Rethinking tipping culture

[annabelle]

Comparing lawyers to waiters is hardly an apples to apples comparison.

[Edward J]

Comparing lawyers to waiters is hardly an apples to apples comparison.

A-yup.. For one thing lawyers and accountants have a governing body and benchmarks/qualifications for thier respective professions. For another, Lawyers, accountants, stockbrokers, etc. are in a position to make money for their clients, or spare them significant losses. Servers are in no position to do this.

[ScoopKW]

This is why they're so resistant to change. They prefer the evil that they know to the unknown evil.

Technically, they are supposed to at least make minimum wage. If tips plus $2.33 per hour doesn't average out to minimum wage, their employer is supposed to make up the difference. This never happens in the real world, however.

Here's a thought.

Let's say that my state changed its policy so that there were no exceptions to the minimum wage for tipped employees. I would immediately have to raise hourly pay for servers, bartenders, etc, probably around 2x - 3x the current level. I estimate that I would need to raise menu prices by about 20-25% across the board to cover this increase in labor costs. Maybe more if you factor in increased payroll taxes.

At that point, would most customers revert to a European style of tipping, e.g. leave a couple dollars if you feel like it? I think most would.

And while this would certainly reduce the volatility of servers' pay, would they end up making less on average? I think in a lot of cases they would.

[pastrygirl]

Here's a thought.

Let's say that my state changed its policy so that there were no exceptions to the minimum wage for tipped employees. I would immediately have to raise hourly pay for servers, bartenders, etc, probably around 2x - 3x the current level. I estimate that I would need to raise menu prices by about 20-25% across the board to cover this increase in labor costs. Maybe more if you factor in increased payroll taxes.

At that point, would most customers revert to a European style of tipping, e.g. leave a couple dollars if you feel like it? I think most would.

And while this would certainly reduce the volatility of servers' pay, would they end up making less on average? I think in a lot of cases they would.

A few states do not allow tips to count as wages, and servers get the full minimum wage as a base, plus tips. Washington minimum wage is $9.19 an hour, Oregon is $8.95, California $8 (with San Francisco $10.55), Alaska $7.75, and Nevada $7.25 if the employer provides health insurance or $8.25 if no insurance. Many other states have a higher minimum cash wage than the Federal minimum of $2.13. Only Indiana, Kansas, Kentucky, Nebraska, New Jersey, New Mexico, North Carolina, Oklahoma, South Dakota, Texas, Utah, Virginia, and Wyoming adhere to the federal minimum, with Arkansas, Delaware, DC, Massachusetts, Michigan, Pennsylvania, Rhode Island, and Wisconsin paying barely more than that but still under $3 an hour.

I can't tell you what effect this has had on business operating costs, but I can tell you that the tipping culture and expectations have not changed at all. The servers I work with in Seattle still expect 18+ percent, and it is still normal to add an automatic gratuity of 18-20% to large parties.

Which I think is part of what makes this discussion so difficult. It is simply not true that all servers make $2.13 an hour. It varies widely. But the expectation that diners will tip 15-20% remains the same. Serving jobs vary so incredibly widely, how can we apply the same formula to all restaurants? A server working at a diner in Texas with a check average of say $12 is going to have to turn a lot more tables than a server working in Oregon at a gastropub with a check average of $30, or fine dining in California with a check average of $60. It is reasonable to worry about the bottom rung, but Annabelle is right, most servers don't want a set wage. Those who can work the system love the system.

Edited April 26, 2013 by pastrygirl (log)

[ScoopKW]

One of the points that we all keep going back and forth about is the concept of a living wage. A living wage in San Francisco is vastly different than a living wage in East Bumbleduck, Oklahoma. Even with $10.55 plus tips, the server needs to hustle to pay the rent (or mortgage if the server REALLY hustles).

[annabelle]

There is no Bumbleduck Oklahoma. That's in Florida.

