Tipping: How Gratuity Replaced Fair Wages in U.S. Restaurants
7shifts.com
7shifts.com
That said, minimum wage is minimum wage. If an employee doesn’t make that up in tips, the law is that the restaurant needs to make up the difference. So it’s a complete non sequitur that $2/hour isn’t a living wage.
If that isn’t happening, the article is burying the lede: the problem isn’t tipping, it’s rampant wage theft. And I don’t need the complete history of tipping to know that wage theft is bad.
Despite this the general attitude is such that most people are cheap for anything less than ~20%, I’ve heard that even the servers running the take out stand expect these types of tips. The sense of entitlement is crazy, it’s such a low skill job and I’m so rarely actually impressed by the service or even attention I receive (there’s a general/generational degradation of all service that’s occurred in past say 15-20 years).
But for plenty of others, the current situation sees them being exploited and payed less than minimum wage. It isnt a rare few either. I'm not okay with a situation where a large group is being exploited below the poverty line, just because it works out better for another large group.
Personally, I don't believe that at all. I do conceed that, if this were the case, things would be fine.
At the same time, employees know that tips are incredibly lucrative for them, and would rather have a sub minimum wage day every once in a while for the on average above minimum wage pay. There’s a reason servers don’t want to get rid of tips.
That being said, none of this is my problem as a customer. If you choose not to pursue your rights that’s on you at the end of the day. I’m not going to feel bad that your scheme to have me subsidize your wages failed.
Whenever I dine at such a place, I give a 100% tip because it’s easier math and it incentivizes me not to patronize such businesses. (I only go with friends and I never make the suggestion.) Just saying that because I disagree with this perspective; do go to these restaurants and don’t tip if that is your choice.
Tipping used to be a gratuity. It’s a way to say, “Your effort was exceptional and I want to show you how grateful I am for it.” Tips are no longer exceptions, nor gratuitous: they have become an obligation, as you say. I reject this; I am not responsible for the wage of someone I did not hire. I’m not even responsible for the success of the business, except that I owe them what I agreed to pay when I ordered. It’s like every restaurant prices their menu incorrectly and they expect their customers to correct them.
(There is a Prisoner’s Dilemma for the restaurants: if I start paying my staff well, I have to raise (advertised) prices but people still think tipping is necessary so they’ll see my increased prices in that context and be more likely to go to one of my competitors. I don’t mean to say restaurant owners have an easy out, just that the answer to patronize these businesses regularly, while also tipping generously, perpetuates the situation.)
Is it wrong for someone to order carryout from such a full-service restaurant and not tip? If so, what would they be tipping for? If not, how does the wait staff get paid from the order when they’re primarily paid with tips?
It’s not quite “the price you see is the price you pay” but it’s progress.
Put another way, if a waiter gets zero tips their pay calculation reduces to what a fast food worker makes.
Most of the sit down restaurants I frequent now use mobile pay terminals so at least that bit is less awkward. They leave the terminal at the table and leave, so you can pay at your leisure.
No need to flag down a waiter, tell them you want to pay, yes, by card, and then watch him getting flagged down by 5 other guests until he makes it back to you with the card reader 10 minutes later.
The math is not the problem. The problem is that it's a unspecified amount, therefore it's up to you to decide on the spot how much to pay the person in front of you. This creates a social pressure towards paying more, and the results are obvious: the expected tip keeps rising- and in fact it's already reached completely absurd levels.
It goes like this:
I have lots of money, you do not. if you wait on me hand and foot in just the right way and if I like it just right I might give you some money. Or not. But you have to dance to find out.
Utterly disgusting, and of course it is normal in a country with severe income disparity - people who have so much money they can waive it around to get people to dance for them while the people dancing don’t even have healthcare, maternity leave or other basic human rights.
The fact some establishments require female servers with certain physical attributes to dress in extremely skimpy clothing just reinforces this. It’s utterly vile.
