The era of America’s subminimum wage for tipped restaurant workers may be ending
cnbc.com
cnbc.com
- workers paid a decent wage
- tipping not expected
- tax included in price
Aka price you see is the price you pay
No tipping? No, that's social.
Workers paid a decent wage? I'm pretty sure that servers would claim they're not paid a decent wage. Australian minimum wage is AU$23.23, or USD$15 - USD$16.37 using PPP.
Cost of living comparison:
Sydney vs San Jose, CA
https://www.numbeo.com/cost-of-living/compare_cities.jsp?cou...
For an example I'm familiar with in my family, consider:
You're paid $100,000 but your bank account only sees $60k, the rest is taxes but taken off by your employer.
vs
You're paid $100,000 and your bank account sees all $100k. At tax time, you need to write a check to the government for $40k.
People get a lot more angry about writing the $40k check. It was _theirs_ in a way that the payroll taxes aren't. I've seen this personally when someone moves from employee to self-employed.
The same applies with sales taxes. Most people don't look at the receipt, or if they do it's only to check that the amount taken matches the label.
Do people get angry at gas taxes, or the oil companies?
Taxes per l of fuel is 44.2c + 10% GST in 221.4c/l. Taxes are ~30% of the price?
https://www.mynrma.com.au/cars-and-driving/fuel-resources/we....
Prices in Australia are more evenly distributed.
In the US high COL cities like San Francisco have much higher prices than butt fuck nowhere Omaha. In Australia there is still a delta but it's much much smaller.
As a result prices in high COL Australian cities like Melbourne and Sydney are generally cheaper than the equivalent SF/LA/NY prices but rural areas in Australia are much more expensive than rural areas in the US.
Not requiring tipping but any model that allows pay to scale to volume would account for this.
We see something similar where I live, restaurants are adding a %age based fee to go direct to kitchen staff. In my state tips can’t be split with BOH staff. This allows the owner to pay the BOH stadf more but scale it to actual volume
The history of tipping in the United States is that it was used to pay Black people less or not at all after the abolition of slavery. White service workers would get big tips and Black servers wouldn’t.
This pay gap persists to this day: https://www.outtraveler.com/eat-drink/2021/2/06/black-worker...
The one thing the tip model does help with is providing a “congestion fee” of sorts. A server in the joints in describing making really good money - if the restaurant was paying say $50/hr it wouldn’t be feasible as patronage at the restaurant is very spiky and margins are low. This allows restaurants to effectively pay more during busier periods and less during quiet periods.
I suppose the same could be done by scaling pay rate by shift.
(Nicer restaurants also replace their menus regularly, but for different reasons: presenting a spotless and seasonal/rotating menu is part of their value proposition.)
I know it isn't often in Europe because I maintain the VAT tables at work for our Europe sales so have to deal with updating when it changes. We sell in 28 countries there, each with its own independent VAT, and since 2015 there have only been around 8 changes among all 28.
Also in Europe VAT is per country.
In the US sales tax at a given location is the sum of state sales tax, county sales tax, city sales tax, and possibly even special tax district sales taxes.
The state rate usually doesn't change often, although it isn't as stable as Europe VAT rates. County and city rates aren't as stable, and there usually isn't coordination between the changes so if the state, county, and city are all going to raise rates in the next year they could easily end up each doing so in a different quarter.
PS Also consider that the other counties have been able to print the menus regardless the tax fluctuations. It doesn't seem to be a problem.
Most Americans think tipping is undermining regulation and authority of the government to regulate, and should be a banned practice, but the rich keep fighting the majority on the issue.
We don't want a tipping culture, this was done to us.
Thankfully, now that we have tight labor markets and blue collar workers feel like they have actual bargaining power and are not just begging for alms from power-tripping small business owners, attitudes are changing.
They were afraid that the average man might get some ideas, so they got Reagan elected to fix that.
This war on America started a long time ago because they're afraid of, apparently, paying people a living wage even though its the law, and has been so since 1933 when FDR signed it in. They still fight it like the law doesn't apply to them, somehow, magically.
It's unforgettable to admit, but a teeny tiny row in a database somewhere has a huge effect on people's wellbeing. When the government is doing (relative) austerity during a downtown, and household balance sheets get weaker, it's not mass psychosis, people really are squeezed and employers have more power, real power.
The people you refer to are questionably American at all, the only thing keeping them here is their citizenship. The people you speak of also go around saying Trump was elected for a second term and Biden stole the election, hasn't violated the 14th Amendment, is subject of a witch hunt, and the people sent to murder Congress and the Vice President are heroes and not literal terrorists.
At some point you just have to accept they're the new Confederacy and they're here to undo 100 years of progress.
