Is America approaching peak tip?
economist.com
economist.com
Interesting. I never feel good about tipping. If I tip I feel bad, because I caved in to the pressure. If I don't tip I feel bad, because the staff will wrongly think I didn't like them or their performance. Then there's the question of how much % is right... What an unpleasant social convention. Just give me higher prices on the menu.
On employee side, well there is usually not option to forgo work as money is needed for survival... So their only option is to take work that is less than they might think they are worth. But this often results in poor retention as they will move for better options when possible.
Is this somehow bad? Everything is only "worth" as what people are willing to pay for it, and labor isn't any different.
Instead, rather than see some businesses experiment with eliminating tips, I see a lot of businesses that haven't historically had tips start to request them. Worse, none of them as far as I can tell have lowered prices: it's just a new cost on top, much like bullshit fees tacked on by other industries, only with a new shame component built-in if you dare express frustration at having to pay it.
It's greedy exploitation stemming from the knowledge that the "free market" rarely exerts corrective pressures as well as advertised. The invisible hand is largely invisible because it isn't there.
[1] https://www.thrillist.com/eat/nation/american-restaurants-do... https://www.sfchronicle.com/food/restaurants/article/tipless...
In fact, now that I think about it, since tips are a percentage of the bill, I wonder if tipped wages keep place with inflation better than retail?
Not to say that this is a great system overall, but I also find the mindset that's worried about tipped wages to be odd, because like I said, if you think they should get paid more that's entirely in your control. No one needs to wait for the boss to decide to hand out raises or make market adjustments. And most of my friends who worked tipped jobs weren't bothered by the tips per-se as they were with the times when work was slow. Sure they griped about stingy tippers, but none of them ever had a top complaint of "man I wish I could just make $8/ hour flat rate instead of getting tips"
Since those days, even though I have family and friends to have holiday meals with, I've made it a point every year to have a small meal at the diner even if it's just coffee and a desert. And since I'm doing much better these days than a poor broke college student, I do it because I want to leave a large tip for the staff. No big Oprah style "you get at tip and you get a tip" performance or videos for youtube, just a simple card and big tip expressing my gratitude for them being there those years ago for past me, and for being around today for all the people who don't have anywhere to go still.
Whether they consider themselves exploited or not. Whether they're there because they need the work and the money, or (like I often did when I worked retail) they volunteered for the holiday shift because they had no where to be that day either. In either case, I was and remain grateful and the holidays are the one time a year I truly enjoy giving a tip.
Even if they were paying their employees a full wage and not as tipped servers, I would still be tipping in this manner. It's an expression of gratitude to the people who – whether by choice or by necessity – make it so that even someone with no place to go on a holiday can have some place to go.
If that doesn't answer the question you were asking, as I said, I wasn't 100% clear on it so my apologies.
But alas, I live in a red state so it is never going to happen.
Servers at my mid-range restaurant bring in around $20 per hour in tips, on top of a base $16 minimum wage. So approximately $36 per hour is where you'd need it to land. Anything less and they ain't showing up. It is already hard enough to find anyone at that rate!
I can tell you as a different type of talent worker, nobody is trying to pay me minimum wage. Minimum wage is set to ensure there's a reasonable floor on downmarket offerings. When you're 18 and fresh out of school and you work at your local Cracker Barrel, minimum wage ensures you don't get exploited. It's not the benchmark for experienced workers who have picked up a valuable skillset.
You have all these restaurant operators crying that getting rid of tippers puts them out of business, makes their business unviable. Well for one, that's nobody else's problem -- there's no contract, no constitutional guarantee that you're allowed to be in business. Making something economically viable is the whole game.
But it seems like everyone just flunked grade school arithmetic.
The cost is a wash at the end. At mid-range restaurants and above, practically everyone tips the same 18-20% on top of the base cost of the meal. If tipping is made illegal, you can expect meal cost across the board to rise by about this much to make up the difference. It's the exact same cashflow. You can pay a living wage on what you're already charging customers on the final card settlement.
They all seem to be imagining this nightmare scenario where they're forced to raise their menu prices, and that prices them out of the business versus their competitors who, somehow, don't need to do the same.
The law shouldn't cater to business operators with no business sense.