(Some people will point out this is just like work and pay on general, but there are laws in place forcing the employer to pay a certain amount for a given amount of work. Not so with tipping)
> there are laws in place forcing the employer to pay a certain amount for a given amount of work. Not so with tipping.
The laws apply a minimum pay to a fixed amount of time working. Not an amount of work. If you do 2x the amount of work as a coworker in the same amount of time, you will be paid the same.
I think you might also be confusing tipped minimum wage with actual minimum wage, and I think the article did no one any favors there.
There are two problems. Requiring an employee to wear extremely skimpy clothing, and tipping.
> I think you might also be confusing tipped minimum wage with actual minimum wage, and I think the article did no one any favors there.*
I am not, I understand the difference perfectly.
It also muddies the waters around tipped minimum wage and minimum wage in unhelpful ways. You can see many people in this thread are confused about it.
A more helpful thesis would be tipping leads to wage theft which is bad.
Combine that with the fact that tourists everywhere are more difficult and time-consuming to deal with and it’s a recipe for resentment.
Just last week I saw a group of Spanish visitors to NYC create a confusing maelstrom of orders at a coffee shop and then override the tip to zero, all while shouting across the room to each other.
The servers and bartenders are always very explicit about the tip being included.
This feels much more fair to me.
Taxes also aren’t included in the menu price.
I can’t imagine any of the servers who don’t like the status quo or that would come out better even if they made $20 an hour.
That's insane as well. Why aren't they?
>>If they say up front on every menu that the tip is included and the servers/bartenders are up front and you can actually remove it (I guess you can put less on the bottom line), what’s the issue?
Nothing. Some restaurants in London started doing this now, the menu says a service charge of 10% will apply unless you ask to remove it and very few people have any issue with it.
This is what I don't get about tipping percentage based. It makes no sense to me. The serving effort is exactly the same between a 10$ salad and a 100$ steak. Take plate, bring plate, place plate on table, smile and check back. That's it.
It gets even more obnoxious when dealing with drinks. A 20$ bottle of wine requires the same effort as a 200$ bottle of wine. (well, except that pretentious bs about breaking the glass, but that's ridiculous anyway)
Same goes for drinks at bars. 5$ shot of your cheapest whiskey takes the same effort as a 50-500$ of a top shelf / ridiculously rare whiskey. Tipping a percentage of that makes absolutely no sense at all, and people defending it with "you get better service" really should visit high end restaurants in London / Paris etc. and see what "great service" really means.
Of course it makes sense and I think you understand it even if (very reasonably!) you don't like it: it's a rough but effective effort at a progressive taxation/extractive pricing scheme. They're trying to extract the maximum amount of money from each customer for each individual transaction [0], orthogonal to effort or value. They aren't a government of course though and don't have full visibility of anyone's exact income or personal psychology. But as a simple proxy somebody buying a $200 bottle of wine is more likely to either have a lot more money or (just as good here) simply be in a mood/occasion to splash out and due to how humans tend to judge relative expenditures they're a lot easier to convince a $30 tip is acceptable if it's 15% of the price instead of 150% the price. Even if they aren't rich and/or are typically value-oriented, on a "special occasion" it's probably going to be easier to squeeze them harder while not framing it as getting squeezed. Once people commit to paying higher numbers that frames the rest of their economic decision making for the transaction.
And clearly it does work for a lot of places, at least in the short term, same as other exploitive human economic hacks (like the predatory rise of microtransactions in video games). It lets the businesses (including not just owners/managers in this case but many employees as well) make a lot more money.
----
0: Ie, treating it as a non-iterated game theory situation, which probably is rational for a lot of restaurants and particularly tourist ones where odds may be that they will only ever see any given customer once (or perhaps single digits, close enough) in a lifetime. In an iterated game, where a large/critical percentage of business depends on local repeat customers, it can make more sense long term to build loyalty by not feeling exploitive and have lower-per-transaction profits that are steady over years/decades. And I have seen that play out to some extent. Some places may also split the difference, such as by offering special local discount scheme sort of things, or having very different pricing/offerings certain days of the week when statistically very few tourists are there vs locals.