Good news, though, they're, at the very most, a quarter of the US population, and I believe that to be a significant overestimation. Enough to cause havoc and destruction in every city in America if someone blew a dog whistle hard enough, but not enough to win. They'd get their chapter in the history books as a participation trophy, nothing more.
Oh come on. The fiercest proponents of tipping I have met are service workers that get tips. Tips are like a slot machine gambling problem for them.
The ones you speak of that have that problem need to get help, and the system should be structured in a way that prevents whats effectively Stockholm syndrome with extra steps.
This meme is getting old. The Karen is the victim in most of these Karen stories. And the service worker is getting paid the be a shield between the boss and Karen.
self declared and largely imagined
> victim in most of these Karen stories.
It's not much of a "Karen story" if there was any actual wrong done to them.
There is a subset of servers who are vocally opposed, because they are quite happy with how things are now.
They'll parrot lines like "if you don't tip well, I have to 'pay' to serve you because the IRS estimates my tip income and taxes me based on that", and neglect to point out that the IRS will not tax you on unearned income, you just have to document what income you did make.
I've even pointed this out on HN and had multiple people then try to claim "there's no way to document cash tips to the IRS", but it took me less than 10 seconds to find IRS form 4070 (https://www.irs.gov/pub/irs-access/f4070_accessible.pdf) which is just a monthly attestation.
The reality is that most servers don't want to document their tip income, because in very large part, it is significantly higher than the IRS estimate.
For quite some time restaurants have assessed the claim amount based on a percentage of the bills paid by cash taken from the tip average on charged payments.
Basically, servers rarely have agency over how much they claim in tips. Only if they score far above average tips can they escape any meaningful taxes.
Often they just feel like they are making out better because they didn't get assessed as much as they were tipped. People are not good at math.
It's clear to me that tipping needs to go away and the restaurant industry needs to retract to a profitable number of participants.
Like trucking and other low margin businesses, there is too much worker abuse because it's the only avenue to profit.
Profits over people have given us a lot as a society and I say that as a beneficiary of it as someone living in the states. I think it need to evolve to sustainable profit along with people, community and planet. We can’t and should not get rid of profit. But we need to preserve it by evolving.
Tipping wages keep things artificially low and sustain a system in which a certain class of people are perpetually exploited. I for one, as a resident of US can’t wait for it this to go away.
Don't get me wrong, I hate the ridiculousness of tipping in the US and how 20-25% has somehow become the norm over 10-15% a few decades ago. But I hate it as the fucked over consumer, not over some misguided notion of worker exploitation. And honestly don't even understand how people have bought into this weird, obviously incorrect, talking point.
1) Tipping is regularly hitting north of 20% -- even for self-service or fast-food type venues. When 1/4-1/5 of your bill isn't figured into the food price, people take mental notice and restaurant patronage is significantly down. Payment processors at POS are also somewhat responsible for this trend, as much of the Tip request process happened by the store, who usually put it as a blank line on a paper bill, but now it's offloaded to the processor's systems and all kinds of nonsense shows up on the Tipping screens.
2) Due to recent rapid inflation, services are trying to "fake it" to keep prices down, but adding in other fees before the tip, which makes consumer costs go up anyways. It's becoming a significant legal problem in many areas when an additional 10-15% "fee" shows up on the bill.
3) Even with tips, workers can't make ends meet as housing and other basic living costs have gone through the roof. There's a nationally recognized worker shortage, and it's because even taking extra shifts and providing exceptional service isn't bringing in enough TIPs to make ends meet, so workers are leaving or switching to other industries. Which makes the service worse when you do eat out.
This means consumers can't figure out how much it costs to eat out anymore. That $10 sandwich and drink combo from 2020 is now $16 + tax + fee + tip = >$20 and now you're getting the same thing for more than twice the price, all a change in the last 2-3 years. So fewer people are eating out.
The food industry is tipping over into a death spiral and it's become time to properly professionalize the service industry and return Tips to a "not expected but welcome" option.
Service staff are already guaranteed minimum wage. If there tips don't exceed the difference, the restaurant has to make it up.
Do you have service staff friends/family? I recommend going and talking to a few of them and ask if they were to make a minimum wage (again...something they already do, but for sake of conversation, let's take your position) at the expense of optional tipping, if would they prefer that. I can just about guarantee you 100% of them will say no.
> That $10 sandwich and drink combo from 2020 is now $16 + tax + fee + tip = >$20 and now you're getting the same thing for more than twice the price
This is the real reason people hate tipping. It's the consumers, not the staff that hate it. Which, I agree with, btw; I just don't need to convince myself that I'm "helping the little guy" to take that position. I just hate subsidizing a restaurant's payroll and having to play some social dance of giving someone 15% "gratuity", even if their service sucks ass.