They're not exactly wrong, I suppose. A restaurant isn't in the business of food, they are in the business of letting the patrons feel like they are kings for a moment of their life. Being able to throw some shilling at "the help" is part of the experience.
I've experimented with not offering tipping as an option when I have worked on the floor and customers become quite irate about it. I was actually a little taken back at first, but it makes sense when you stop and think about why the business model exists.
That's not say restaurants couldn't pivot into a new business model, but outlawing the old model would absolutely see that business go under. Anything else would be in violation of the law.
> there's no contract, no constitutional guarantee that you're allowed to be in business.
Fair enough. But by the same token, it is curious that there are calls to end the experience customers crave and one that provides a pretty good living for those doing the work. All parties are making the transactions voluntarily.
> If tipping is made illegal, you can expect meal cost across the board to rise by about this much to make up the difference.
Indeed. Which is way better for me as it is easier for me to skim my margins off the top. Humans aren't perfect calculators. They wouldn't notice a few cents here and a few cents there in my favour. The law prevents me from taking a margin from tips, though, so there is much greater accounting visible to the worker there. I suspect the "tipping should be illegal" idea stems from restauranteurs themselves.
I am certainly a proponent! Bring on making tipping illegal. Who doesn't want the cashflow through their own books? But until then, I am beholden to my customers and staff. Without them, I truly don't have a business.
The thing I don't understand though is: How is tipping sneaking in to other non-restaurant businesses, if it's not really supported by the business owners? After all, they're the ones deciding to offer the option to tip.
I don't have direct experiencing running a retail business outside of hospitality, but I would venture to guess it is the only way to retain staff. After all, if you are the worker, why would you work at the store that refuses to allow tips when you can just as easily go to the store next door that does?
Superficially, it is true that the business owner gets the final say, but they don't get to make the choice in a vacuum. You don't have a business without staff.
That depends on what state you're in. The Federal minimum tipped wage is $2.13 per hour and has not increased in years. (If wages and tips, combined, don't equal the minimum wage of $7.25 per hour, teh employer is supposed to make up teh differences.)
A number of states have set a different minimum tipped wage, just as they have set a different minimum wage. Seven states have the same minimum tipped and non-tipped wage. (California is $16 for both tipped and non-tipped employees.)
Are you under the impression that this is some kind of unobserved Schrodinger's Cat restaurant? There is no depends. That's what it is. It has already been observed. The state within the box is known.
But IMO it should be a measure of the service provided not an expectation pushed on the customer. A nice gesture given by the customer.
I remember a visit to the States where I stayed with friends, so got to see “Real America”, not just tourist traps. On my visit when we were just chilling out I remember my friend’s parents ran a Limo service and the discussion they had because one rider hadn’t tipped the driver, and who they were going to call them up and demand a tip. I can remember thinking that shit just wouldn’t fly back home and if I got a call demanding a tip after the fact I would just laugh my head off and put the phone down.
But it’s a different culture I suppose, one I still can’t get my head around.
EDIT: I see how it would be hard to change right now, IMO it would have to be gradual. Servers can easily make more than their wage just in tips, removing tips and paying the staff the same "wage" as if they got tips would have to put that increase of costs on to the products, which the avg customer will baulk at even if they are paying the same overall.
Which is why your server wants you to tip in cash, because then there's no official record of the tip.
P.S. to tipped employees, paying taxes sucks, but cheating yourself out of SS credits by not paying your taxes sucks more in the long term. Especially if you wind up with some disability in early adulthood that limits your work capabilities. You want your pay history with the social security administration to be as long and as high as it can be, so bite the bullet and pay your taxes on your tips too.
That theoretically makes sense, but I've never actually seen that. If I'm paying with card, it's almost always added to the total bill, so there's always a record.
Your server probably still prefers you to leave the line blank and tip in cash though.
That was the best part about being in Europe. Tips were appreciated whereas in america, wait staff expect them and feel entitled to absorb 25% tips.
The problem is that the greed has exacerbated beyond reasonable greed and now threatens social cohesion, and commerce. The guilt with tipping, or not tipping enough, or when they bring the card swipe to the table and look at you while you tip. It's.. awful. Simply awful.
