That's true in more or less every job, it can be done well or done poorly. Incentive should be keeping the job at all. Tips are an infuriating hidden cost.
I've seen/had this happen. Bosses had to go to bat for their long term workers because even with raises, they wound up making less than people hired in the past month.
It's really low. I've worked in a place where people will literally throw away money equalling an hours worth of the wages of a service person into a pool of water for good luck.
Do you tip other service positions like the employee that helps you at best buy or the cashier at the grocery store? Why are they different? If people staying in one job longer is a good thing and tipping helps that why wouldn't you?