In Switzerland a lot of the restaurants that have moved to tablets for payment, and the payment screen pops up a "suggested tip" window with a few options. They might be a bit lower than the standard American tips but it's still there and it never was before.
There's no custom of tipping that much at any of these places, but I feel cheap just clicking the lowest (no tip) of 4 options. Maybe all the time I've lived in the US plays a role here but it seems like it might just be the decoy effect [1] applied to tipping. It will be interesting to see if consumers see this as a dark pattern and push back.
You dining experience is affected more by other people: person who actually prepared the dish and person who cleans the toilet. Their poor work can easily ruin your dinner experience, but tips are expected to the person walking with plates.
A lot of restaurants have "tip sharing", "tip out", "tip pool" where the waitstaff share some portion of their tips with the hostess, foodrunners, cooks, etc. So the customer is really tipping all the workers except the managers.
https://www.google.com/search?q=waitstaff+share+tip+share+ti...
Poor latinos are working overtime on minimal hourly wage as dishwashers, basic food prep, etc and no tips for them.
That is my experience, it would be great if other places are more fair.
Tipping appears nowhere in the Bible. However, the practice of fair and honest trading appears many times.
German service (not just in restaurants) is proverbially bad, even among Germans. See https://de.wikipedia.org/wiki/Servicew%C3%BCste
Berlin Mitte: Agree, yes, atrocious service, many arrogant people, no credit cards because of tax fraud (Lived the startup life in Berlin for 20 years, "Monsieur Vuong" was IMHO the worst for service and arrogance - but then there is "Il Pane e le Rose", lovely people, went there for 20 years, or "Restorani Tbilisi", my favorite restaurant in Berlin, most excellent food and service).
Nice city somewhere else: No. Here in Stralsund we go to 5 restaurants regularly. All are nice, have excellent service, people are friendly, prices are fair (But I so miss Georgian food).
Whereas in the US, it’s all about the tips. And once you’re done with your meal, you’re just delaying the next tip.
Restaurant owners need to balance between overstaffing (and thus spending too much) and understaffing (and having service suffer). The optimal point is different if your opportunity cost is $2 vs $15 per hour.
Thus, in a US restaurant, on average, you’ll see more waiters than in most EU places, given the same amount of tables.
You might've hit what bugs me about dining out (in the US).
My favorite place for first dates was this particular cafe-restaurant, where a server would come to your table for your order, eventually, but otherwise didn't bother you.
For example, they did none of the apparently standard barge-in of your conversation, 10 minutes after you're served, asking how everything is.
Also, in restaurants in general, some servers have mastered the art of refilling water glasses like a ghost, and somehow asking if you want to refresh your drinks without interrupting your conversation.
But others either aren't able to do that, or come from a school of thought that the top priority is that guests be conscious of the server's willingness to serve.
I tip 20%+ in any case, but I wish more servers would be more subtle.
Why would they change their behavior if you tip anyway?
I'd guess what's needed is to promote a different school of thought via broadcast (e.g., through lifestyle articles and restaurant trade publications).
Though it might be that I'm not representative, and more US diners want to go through the rituals of being served conspicuously, as part of the experience.
And most importantly, set the percentage limit to 50%, so owner would have to raise menu price by 100% if they want to simply offset it.
This way, customer don't feel like they are paying twice, the service team still get tips to supplement their lower income.
Of course the restaurant owners won't agree to this because now they are the ones subsidizing the waiter's salary instead of the customers. Just like it should have been.
Use the agreed upon price set in the menu.
We won't see any real increases to our standards of living in the US again until we bring electric prices down and we start converting more things in the ground into things which make our lives even easier. Climate Change™ has been a wonderous success in slowing down Western inertia, though don't mistake my sentiment as faith in the current administration (lol).