A minimum wage is NOT a living wage and was never meant to be one. I said these many pages ago: minimum wage is an entry level wage paid for unskilled labor. A living wage requires one to actually learn a trade. Raising the minimum wage contracts the job market and squeezes out unskilled workers, many of whom are teenagers looking for after school and summer employment. Certainly having fewer workers will simply payroll. It will also affect service and customer satisfaction.

[ScoopKW]

I disagree, Annabelle. Let's pick a low-skill job like trash collector. Those guys make almost as much as my wife, who has a BUNCH of letters after her name. I don't think there's much skill involved. And let's be clear -- I do not begrudge them their salary. I certainly don't want their job. (And I work in a high-stress kitchen -- most people would look at what I do for a living and say, "Oh hell no. I don't want any part of that.")

The way I see it, if someone is working full time and doing something productive for society, they should at least earn a living. It might not be a GREAT living. But nobody should have to choose between food and medicine. There are many, many fields where workers are basically exploited. Right here in America. That doesn't sit well with me. We should all be willing to pay a little more for the stuff and services we buy so that everyone can earn a living.

Edited April 28, 2013 by ScoopKW (log)

[annabelle]

I begrudge no one their wages who is performing the duties of their job adequately. That does not meant that I believe in equality of outcome versus equality of opportunity. What would be the empetus to work hard, to study hard, to excel if outcomes will always be the same? Human nature is terribly predictable in that sort of an environment. Most people, with a guarantee of X amount of dollars on payday, regardless of performance, are going to do the bare minimum. Not only that, the cream of the operation will move on anytime the grass looks greener since there is really no danger of starting in the cellar paywise at one's new job.

As for your last statement "We should be willing to pay a little more for the stuff and services we buy . . ." Count me out. It makes me sad that you would tell others how they "should" spend their pay. It's wrong and sounds like our president lecturing us that "At some point, you've made enough money". Who is he or anyone else, for that matter, to make that determination? Our social safety net has become a social hammock. (I addressed this phenomenon in another post, so I won't respeak it.) With our new tax structure we are working for Uncle Sam until August before we start earning for ourselves. It's unsustainable and our middle class is vanishing because of it.

[PSmith]

The situation in the UK is very different to the US. Waiting staff ARE on minimum wage - for someone over 21 that is £6.19 an hour.

It would be very easy for someone working in a good rural restaurant to double their minimum wage with tips. In fact someone we know gave up their admin job to wait on tables as she could earn more once the tips were factored in. They were getting £16k a year in an office, compared to £24k in a local restaurant.

However, we rarely tip bartenders in pubs and not everyone will tip wait staff in a pub either.

So a tourist in the States from the UK, may naturally assume that the situation is the same.

[ScoopKW]

As for your last statement "We should be willing to pay a little more for the stuff and services we buy . . ." Count me out. It makes me sad that you would tell others how they "should" spend their pay. It's wrong and sounds like our president lecturing us that "At some point, you've made enough money". Who is he or anyone else, for that matter, to make that determination? Our social safety net has become a social hammock. (I addressed this phenomenon in another post, so I won't respeak it.) With our new tax structure we are working for Uncle Sam until August before we start earning for ourselves. It's unsustainable and our middle class is vanishing because of it.

We're the only first-world country with a large homeless/beggar demographic. Roughly one-third of our citizens are two paychecks away from homelessness. Sure, most of them are in that position because they don't know a thing about finances. But they are largely set up to fail. We don't have a social hammock -- our large homeless population is proof positive that the system isn't working.

So a tourist in the States from the UK, may naturally assume that the situation is the same.

And we can naturally assume that everyone drives on the right side of the road. But that doesn't make it so. The excuses I hear from foreign tourists are just that -- excuses. It is not hard to find out how things work in America. We drive on the right side of the road. Drivers are usually allowed to make a right-hand turn at red lights (when it is safe to do so). And we tip our servers and bartenders because for the most part they don't earn a decent living otherwise. Tourists from the UK should stop naturally assuming.

