Why some New York restaurateurs are looking forward to the end of tipping
theawl.com
theawl.com
1. You could make an argument that tipping a business could be desirable, but that is a different discussion.
Not necessarily in favor of tipping myself, but I take issue with that statement. The reason that springs to mind immediately is that tipping is a mechanism by which good employees (polite ones, or ones who go above and beyond to provide excellent service) are paid more relative to worse ones. The mechanism is imperfect which is why I don't take this argument as proof of the necessity of tipping, but it's a solid argument.
To put it in academic terms, tipping is a technology that can help an employer solve the principal-agent problem.
Secondly, solving the principal-agent problem is the employer's problem, and they could do that by collecting feedback, paying bonuses, firing people, etc. Punting the whole thing to clients just means that it becomes a lottery based on the client's mood, wealth, expectations, instead of something objective.
It's incredibly naive to think the people who get tipped the most are the best employees, even if the pool ultimately levels out the playing field.
What kind of a fucking awful system do we have where hot white girls are better coworkers simply because they're hot white girls, and not because they do a good job?
Uh? Is that just your opinion or are there studies to back it?
* https://www.washingtonpost.com/posteverything/wp/2015/01/21/...
* http://www.slate.com/articles/business/moneybox/2013/07/abol...
* http://www.esquire.com/food-drink/restaurants/a23132/why-tip...
* http://www.wagehourlitigation.com/files/2015/10/cornell.pdf
* https://news.ncsu.edu/2012/04/wms-rusche-restaurants/
* http://viewfromthewing.boardingarea.com/2016/02/19/45436/
* http://business.time.com/2013/11/18/worst-restaurant-custome...
* http://www.npr.org/templates/story/story.php?storyId=1329241
* http://www.tippingresearch.com/uploads/JFSBR_race_revision_a...
This is not (just) my opinion.
It is pretty sad that HNers are quick to downvote your post while demonstrating little inquisitiveness.
A waiter may tip out a bartender depending upon how much of their tab was alcohol but otherwise they generally don't divvy it up with all the other servers.
Avoiding taxes by collecting cash tips is also a common practice, though that does end up requiring one to collect cash - sometimes on the order of $10^5 and keeping it in ones apartment, since you can't put it in a bank account and not be taxed on it eventually.
If only that were true. It is not quality of service that drives tipping size, but to put it crudely, hotness.
Even if your statement were true it is for the business to resolve, not the customer. If the level of service provided by the employee does not match the level expected by management then management needs step in and solve. All tipping does is screw up the normal relationship between the employer and the employee.
[0]: http://www.wigdorlaw.com/2014/04/07/unlawful-tip-pooling-und...
Although in practice, the employer would probably act as arbiter for pooling tips. (Those restaurants I'm aware of are in Norway, so circumstances are quite different: while there is no minimum wage, the de-facto minimum wage usually hovers around what the unions negotiate -- and end up being quite substantial as compared to eg: the US).
For one, 10% on $15786 is a little silly, sure. But current etiquette already recommends flat rates for certain types of services so this could logically be extended to certain other cases.
And secondly, even brought to the logical conclusion, extending tipping would only make sense where it could reinforce proper incentives and would be actively bad where it reinforces perverse incentives. A legal avenue for bribing cops is certainly problematic in a way that bribing waiters for better service isn't, for example.
That's not to say I'm arguing in favour of tipping but I don't think it's as clearly unreasonably as your example would suggest.
That said, there are key differences between a dentist or plumber and a waiter or cashier. The obvious one is a private-practice dentist or self-employed plumber where they're setting their own fee and getting directly paid. In such cases there's no problem for tipping to solve. The other big one regardless of public or private is that there's a major power imbalance where the dentist or plumber is effectively acting as the agent of the patient or customer. Check-ups, routine cleanings, and such aren't an issue but when it comes to things that need fixing it's the dentist or plumber telling the customer "this is the service you require" and selling them that service. This is a principal-agent problem itself and tipping only exacerbates the issue rather than solving it.
Like I said previously, the logic of where tipping could or could not make sense is based on what sort of incentives it reinforces, if any. And, also like I said previously, I am not arguing in favour of tipping, either, and I'm especially not arguing in favour of tipping making up an essential part of one's income.
To a large extent it's society's way of allowing "the right kind" of drug addicts or whatever to have a way of earning a living wage.