It's like working on comission. Americans are rich (comparatively, globally). For all of our gripes we still have the highest disposable income by a long shot. Many can and do enjoy tipping their waitsaff gratuitously in exchange for their service. It's the only way serving can possibly ever be anything more than low wage drudgery, given the margins of food service.
If you can't afford to tip, you cant afford to eat out, plain and simple. Go to the grocery store.
I can’t speak to if that’s true but what I can tell you is that on credit card transactions they saw a 7.6% tipping rate. The drinks at this festival ranged from $8-15/ea so depending on the price, a $1-2 increase that was shared with the bartenders would net them _more_.
One missing data point here is cash, cash payments accounted for half of the credit card payments and I don’t track cash tips (it would be worthless to try). Maybe people are dropping $20/$50/$100 bills in regularly that blow out my calculations.
All that said, I assume the truth is somewhere closer to this being a collective action problem. Individual server might think that they can beat the curve (perhaps correctly, my numbers are averaged) which causes them to advocate for tips instead of more consistent wages.
Either way, it's a sad state of affairs further complicated by bringing drugs (alcohol) into the mix. I'm sure tips flow more freely when people are cognitively impaired, which is a gross thing to prey on IMHO. Also add in the "I'll make this a heavy pour if you tip me more" (aka stealing).
One friend shared with me in detail how she plans and practices every customer interaction to maximize tipping. The more I learn about this the more the restaurant industry feels like a scam to me.
For example, if someone orders a mixed vodka drink, she will ask "do you want that with Absolut or Stoli?" two of the higher priced vodkas they offer. She won't even mention that you can also choose the well vodka for much less.
She also told me of another trick she often uses, especially with large parties on busy nights. When she first goes to the table she will ask "has anyone been by yet? No? Oh this isn't my section but I'll be happy to take care of you since you've been waiting..." Only it really is her section. According to her this always results in higher tips because it gives the impression that she is going out of her way.
My reaction to this and the escalating tip expectation has been to pretty much stop going out to restaurants. Instead, I've learned to cook and host dinner parties. I enjoy it so much more (and I refuse any attempt to tip me ;)
Precisely. Notice that I said "vast majority", certainly not all. Some people see serving as a labor to perform. Others (rightfully) see it as hospitality, and act acccordingly. It's no surprise who earns more, and who feels resentful of that. At the end of the day you are shucking and jiving to make more money than your physical labor is worth, and some people just don't get that. But the ones who do would never want to give up tips because it is an outsized form of income that a wage could never touch. Your festival example is a bit nontypical as they generally rely more on regulars at a fixed location, which is why servers will usually negotiate a higher hourly rate for things like that.
All of them. I ask most that I meet. None are willing to give up tips
Absolute bollocks, but I do like the idea of tipping at the grocery store, rather than just paying an advertised price that i can consider before entering.
Since I suffer from PTSD, it has been very difficult for me to discern when I was receiving bad service, disrespect, outright contempt from "the help" because of who I am or what I look like, or what my name/address was. I really just put up with it every day, as an unavoidable fact of life.
And it really came to a head during the pandemic; I was using GrubHub extensively and they were systematically stealing my drinks. I'd order one drink--missing. I'd order two drinks--missing. I was having a meltdown during each reimbursement call, 3 times a day every day!
And my friend counseled me that perhaps I just shouldn't return my business to a place that treats me like that. And I was like, hmm, could it be that easy?
And I began to test it--I switched to DoorDash and they've been fair and honest every day.
I began returning to restaurants where I had noticed they smiled to me and treated me kindly, like a human being. And the difference was amazing.
Of course this worked out to mostly Catholic proprietors around town, whether Italian, Vietnamese, many Latino-run kitchens, whatever.
And yes, "obsequious" sort of describes the experience sometimes. They really do value my business, especially at the struggling Irish Pub downtown, or when I pay cash to the elderly Vietnamese lady on borrowed time in the dilapidated shopping center.