I am tired of tipping for what seems to be the basic function of a job, then being tacitly or overtly being guilted into tipping more. In my large American city is the reason I don't go out as often.
Also there are some cafes and restaurants that have 10% surcharge for public holidays, etc. So the hidden costs are creeping in, but thankfully not mainstream yet.
This is increasingly common in NZ but also entirely justifiable as staff must legally be paid time and a half on public holidays and wages is likely the largest component of the restaurant's costs
This is similar to 'free delivery' on Uber Eats which still has a service charge--it's a delivery service! All it means is there's no extra delivery charge on top. Plus priority if you'd like that maybe still warm. It's all a meaningless cash grab.
This is perhaps a consequence of student debt nightmare from worthless, over priced college degrees. People waiting tables and serving coffee now are "highly educated" with expectations!
My whole point is that it's not reasonable not to take tips in the us today.
I can't imagine we want to change that. Allowing someone to give endless amounts of alcohol to a customer without any repercussions is rife with problems, and removing the ability for a customer to pay a vendor for services rendered would undo everything we know.
This is an absolutely bizarre take. The fact that bartenders have liability to not serve patrons absurd amounts of alcohol, has no bearing on what the transaction is "technically" between. If you really want to get down to brass tacks, I doubt the merchant account on the credit card machine is going to the bartender, nor is the revenue showing up on his tax returns. Moreover, bartending isn't the only profession where you take on liability. Doctors are liable for malpractice as well. Does that mean you should tip your doctors as well?
Again, this is a bizarre take. The fact the person is the proprietor of the business doesn't mean you're "tipping" them by mere virtue of patronizing their business. Taxi drivers also operate as independent businesses, but it's a stretch to call the mere fact of paying your bill (ie. without adding anything extra) "tipping".
Imagine I'm your server at a restaurant. You agree to pay the restaurant $20 for the service it rendered and, separately, me $3 for the service I rendered, the latter of which oft called a tip. I now have $3 in hand. What more am I going to get "on top"? I've never heard of such a thing.
Are you somehow confused in thinking that the restaurant is taking $23? That might be reasonably described as "on top", but doesn't happen, so would be nonsensical to discuss.
That's just a clever way of pretending that tipping is like buying banana from a grocery store, but there's a pretty big difference between the two, even if in both cases money is exchanged for services rendered. For one, the server has no ability to set a price and has to accept whatever he's offered, even if it's zero. That's not the case for nearly every other sort of transaction.
Nonsense. In most jurisdictions the server is given full reign over the sale of alcohol. They are well and truly free to reject your request for a drink and there is nothing the venue can do about it. If you are not willing to pay their price, they most definitely can halt service.
It is the cultural norm to assume that the customer will pay up in good faith, typically a percentage of the venue's take. Indeed, if you don't pay up they're probably not going to hunt you down. If most people stopped acting in good faith you might see things change, though. There is no obligation for the server to honour your alcoholic drink request.
That is not so much the case for other items. You are right there. The very same server rejecting the sale of a perfectly good meal because you won't pay them would be grounds for them being ejected from the venue, but not so is the case for alcohol. Servers are considered independent operators when alcohol is involved. Which is why an independent operator fee, known as a tip, is paid.
Hence why tipping originated around the sale of alcohol. Although you're right that would also apply to some medical doctor situations as they have the same right to reject service (although that may violate their ethics commitment, which does muddy the waters). The modern adaptation of throwing a bonus at the jug of oil you bought down at the auto shop, which may be your source of confusion, is something quite different. That's not really tipping, at least not in the historical sense.
Of course, tipping isn't required anywhere, and that includes the US. If you don't want to tip... don't?
"No hidden costs. Service included. No tips expected. What you seen on the menu is the real price"
I'd be inclined to choose such a place as a tourist from Europe, who's accustomed to tipping being optional.
https://www.cnn.com/2018/09/27/business/jcpenney-history/ind...
But for people who are currently not tipping or paying less than 20% it would be a price increase.
If the people not tipping or tipping less than 20% were evenly distributed across all age, income, and other demographic groups probably nobody else would care.
Unfortunately non-tipping and low tipping is not evenly distributed in the US. That would need to be taken into account.
They don't want to beg.
