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Comment by jonahx | Hacker News Reader

as a practical matter, i don't believe it's possible to have "optional" tipping that doesn't create obligation (even if that would be desirable).

either you create a cultural norm where tipping isn't allowed or expected, which Uber has effectively done, or you have a situation like restaurants, where the tip may as well be part of the price, unless you're cool being the asshole who doesn't tip, which most people aren't.

if tipping is an option, through a kind of cultural game-theoretic pressure, the situation will always devolve into the restaurant norm. at least that's how it is in the states, and short of massive cultural changes i don't see that changing.

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> if tipping is an option, through a kind of cultural game-theoretic pressure, the situation will always devolve into the restaurant norm. at least that's how it is in the states

In the UK tipping in restaurants is optional and, while it sounds really weird to say this, I don't think the waiters and waitresses seem to care either way. I don't get a different reaction from them if I tip or if I don't. They don't seem elated if I tip a lot or disappointed if I tip a little. Nobody seems to care and this situation seems stable as it's been this way as long as I've been an adult.

I think it is because they aren't getting paid $2.13/hr like servers in the USA are.

But this is a bit of a chicken and egg problem, isn't it? You could just as easily argue that the wages are so low because tipping is pretty much a given.

It's actually enshrined into law - restaurants are allowed to pay less than minimum wage because of tipping.

It's a perversion of the whole norm, since it effectively turns tipping into a subsidy to the restaurant owner.

https://en.wikipedia.org/wiki/Tipped_wage_in_the_United_Stat...

As your link says, they are not allowed to pay less than minimum wage. They are allowed to set hourly wages for tipped employees lower than minimum wage, but they have to ensure that the total compensation of the employee averages out to minimum wage.

Realistically, if the restaurant owner has to contribute anything beyond their hourly rate to the paycheck of the server, that server will be fired (or the business is so slow that it will go under soon).

My experience as a server was a lot of < $1 paystubs after taxes on tips.

Not necessarily. I briefly worked at a 24x7 roadside place where tipped employees would occasionally fall under minimum wage due to slow periods or customers who would either stiff the waitress or tip out $0.35 on an egg, toast, coffee which cost $2.65.

That place systematically robbed those staff by refusing to pay minimum wage and falsifying records and withholding taxes based in nonexistent tips. The Labor department fined then pretty heavily -- but that isn't an uncommon practice.

I'm not sure how this contradicts what I said. Your experience showed that the business was not contributing anymore to your paycheck than the normal wage. Had they not been breaking the law, they probably would have fired someone due to the "extra" expense.

Exactly - so any tip just reduces how much the owner has to pay to cover minimum wage, making it a subsidy to them, not to the server, who gets minimum wage either way.

It's not really a subsidy though, it's just a complication of the payment.

It could be a subsidy if it wasn't an established custom to tip, but people know quite well that they are paying the server a tip for the service.

I suppose the fact that it enables the restaurant to under-report wages and thus under-pay wage taxes is a bit of a subsidy (but then some of that savings probably shows up for the customer).

It is a subsidy, because the server gets the same, it's the restaurant that pockets the difference.

Say the server works 40h/week like a regular full-time worker, so the minimum take-home pay under federal law is $15000. If the server gets $0 in tips, the restaurant must pay the $15000. But if the server gets, say, $5000 in tips, the restaurant can pay only $10000.

The server gets the same money, only the restaurant gets to save some.

Right. In practice, servers get $15000+ in tips. So there usually isn't a subsidy.

It also has a non zero impact on the menu prices (they would go up if tipping wasn't expected)

Seattle recently passed $15 minimum wage and now a lot of restaurants are charging a "service fee" and putting up signs that discourage you from tipping. A much better system imo.

Washington State specifically doesn't allow tipped employees to be paid a lower hourly wage!

What's the point of a service fee on top of the cost of your meal though? Why not incorporate it into your meal, since it's non-optional.

I noticed they did this in Singapore. You'd be charged a service fee on top of your bill, I can't remember if they popped tax on top of that too. If it's non-optional, it should be included in the cost.

>What's the point of a service fee on top of the cost of your meal though?

For the same reason airlines don't include mandatory charges in their fares - humans are not particularly good at rational pricing evaluation.

It's known as partition pricing and generally results in higher revenues - from "The Effects on Perceived Restaurant Expensiveness of Tipping and Its Alternatives": [1]

"Furthermore, participants ordered more expensive meals when automatic gratuities were added to the bill than when the costs of service were built into menu prices"

[1] http://scholarship.sha.cornell.edu/cgi/viewcontent.cgi?artic...