[annabelle]

My suggestion would be to run for public office and right all these wrongs. There are a tremendous number of squatters in the UK. Along with the Travellers, they present the same menace to public health and safety as our homeless. My point is, it is safe to say the that America is not the Great Satan when it comes to social outreach or lack thereof. It is not my look out to take care of these people and I resent being made to do so through excessive taxation.

All that said, I always tip my server at least 20%. PSmith is correct: waiting tables can be very lucrative. I always had cash and was the only one of my friends who had a savings account, a car, was going to community college and paid my rent on time when I was an 18 year old waitress. Of course, I was also the only one who didn't spend all of my money on booze, weed and clothes.

Edited April 28, 2013 by annabelle (log)

[Edward J]

mmmm. now this might be off-topic here, but we all know about the garment industry building collapsing in Bangledesh. Along with Mal*wart and others, several CDN retailers were using this factory as well.

Thoughts?....

As for your last statement "We should be willing to pay a little more for the stuff and services we buy . . ." Count me out. It makes me sad that you would tell others how they "should" spend their pay. It's wrong and sounds like ....

[annabelle]

Tragic indeed. However, the industries that employ child laborers, soccer ball factories and the like, while distasteful keep those same children out of the sex trade. Following the law of unintended consequences, that is exactly where the children who were factory laborers in Pakistan went when their factories were cleared of child workers.

Seeking to perfect our world, a world full of imperfect beings, is a fool's errand.

Edited April 28, 2013 by annabelle (log)

[Edward J]

Again, this is off-topic, but the Bangledeshies killed weren't child laborers, they were fully grown adults--mostly women, who were paid from 19 cents/hr to 23 cents per hour. And the owners had bullies to beat them silent if they asked for more or ask for safer working conditions.

I admit openly that I have bought cheap clothing from some of the CDN stores that contracted with that collapsed building.

But fools errand or not, money talks. I won't be buying cheap clothing in the future, and in the future the CDN stores implicated will do due dilligence and inspect the factories before the contract is signed, and thus have some clout in negotiating better working conditions.

It's a start, not a fool's errand.

Now, back to the hospitality industry....

[ScoopKW]

As far as clothing is concerned, I make it easy for myself. I only buy chef clothes that were made in America. And all the rest of my clothes were made in Hawaii. (I have a zillion Aloha shirts.) All of my shoes were made in Germany -- Birks or nothing for me. And I try to find socks and underwear that was made someplace reasonable. I cannot vouch for the political integrity of all of my socks and underwear. But I do try.

And when it comes to restaurants, if I learn that a place is exploiting their workers, I won't go there. We have a few bars in Las Vegas that are guilty of this, and I don't give them my patronage. And I refuse to be an exploiter myself when it comes to tips.

Incidentally, I asked the servers where I work about tipping practices. First of all, FOH where I work makes a lot of money. A lot. Six figures. At least three times more than I do. I think that is unfair, seeing as they wouldn't be making all that loot if it wasn't for the cooks in the back. But that's how it is. (I work for the experience, not for the money anyway. But I do feel a bit sorry for my co-workers, who I think are being shafted by an unfair system.) The division of salary between FOH and BOH should be a LITTLE more equal. But we're union cooks -- everyone at every resort makes exactly the same hourly wage. I knew that when I accepted the job. So I won't whinge about it.

The servers said unequivocally that the worst patrons are [an ethnic group] [a gender] Americans. "They run you ragged and then stiff you." Continental Europeans are the second-worst. UK/Ireland is third. "They're not going to tip, but at least they're polite." Then Asians. Then Australians/New Zealanders. And last on the list, Canadians. "They tip, but almost always 10%."

These servers just see it as part of the job. They're making a very good living because a 20% tip on a 20-top is basically the same as a mortgage payment. And we have regulars who tip 100%. Nobody needs to worry about FOH where I work. That's for sure.

But what about the servers at an mom-and-pop joint in a tourist town? They aren't getting many 20-tops who pay 100% on a $5,000 check.

[buffy]

This week's Freakonomics podcast is very interesting. It's titled "Should tipping be banned?"

