California Restaurants Are Dying Due to High Labor Costs

.[...]tipping is a form of price-partitioning that reduces perceptions of expensiveness even when it does not affect the actual total costs of eating out, so replacing tipping with service inclusive pricing may decrease consumers’ perceptions of value."

Some pretty big names in the business have tried banning tips in the past few years, and it's been largely unsuccessful -- in some cases disastrous -- and the restaurants have almost all had to return to tipping to save their businesses. A few brave souls persist, but it's safe to say the anti-tipping movement in the U.S. has kind of petered out for now [2].

I suspect that if an entire city were to ban tipping, it would be much more successful since individual restaurants would not be at a comparative disadvantage due to whacky price perception.

I personally hate trying to figure out tips. I cope by just adding 20% by default in every case, unless the service is truly awful.

1 - https://static.secure.website/wscfus/5261551/7004898/ijhm-ti...

2 - https://www.newyorker.com/culture/annals-of-gastronomy/the-l...

That's why they're fine with their salary being less than federal minimum.

I'm not a server and I'm not in favor of tipping because of the psychological effect cited, which might as well be a bait and switch. Menu price being the bait and paying 20% over that the switch. Reduced perception of value equivalent to saying the market would adjust when consumers are informed of the true cost of the product.

But never mind all that, industries must always grow, even if it's wasteful and the community taken as a whole is worse off for it. And evidently because some servers like tips. Aces.

In my experience, management instructs servers to dramatically underreport cash tips. Many places instruct them to report an amount that equals the minimum wage - even where the federal minimum applies, if you don't make at least $7.25 with tips, the employer has to make up the difference.

I believe the reason for this is to reduce the employer FICA contribution. Servers are generally all-too-happy to go along with it since it means paying less income taxes.

The IRS has been taking some action on this, and larger companies apparently have gotten some kind of deal where servers must report an amount based on sales, or something like that - it's been a while since I looked at the specifics, and it didn't affect me personally, so I didn't look too closely at it. It seemed pretty unfair, but tax evasion is rampant.

This is one of the factors that make it unlikely business will pay servers what they make now - there's so much tax evasion going on, to net the same amount of money, businesses would have to pay much more money than you would think at first glance.

> I dislike tipping because oftentimes the people who are making your food make less money than the person who brings it to me, which seems wrong.

This is a very fair point. It's also another reason why businesses will not be likely to pay servers what they're making now. You can get away with making that much money when the customer is giving it directly to you. There will be a lot more agitation and drama if waitstaff is being paid much more highly than the kitchen staff on their actual paycheck.

Now, suddenly either labor costs are rising by a factor of 4-5 (ha!), or servers make merely twice as much as minimum wage, or something like it.

> . People are always crying about how little servers make while neglecting the fact that society has trained people to automatically tip, meaning that you don't even have to do an exceptional job to earn 15%+ on most checks.

I will be the first to tell you that a very large proportion of servers are incredibly spoiled and entitled and complain about how much money they're making even as they leave at the end of the night having made $40/hour, right in front of the kitchen staff being paid $7.25. I can't explain this phenomenon, other than loudly and publicly complaining about tipping and poormouthing might be believed to increase income as people feel bad.

My personal belief? Don't tip if you don't feel like it. I sometimes stiff servers now. I never would have done so before I worked as one. It’s rwally not that big a deal. Being stiffed is not that unusual, you’re not going to stand out, and it’s a lot better than religious pamphlets.