I was recently eating dinner at a French restaurant in Seattle that is working toward introducing a service charge (the current Seattle practice of a fixed service charge, vs raising prices, as consumers don't want to see a $40 steak frites on the menu before tax) and the owners were most concerned with how to fund the credit card fees, since they had not been doing this at all!
Talk about unfair to the workers...
Honestly, I loved it. It makes me want to go back. Worrying about how much to tip has always been a vaguely unpleasant ritual for me. It's not that I don't want to pay for good food and service, I am more than happy to pay for good service and food, I certainly don't expect anyone to work for free or poor wages. I just really found it refreshing to simply be charged the price that was quoted on the menu.
Unfortunately, eliminating tipping can be complicated, and evidently can also lead to a higher tax bill…
http://www.sfchronicle.com/food/article/Eliminating-tips-bri...
Any time on many forums where this is brought up a cadre of 'service industry staff' will show up and trot out lines about how they are "legally required to pay tax on a certain amount of tips, even if that's not what they make", when the reality is that "if they make less than that they should be able to show it" (and even that's not a perfect science, and still errs on the side of the server) by virtue of bank deposits (you can still keep some cash on the side).
But that "seems like a lot of work" to those people - why should they have to expend effort to document their (lack of) income in order to minimize their expected tax?
Nope... while service industry work is rarely glamorous, it's not that horrific. Unsurprisingly, those same people can often be found mocking people's ideas of tipping - apparently according to them, you should be expecting to tip 25% as a baseline these days... huh.
So if I go to Red Robin and my partner and I have a drink or two, and our bill comes out to about $60, and you have four other tables, all doing something similar, and we are there for about an hour, maybe a little more, you should be picking up $60-75/hr for tips?
Huh.
But "if you tip 15% or less, then I am actually having to pay to serve you because I have to tip out all these people no matter what tips I actually get, and the IRS demands I pay taxes on all these tips even if I make less"...
The reality is there's no requirement like that from the IRS - there's a base expectation, and if you can't provide documentation that you made less, that's what you'll be taxed. I wonder how many of these same servers provide that same documentation when they make -more- than the base?
But based on the above comment, it does appear some of this may be manipulation.
Except this is not true. The government does regulate a minimum wage. Businesses never want to pay minimum wage so they have to.
But because tipping existed, the restaurant industry was able to carve an exception that if someones tips do not equal up to minimum wage the business will cover the shortfall, but if it exceeds it, the business only has to pay a special lower minimum and the server gets to keep the gratuities.
Either way, your server is guaranteed to make minimum wage.
That people like you exist, who think that they are doing society a good thing, is one thing that keeps this practice alive.
A lot of servers and bar tenders want to keep the special minimum wage + tips setup. Tips are often paid in cash and are much easier to keep off reported income.
In what state(s) does this apply? It doesn't in mine.
Wow. Did not know this.
Tips are weakly proportional to rents and other costs of living (restaurants have to charge enough to make a profit, and tips are a % of what they charge). Minimum wage is probably enough to get by if you live outside of a major city, but that is definitely not true inside them.
Businesses will pay whatever the minimum people will work for, which tends to be well below what society at large feels is reasonable. Obviously, because the business' interests are directly at odds with paying the employee a reasonable salary. With tipping, social forces decide what is reasonable, not the businesses.
You're talking about a completely different thing, unless you're advocating tipping everyone you believe may be on minimum wage.
At no point did what I write imply the current system is good, I simply said it exists and that the restaurant industry carved a special little exception out for themselves. That exception was carved out so they could directly push the burden of paying employees on the customers while continuing to get the same profits from their product.
Although I may end up paying the same (the cost of food will be increased to account for proper wages for the waiters), the main positive difference is the absence of guilt and pressure to stick to a silly social norm.
[1] Reasons: https://www.youtube.com/watch?v=Z-qV9wVGb38
Think of it like Patreon or donating to your favorite FOSS.
This isn't a statement for or against tipping. I don't really care; either way is trivially easy and all that matters is the bottom line.
I do care about labor conditions. I don't believe restaurant owners are doing this to benefit their employees. I wonder how it affects the power relationship between workers and owners, and I especially note that discussion of it rarely includes input from the people who actually do/don't receive the tips.
I will never tip 0% because I have worked in the service industry
I tip well because I know that I make ~3-7x what the people in the service industry are making annually and I feel obligated to share the wealth.