It mainly focuses on the data collected over years by a Cornell professor.

Very interesting listening.

[PSmith]

First of all, FOH where I work makes a lot of money. A lot. Six figures.

Now if you talk to your average diner who has little or no direct experience of the restaurant trade, they will tell you that when they leave a tip, they expect a fair proportion of that tip to go to the kitchen staff, not just the FOH.

Personally, I feel that it should be shared. I know of FOH who earn a good wage thanks to tips - well over average wage.

[annabelle]

This week's Freakonomics podcast is very interesting. It's titled "Should tipping be banned?"

It mainly focuses on the data collected over years by a Cornell professor.

Very interesting listening.

Who is going to enforce this and why? This professor?

[IndyRob]

This week's Freakonomics podcast is very interesting. It's titled "Should tipping be banned?"

It mainly focuses on the data collected over years by a Cornell professor.

Very interesting listening.

Who is going to enforce this and why? This professor?

The court system. Clicking on the link, I thought that Freakonomics would present an economic argument against tipping, But it was a legal one that was addressed most thoroughly.

Since it can be proven that black servers are tipped less than white servers, the entire practice could be ruled discriminatory. It might just take someone to file the suit. Interestingly, it could be gone just like that. With no public debate or societal shift.

[annabelle]

Proven? I would like to see a citation on that.

[PSmith]

Article on the BBC website today

http://www.bbc.co.uk/news/magazine-22846846

[sigma]

Article on the BBC website today

http://www.bbc.co.uk/news/magazine-22846846

That article is hilarious. It posits that it is somehow negative that a woman had no interest in a man who undertipped, showing himself as stingy and happy to treat the server as a low person, then bemoaned the "fact" that we only tip to grind people into pseudo democratic dirt and yearned for the equal treatment people got in the USSR and China. Yay BBC.

[mkayahara]

I wish they had a link to these studies. I'm still leaning toward it being the author's opinion and not a stone fact.

His list of newer research papers is here: http://tippingresearch.com/most_recent_tipping_papers.html. There's a link at the top of the page to his older research as well. The paper under discussion is likely this one, based on the abstract: http://tippingresearch.com/uploads/customer_racial_discrimination10-30-06.pdf.

I have a hard time believing that any court would find the evidence sufficiently conclusive to actually ban the practice of tipping, but I've been surprised by the courts before!

[annabelle]

Thanks, Matthew. The is experiment is poorly constructed and badly controlled for variables. It appears to have significant artifacts in the data gathered that do not support the hypothesis given, e.g., that blacks are undertipped as a group, therefore tipping is unethical. The sample size is too small and gathered from only one eating establishment over the course of three services, again, an insufficient amount of data to support the hypothesis. Indeed, the authors say in their concluding paragraphs that their project is meaningless.

If I were reviewing it, it would get a passing grade as an undergraduate project, but scholarly work it isn't.

[IndyRob]

Indeed, the authors say in their concluding paragraphs that their project is meaningless.

Really? You interpret the following as an admission of futility?

To be clear, we are not arguing that tipping violates discrimination employment law everywhere it is used. Our data is too limited in diversity of servers and settings to support such broad generalizations. However, our data does indicate that tipping has an adverse impact on black servers in this restaurant. Furthermore, there are no a-priori reasons for expecting this unit of a national restaurant chain to be unique and our findings at this restaurant were consistent with prior research with respect to other determinants of tipping (see Lynn 2006a), so the server race effect should generalize to at least some other restaurants. Moreover, our finding of a server race main effect on tipping replicated and extended previous findings about taxicab tipping (Ayres et. al., 2005), so our finding generalizes to some other service contexts. These considerations lead us to believe that tipping is likely to have an adverse impact on black service workers in many settings, but additional research is needed to verify that expectation. Finding a setting for field research that has racially diverse employees and customers is challenging, but we hope the serious nature of our findings encourages more researchers to undertake this task and more companies to cooperate in the investigation of this important issue.