I can still sort of put up with thinly veiled hate when I walk into a really basic fast-food joint. But I've really curtailed my explorations of new restaurants.
And I feel much better tipping the drivers and the waitresses who really do give me good service, and you know, treat me as a human person. I had begun to think it just wasn't possible.
But I hate it. It's not "tipping" - which is to give some extra to show appreciation for service. It's an underhanded guilt trip to make you pay more than you thought you were going to pay for your meal.
I especially hate "tipping" for cases where no service was provided. It's really just a surcharge on the coffee/whatever.
Raise prices and drop the tipping.
I ate at a restaurant recently where they did just that. They had a little sign on the table that said something along the lines of "we've raised our prices 20% to pay living wages and we don't encourage tipping". I left a small tip anyway, but it was a true tip.
What was shocking how many places I would say 80-90% have the "tip before service" payment terminals.
Many of these type of places were those I would not associate with classical service tipping - food counters, bagel, donut, coffee places where you pick up the order from counter.
Then there were some serious restaurant style places with this same type of payment system.
My American friends informed that technically you can skip tipping in these places.
Still this "tip ahead"" seemed really a bit of dark pattern - you feel like if you do not tip you get Tyler Durden clam chowder treatment.
In law the restaurant must make up the difference if tips fall short of the minimum wage but, we are told, wage theft is so common that most restaurants simply don't pay it. Some will even fire staff for falling short on tips.
Why are we supposed to just look the other way while we tip to support criminal wage theft?
Fair and honest pricing would remove a huge enabler to this wide spread criminal activity.
https://youtube.com/watch?v=KHDpVPKuwjY
Also, this is my favourite skit about tipping:
I hate even more that “taking a stand” against tipping doesn’t solve anything and just hurts the people I’d like to be helping.
I work for a POS company, I hate tipping screens, but there is no way to not offer that feature.
I run my own food festival payments company, I was forced to add tips for Bar payments but managed to hold firm on not adding tipping to the food vendors (even though they complain constantly about it, the entitlement is insane “how am I going to get people to work without tips?”, uh, pay them more?).
My sister owns a bakery, they added tipping because they couldn’t entice people to come work for them even at $15-16/hr unless they also could make tips. This front of house we are talking about, not the people actually making the products (though tips are pooled for back of house), they are talking items out of a case and putting them in a box to hand to customer. Why that deserves a tip I’ll never know, especially since most can’t be bothered to do anything to increase sales and thus their tip.
For the _first_ time in my life I clawed back a tip from a delivery app about a week ago. I’ve had many bad deliveries and bad shoppers but turns out my line in the sand was: 7hr late delivery and the meat and cheese was 70F when it arrived. I hate that _this_ is the only thing that’s caused me to remove a tip. Maybe I should be quicker to clear the tip when the delivery person messes up (happens often).
Because those groups typically tip less or not at all. Although I never found that to be true with women. And “people of color” in the article really means black people. Asians and Hispanics seem to tip normally in my experience.
And for those thinking “omg how racist” — you clearly never worked in the restaurant business in the United States before.
Here is an interesting thread about black people and tipping: https://www.reddit.com/r/Serverlife/s/MGkkDmZgYq
> Server race has also been shown to affect tipping. Black cab drivers receive smaller tips on average than do white cab drivers ... This is true regardless of the race of the tipper – both black and white tippers give white drivers larger tips than black drivers
https://static.secure.website/wscfus/5261551/uploads/Busines... (p19)
That's about cab drivers but I don't see why the case would be very different in restaurants.
Yes, you can trace tipping back to demeaning pre-enlightenment service worker dynamics. But you can do that with almost anything. Talk to a socialist Google worker about the morality of their $350k comp package. As I have learned the hard way trying to convince a local polity that zoning is fundamentally racist (it is), to confront a system you have to address what it is today, not what it was historically.