I'd be okay with eliminating tipping. Frankly, it would be way easier for me to take my margin if the price was baked into the menu! In a vacuum, it would be silly for me to do anything else. But you don't have a business without the staff. You are pretty much beholden to their whims.
There is a restaurant on every street corner and they are all hiring. If you don't keep staff happy, they aren't sticking around.
The unlimited earning potential would still be there.
Would you be able to give raises comparable in earnings to what they would make from higher "recommended" tips?
As a reminder, the original article concerned people selling "coffee or a muffin", and not "table service at restaurants". Where do your employees fall on the spectrum?
I certainly can't read minds, but I find it hard to believe that someone – especially someone who realized they could ask for higher tip options – would not realize that they could also ask for a higher salary. You have to be pretty savvy to make it as a server. I would be surprised if any of them were that out to lunch, but I don't have concrete data to go on.
I get higher salary requests too – and usually have to fulfill them, you don't have a business without staff – but that isn't the instance I was talking about. This doesn't really have any relevance to the topic at hand.
After all, if you are the server, you're going to want the highest tips you can get even if you also have a higher salary. Why wouldn't you? Let's be real. They are not doing the job of a server just for fun, they are there to maximize profit.
> Would you be able to give raises comparable in earnings to what they would make from higher "recommended" tips?
I wouldn't have much choice if that is what they wanted. You don't have a business without staff. I guess what you are asking is if it would bankrupt me? Who knows? There are too many hidden variables to even start to guess. I mean, you have to be pretty savvy to make it as a server. We all understand that there is some tipping point where bankruptcy becomes inevitable, so servers wouldn't push for a million dollars a year or something. But assuming you mean within reason.
> As a reminder, the original article concerned people selling "coffee or a muffin", and not "table service at restaurants". Where do your employees fall on the spectrum?
A segment of the staff would fit into that end of the spectrum. Unfortunately, the awful state of software in the industry means that variable tipping options wasn't a technical choice (absent of running two entirely separate system). As such, they got pushed into the same rates the other restaurant staff whether they liked it or not. I didn't hear any complaints, though. If they start asking for lower tipping rates, I might have to find a workaround for the technical limitations. But so far it hasn't come up (and I will be completely shocked if it ever does).
Are they savvy enough to figure out you wouldn't give them a large enough mass raise, but would raise the suggested tip levels and pass the issue on to the customers?
Are they savvy enough to rig things to get a higher tip, even though the overall effect is worse for the restaurant? (Which I've read about in previous stories about tippping/no tippping. Like giving poor service to people they know won't tip well, or telling lies about the state of the restaurant to get a sympathy bonus.)
Are they savvy enough to avoid getting a "worthless, over priced college degree", as richrichie suggests is the fundamental issue?
Is this request for higher suggested tip rates because they "now are "highly educated" with expectations"? Because your description to me sounds like they are correctly using their market advantage, which doesn't require a college degree.
That is, everything you say can be true, but not at all support richrichie's (deservedly, IMO) downvoted comment.
Your response also sounds like I am correct, and it's not the people who are behind the counter serving muffins who are the main driver of the change in your restaurant's policies, bur rather they are the secondary beneficiaries of changes driven by your (traditionally tipped) wait staff.
They're likely savvy enough to know that if I can cashflow what would have been the tip, it works in my favour. There is good reason the workers (and, quite often, customers!) prefer to keep it a separate transaction. Sucks for me, but what can you do? You don't have a business without staff (and customers). They hold all the power.
> Are they savvy enough to rig things to get a higher tip, even though the overall effect is worse for the restaurant?
No doubt to the extent that it is to their favour. They most certainly aren't there for my benefit.
> Are they savvy enough to avoid getting a "worthless, over priced college degree", as richrichie suggests is the fundamental issue?
Perhaps, but pursuant of a degree is always done for the feel good emotions, not rational decision making. Not even the savviest person alive is able to keep all emotions at bay. Sometimes you just gotta spend money to get laid.
> Is this request for higher suggested tip rates because they "now are "highly educated" with expectations"?
Well, if we look to the historical record it does not appear that servers always had savvy, but that the rise of savvy people taking serving positions has raised the bar (although that could be the result of not having good data rather than some actual change).
