Imagine working for someone for an hour or two at the end of which they can decide whether or not they should pay you.
Tipped employees will always maximize their time and effort for their own benefit, instead of maximizing time and effort to complete the job. This "me first" attitude permeates into the entire restaurant. It allows service staff to view every action through the lens of improving their bottom line and avoiding unpaid effort. Assisting guests who are not seated in their section can in fact lower the tips that they do earn. As a former server, I always felt like my level of service was more honest when the tip was included because it removed the ingratiating dynamic between myself and the customer.
I would much prefer to have it all included in the bottom line price of the meal. Some say this is not feasible and it would put a restaurant out of business. Yet we’re expected to voluntarily pay the same amount as a supplement.
I’m going to use Panera as an example. Here is a company with $500 Million in annual sales, where the price of a blueberry muffin has gone up by 80% in five years. When you pay with a credit card, you’re prompted to include a gratuity. Panera delivers the food to your table and they’ll even fetch a condiment for you, so there is an elevated level of service there, I’ll admit. But none of those people are earning $2.13 an hour. Why is Panera transferring their labor costs directly onto the customer? Can they not turn a profit with a half a billion dollars in annual sales?
In Europe, tipping is considered a snub to tip the staff because they already make a living wage. It’s like saying, ‘I’m sorry you’ve got such a lousy job, you must need some extra help.’
In this classic scene from Pulp Fiction, Mr. Pink is arguing against tipping. The scene is written to reveal that he's a selfish jerk, but he's kind of got a point.
"You don't have any idea what you're talking about. These people bust their ass. This is a hard job."
"So is working at McDonald's but you don't feel the need to tip them, do you? Well why not? They're serving you food. Society says 'Don't tip these people over here, but tip these people over here."
Comments
Several restaurants
here in Denver are experimenting with simply adding a service charge to the check (22-24%) and asking people to not tip. This charge amount is then distributed over the entire staff, front and back of house.
The public has rewarded them by going elsewhere, stating in general that that was "too expensive". So there needs to be some social engineering performed here.
The right way to do this is to pay everybody the proper hourly wage, of course. But if people think that that is too expensive now, they aren't going to like the next step any better...
Twice bitten, permanently shy.
Was it the expense or the service?
A local restaurant tried the service included model and their customers did not like it because the service deteriorated, which is what happens without any incentive. The service included model can't be used in high end restaurants or places that sell liquor, because those restaurants rely on suggestive selling.
You touched upon a whole new subject when you said the tips are pooled and shared with back of house because now the service charge is being siphoned off to pay for labor that is traditionally paid via sales. I once worked in a restaurant that charged the servers 3% of their sales. At first the owner said it was to tip out the foodrunner and host, but eventually those positions were eliminated. When I questioned him he said the fee was to "defray his labor costs." That's bullshit, revenue is fungible and it went directly to padding his bottom line.
F the F'n D's
P.S.
If the minimum wage was increased to $15, then the competitive wage for cooks would be higher. Prices would go up across the board to pay the increased labor and the owner would only have to add 15% service fee.
F the F'n D's
When I was a cab driver
our card readers could only be used once per fare. So you had to ask the customer, "How much do you want me to run this for?" He'd say whatever was on the meter and then, after you couldn't add a tip he'd tell you to add a tip. You couldn't. That way he'd have his jollies stiffing you and look innocent doing it.
I hate tipping. It's dehumanizing.
On to Biden since 1973
It is another criminal injustice
which keeps the food and beverage service enterprise rolling in the dough.
Bottom line, the wait staff are taxed at minimum wage, whether they make
up the difference in tips or not. The taxing authorities assume you are making
the minimum wage (which is a starvation diet) irregardless.
Another scam to profit the owners, not the workers.
Thanks for bringing this up. Pisses me off to no end.
Q
Well technically
Servers do make minimum wage by law since the employer is supposed to make up any deficiency after 40 hours. But in all my time I've never seen an employer held to that. But you're almost right. From what I understand the IRS will automatically trigger a server audit if they claim less than 7% of sales in tips.
F the F'n D's
I haven't been to a place where one tips in 22 years
My wife's idea. We seldom eat at fast food too. Cut hair at home. Bus to the airport, or we give each other a ride.
We vacation in countries where there isn't tipping except by clueless tourists.
That said it's the same dynamic as giving to beggars, the benefits mostly is for the tipper, not the tippee. It feels good, like you were generous and wealthy.
In countries without tipping is sure don't notice a diminished level of service. People bring food when it's cooked, not sure what's so difficult.
We do pay too little for many jobs. Last month 130,000 more low wage workers entered the country. Americans like having low paid workers, why I don't know. Most jobs people pay to have done are free if you want to do it yourself. I'd rather use that money to pay tuition or invest in the market.
Back in 08 when I first heard of $15 I tried it. Everyone begins at $15 and gets a dollar raise every other month for two years, then they get bonus for piece work and no more raises. It worked out. I had to raise my prices, I made more profit. Happy workers. Labor was one of my largest bills. Turns out it was about 25% of the total, the rest was materials and profit. That big jump in labor cost added up to maybe an additional 5%.
There's no reason most jobs can't pay $25, with vacation of 3 weeks and holidays, govt health care. Labor just isn't that much of the total price. Things like a big mac or Walmart are much less labor intensive.
Michelle Alexander wrote about how tipping came about here
.
She said that after the civil war ended ex slaves had to be paid for their labor and one congress member had just been to Europe and saw that waiters there were getting tips for good service even though they were getting a decent wage. He brought the idea back to the state and got it implemented there, but left out the fact that the tips were in addition to the other wage. Back then it was $2.13 and that was the amount set for minimum wage here in America.
So that was in the late 1860's and here we are over 100 years later with it only rising to $7.25/hour. It might be higher but I haven’t been paying attention. But still that’s a very miserly increase over so much time. It was $3.25 when I started working. Obama didn’t try to raise it when he had a majority and democrats whiffed when they had the chance to. Remember that they blamed it on the unelected parliamentarian who they could have overruled if they actually had any intention of raising it.
They might have said that the north won the civil war, but slavery in America never went away. It just became legalized by Congress at the behest of the robber barons. It’s still in effect today in the prisons and elsewhere.
Which AIPAC/MIC/pharma/bank bought politician are you going to vote for? Don’t be surprised when nothing changes.