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Comment by ryandrake | Hacker News Reader

Yea, I don't get where this idea came from that tipping is either good for the employee or good for the customer. The employee is getting paid a crappy wage and the customer is being guilt-tripped into making up for it. The only winner is the employer.

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Don't forget that you're implicitly paying a premium to compensate for the unpredictability/lumpiness/[1] of the tips!

[1] as well as "the presence of people who deliberately flout the expectations" and whose non-payment must be made up, in expectation, by more honest customers.

So essentially subsidizing the profit of the employer and subsidizing the cost of the goods that people who aren't adhering to the implied price structure are paying (non-tippers)!

I wonder how this came about? Like was this something a clever businessperson invented at some point? It sounds like the US is the only place with a tipping culture like ours.

One other side effect which is generally not discussed because it's contentious, is that a number of people who receive tips will underreport their tips. Especially those who receive cash tips. So the state and federal governments are partially subsidizing their wages too.

I don't think "subsidizing profit" is an effect of the tipping system; what the restaurant gains in lower wages, it loses in higher effective food prices.

In fact, I think, ignoring the tax evasion effect, the tipping system reduces profitability, because it scares away business by that "compensate-for-unpredictability" tax, which takes from what could be restaurant revenue.

I waited tables in college at a medium priced restaurant. On my great shifts I would pull down $50/hour on my best nights, $25-30/hour on typical weekends, and $10-20/hour on weeknights. Like most servers, I did not report most of my tips so it wasn't taxed.

This was AMAZING for me, the employee. If I was an hourly worker, I doubt I would have gotten paid over $10/hour.

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