What we do know is that colleges flat out won't allow anyone without savvy into their halls, going to great lengths to banish anyone who might try, so as a result there is a strong correlation between having savvy and having college debt. Did savvy people start taking serving jobs because they had to in order to service the debt? It is quite possible.
> That is, everything you say can be true, but not at all support richrichie's (deservedly, IMO) downvoted comment.
Okay....? That's fine. I couldn't care less about what richrichie had to say, and I care even less about someone pressing an arbitrary button that does nothing.
> Your response also sounds like I am correct
Let's hope. As long as it isn't me that's correct. I can think of nothing more defeating than spending all that time writing comments, and then not being able to learn anything from it because I was already correct.
What historical record do you refer to?
Servers have always had savvy, and started unionizing in the late 1800s, including a wave of strikes in 1912 and 1913. This didn't require a college degree. https://restaurantworkersunion.org/allarticles/nycrestaurant... says three of the demands were:
"The first demand was for a $20 minimum weekly wage for waiters, which would largely eliminate the tipping system. The second was for a universal eight-hour working day, which would replace the much longer shifts that many had been forced to work. The third demand was for the abolition of private employment agencies, which often took portions of worker’s pay in return for securing a job."
As for "colleges flat out won't allow anyone without savvy into their halls".
How do colleges measure "savvy"? So-called "legacy admissions" are not based on savvy. If someone is admitted for being a good football, water polo, or lacross player, does that automatically make them more savvy than being a good Pokémon player?
If your parents are rich enough to pay for classwork, SAT, and ACT tutors, does that make you more savvy? (To say nothing of parents who have donated millions to the school over the years, and just happen to have their kid accepted there.)
I may have done well on my SAT and got good grades (which is enough for many colleges), but that did not make me savvy in any sort of business sense that would apply to a waitstaff position.
Acting and improv training would have been better, and that doesn't require a college education (likely one of those "useless" degrees).
The union leaders no doubt had savvy. Those who needed to lean on those who had savvy are not demonstrative of the sort. After all, that's the whole reason people join unions: To outsource savviness to those who have it, improving one's unsavvy standing within some kind of community.
> This didn't require a college degree.
Well, of course. Some jobs require licensing, but the "degree required" you see on job advertisements is just that: An advertisement. It communicates the idea of "You might like this job if you have an interest in this type of scholastic program." It has nothing to do with any kind of literal requirements.
> How do colleges measure "savvy"?
They try to measure sexual attractiveness. That is what college sells, after all: A community of people in their sexual prime that are prepared to regularly mingle.
It requires savvy to make oneself sexually attractive, though. While anyone can be attractive to someone, savvy is necessary to make oneself attractive to a reasonably wide audience. Being attractive to only one other person isn't typically going to get you admittance (of course, no measure of the nature is ever 100% perfect).
> If someone is admitted for being a good football, water polo, or lacross player, does that automatically make them more savvy than being a good Pokémon player?
Automatically, no. Statistically, those sports players do tend to be more sexually attractive to a wide audience.
> I may have done well on my SAT and got good grades (which is enough for many colleges), but that did not make me savvy in any sort of business sense that would apply to a waitstaff position.
I look forward to receiving your application. Someone with savvy, but not the right kind of savvy, would be the perfect hire.
I hate this sentiment. Not every degree is going to lead to a high paying career, but knowledge is worth having in it's own right. If people are passionate enough spend four years studying art history or poetry or underwater basket weaving then I'm glad we are sharing and preserving that knowledge in our culture. I don't like tipping culture, and I don't really think the two are related, but if tipping is the only way that we could get a generally well rounded educated population then I suppose I'll prefer tipping.
There's probably some non-zero value in learning underwater basket weaving or whatever, but I don't see why it should be publicly funded. I don't see any fundamental difference between someone wasting 6 figures on an useless degree, and someone wasting 6 figures on a useless hobby.
On top of that, in the US a lot of time in an undergraduate program is spent on general education. Someone who’s degree is in underwater basket weaving still has more education in general than a person without a degree, and that’s also good for society.
Yes, there exist (often already very privileged) students who have no career motivation for going to school and are just going for the knowledge and culture, but the vast majority go for career reasons.