Restaurants can certainly try to motivate their sales staff with a wage instead of paying commission, but the consequence will be that their sales people will lose motivation, be less competitive, and less aligned with the interests of customers and more aligned with the interests of management.
If restaurants want to motivate their wait staff, they can pay them an actual commission based on sales if that's the goal.
Anecdotally, I've already seen some of my friends tipping uber drivers in cash. Sure, it's not required. But everyone knows about how Uber drivers are getting constantly screwed over. If you can afford to throw them a little extra cash, why wouldn't you? It makes the driver happy, and it makes you a better customer.
Whether tipping is required or not, it's just a nice thing to do. And if you don't do it, someone else will. Don't be surprised when they get better service than you.
To the former, there are many occurrences of societies without tipping (Korea?), although this is shifting as western influence progresses.
To the latter, let's look at this as a commons problem: The more people who tip, the less business owners think they need to provide as base salary, eventually tipping becomes assumed to maintain a minimum standard of living as it has for most minimum wage American service jobs. It distorts incentives and muddies the water around providing meaningful minimum wage guidelines.
On top of that it provides a negative customer experience. I have the money to tip. But I'd like not to turn making simple purchases into a "how much do I have to give extra to not have people look at me odd?", a game of "how can I drop this in the tip jar so that they SAW me drop it in" and other really... fake social tendencies that I'm not happy with myself for exhibiting, but I can understand the need for. If I knew I could go somewhere that might have slightly higher base rates, but both treated their employees at a better level AND spared me the social/mental cost of the tipping ecosystem, I'd let my money speak for itself.
She regularly has nights where she makes $300+ in tips. If tips did not exist, the restaurant would presumably pay her minimum wage or something close (as opposed to the "minimum wage with tip" they currently pay). There is no way this would come even close to paying her the same amount that tips do.
From what I've seen, tipping is a far more efficient way of allocating resources (direct from the client to the waitstaff) than employment (client -> restaurant -> waitstaff). Not only is it more efficient, but it encourages waitstaff to build good relations with clients, and vice versa.
Removing tipping removes a fundamentally personal element from the service economy. It hurts the workers by putting less money in their pocket and reducing their economic autonomy. And it hurts the restaurants because, I guarantee you, it will cause them to lose their best waitstaff. Why work for peanuts of a salary when you can make way more in tips?
(Also, tipping is a wonderfully efficient way to discover which customers are not worth being nice to. ;) )
This is why they won't pay servers minimum wage (i.e. Danny Meyer doesn't).
Europe doesn't have tipping and service is perfectly fine -actually, better in many cases, in my experience they bother you much less, and there's no aggressive pre-bussing because unless it gets to the point where the business fails, table turnover doesn't matter nearly as much to the employees.
Why are you so sure about this? Many people work service precisely because they can make tips. If they were now limited to a fixed minimum wage they would look elsewhere and put upward pressure on service salaries.
But if tipping is removed through some global measure, such that no restaurant offers tips to its employees, then where would that upward pressure come from?
How regularly does she have nights where she doesn't make $300+ in tips, and what does her nightly pay average out to over the course of a month?
I'm sure it's probably more than the minimum wage, but that's because of the appallingly low minimum wage in the US.
Compare with say Australia, where the minimum wage for restaurant staff is reasonable, with extra loading for late night, early morning, weekend and public holidays, and you have a situation where an experienced waiter working in a regular (e.g. not too upscale) restaurant can bring home close to $100 for a 4 hour shift (more on weekends and late night shifts), and more if working in an upscale restaurant.
I know people claim that raising the minimum wage will put restaurants out of business and so on, but the situation in Australia and other countries disproves that because despite a high minimum wage, Australia still has plenty of restaurants and plenty of people going to restaurants.
Restaurants just need to raise their prices to cover the difference, and patrons make that back by not needing to tip.
It might not be as 'efficient' as having clients directly paying the wages of your staff, but it is more fair, transparent and reliable.
What is the nature of this "personal element" exactly[1]? All I expect from a waiter is that they bring what I actually ordered, and bring them hot.
[1] incidentally user Laaw posted the racial angle here: https://news.ycombinator.com/item?id=11349092
Not when the tip is collected after the meal. If you want to make an argument for tipping on these grounds the tip needs to be made before the meal is served.
Which is a problem unto itself.
In Australia, I tip when a person provides exceptional service to me, and goes above and beyond what you would normally expect them to.
I do not tip them for doing their job.