Where are workers going and why is there a difficulty in finding people?
Tbh, just about anywhere. The local gas station is far less demanding of a job, has flexible hours, and pays a guaranteed wage [1] that's about the same as what they'd make waiting tables [2].
> Do you have service staff friends/family?
Of course! I could tell you stories all day about how the front and back end of the restaurant business functions. Key takeaway, it's not fun for just about anybody, but the jobs and workforce are highly fungible. Working in the restaurant business is almost like being a freelancer, except the hours, working conditions, and pay sucks.
At the end of the day the problem is not that restaurants don't want to pay their staff, it's that they don't want to look expensive in a crowded market. Once the market has to shift (either by market or legislation) the entire market will move at once.
1 - https://www.glassdoor.com/Salary/Sheetz-Team-Member-Salaries... 2 - https://money.usnews.com/careers/best-jobs/waiter-and-waitre...
One problem in the industry is that it errs on catering to "luxury experience" and neglects the "I just don't want to cook market". This will also help with that:
Better wages -> labor saving -> less frivolous pretending one has servants and more emphasis on the food itself
I am convinced this is the real reason that there is suddenly a push to end tipping culture in the US. The tax man wants his.
Anyone that understands economics understands that the overall effect of ending tipping will have very little real effect on wages. All it does is give employers and tax collectors more power over these low wage earners.
They would have a lower, but more consistent, income.
We're tired of subsidizing others' ludicrous desire for aristocracy role-playing when we just want to eat food.
Could add one or two in between, but I don't see any reason why there should be need for anything beyond these basics.
I'm not saying I would go on a date to the cantina, but I sure as hell would do that instead of cook 10/10.
If we had abundant housing and thus poorer residents on average (in a relative sense), we would already have these labor-saving amenities.
The fact that cities are both more efficient and more expensive demonstrates just how fucked up the economics of all this stuff has gotten.
Many Canadians just can't afford to visit restaurants to begin with these days.
Lately, though, even those with the financial means to not care too much about the cost are avoiding restaurants because it's such a miserable experience overall.
The portion sizes are typically quite small compared to the cost. Even restaurants that used to offer generous portions now give less and less.
Many of the servers are low-skilled, low-cost foreigners who lack basic language/communication abilities. Even just placing an order can became an ordeal, with mistakes and misunderstandings being far too common.
The kitchen staff don't seem particularly skilled, either. At lower-end and even mid-tier restaurants, they seem to just be reheating frozen meals most of the time.
After what's often a rather negative dining experience, it's common to be prompted for a tip of 18%, 20%, 25%, or even more when paying.
Even some fast food restaurants, including ones at mall food courts, and take-out pizza joints now have tip jars, or prompt for large tips when paying.
I'm not sure if the Canadian restaurant industry can be saved at this point.
More and more people I know are learning how to cook at home, and even if it takes more time and effort to do, the cost is significantly less than going to a restaurant, and the experience can be far better in pretty much every way.
Last two mid tier restaurants I went to had the tip options as "20, 25, 30, 35%"
That isn't the minimum hourly wage for every hour... It is the minimum amount a person must walk away with when divided by the number of hours they worked in a week.
The difference is subtle... But it means you can be paid $6 per hour for some hours, as long as you are paid $25 for other hours in the same week.
Likewise, your employer can 'fine' you for being careless... but the fine must still ensure your pay for the week doesn't fall below the minimum.
And the employer can pay you hardly anything yet let you have very generous tips - again, as long as the total is above the minimum.
Enforcement of minimum wages among tipped workers is famously lax, and this is unlikely to change anytime soon. Coupling this with taking away the tax dodge that is cash tips, and you'll see a backlash from workers who see no reason why they can't have both.
Paying your employees a decent wage is part of running a business. It's disgusting when bosses pull tricks like this to try to lay the blame on their employees.
Make both accepting and giving a tip illegal. And give rewards to either side for reporting the other.
It isn't the employee who loses out - it is uncle sam.
It's insane that internship is legal in the US. Minimum wage is the bare minimum.
You may mean unpaid internships specifically? I got my start when I otherwise wouldn’t have had an entry to my industry with an unpaid internship, but also recognize that it’s a privilege to be able to not be paid for months at a time early career. I would personally never not pay an intern, but think there is probably a place for unpaid interns.
Not everyone does this, and it certainly sounds like you wouldn't be affected by any laws requiring paying interns minimum wage.
> There’s nothing wrong with internships at all.
At your company.
[1] https://www.dol.gov/agencies/whd/fact-sheets/71-flsa-interns...
While I’m happy to tip 100% or more on my tabs, I think tips are a cancer that needs to be eradicated.