And yes, tipping is widely abused, especially in the fast-casual and low-mid casual segments of the market. You want to set a N0% plus-up over minimum wage on front of the house jobs? I'm here for it. We're going to put a lot of restaurants out of business together with this plan --- the most abusive sectors of the restaurant business operate on the knife's edge of profitability --- but maybe that's for the best.
In high-end casual and fine dining, though, tipping has nothing to do with master-serf relationships, or really any kind of exploitation. A fine dining server's comp package looks a lot like that of a sales account manager: an untenably low base with a variable comp package on top. The reasons are the same in both cases: because of principal-agent problems. A flat salary for servers (the "living wage" system) breaks incentives: if you're going to make the same money whether the restaurant is packed or empty, why would you ever want to work a Friday? Put differently: tipping gives service staff exposure to the gross upside of the business, and aligns that exposure to the server's own agency in the business --- managing the customer relationship, monitoring the products being delivered from the back of the house.
This is part of the reason that expert servers quit when fine dining restaurants try to flip to no-tipping models.
People complain about how manipulative or stressful tipping is. I think that's pure applesauce. Divide the check by 10 and multiply by two. Or double the sales tax. Your check probably has the 15-20% line figured out for you already. You go into an American restaurant knowing you're on the hook for the tip, like adults in America have done for generations. If it's a scam to fool you into thinking prices are lower than they are, we've all had more than enough time to metabolize and work around it.
Tipping subsidizes owners. But everything you spend in a restaurant subsidizes owners. You're where all the revenue in this industry comes from.
This not the system I would design if I was the Pope of Chili Town. But it's not the moral calamity nerds like us make it out to be, either.
Probably best to tie this all together in a "Lowest listed price is final price" law that includes a hotline for customers to report businesses/staff who retaliate over no tipping. Mainly it's so the agency can send secret shoppers of their own to test for social retaliations/pressure.
Some customers started to input their PIN code (which you sometimes have to do) instead of their total when this was a new thing. It made for some hilarious totals.
One of the most egregious examples I can remember was a restaurant where you order digitally, and when done, you go and get your food/drinks yourself from the serving window. And they asked for tips... ¯\_(ツ)_/¯
Sigh... I do sometimes tip though, never for lunch, but sometimes for dinner.
If there's any logic behind it, why don't people tip their post delivery people for their service?
Well this does happen actually, I don't know how prevalent this is and whether this is getting more widespread, but given the current trends I wouldn't be surprised if it becomes fully normalized eventually.
2) So that tipping is no longer subsidizing the restaurant owners.
3) Also, FFS, when demand is inelastic, the only way to lower prices is MORE SUPPLY (where it's needed). Build the housing, do not stop, just keep going until after we all die.
No, the prices would be more transparent, not higher. You've made clear in other comments ITT that you believe tipping to be mandatory ("If you don't want to tip, don't dine at full-service restaurants in America"), which means you consider prices 15% or more higher then sticker price to already be the rule. Requiring that to be part of the advertised price instead of hidden is purely good for free market efficiency. Anything that isn't fully optional should be part of the advertised price. The employers and employees have superior information for correct decisions, and once a transaction (dining) has already been committed to a superior position of power as well.
And it is a horrendous argument.
You are literally actively arguing for greater inequality.
If a company can not cover their costs with their revenue, then they need to cease to exists.
And ofcause they need to pay fair market wages.
Now, get rid of tipping. The restaurant will raise prices to 23 per meal. And instead of that 3 ending up in the waiter's pockets it will instead be split between the owner and the waiter. Most likely, the worker's wages will be likely suppressed down to minimum wage and the owner will get whatever remains of the 3.
You will need to do more interventions beyond removing tipping to ensure waiters get more than minimum wage.
If we assume that the restaurant owner pays the minimum possible wage out of the revenue, then the claim is correct.
China did exactly that. And ended up with 3 apartments per each citizen. Most of them perpetually empty because real estate is still expensive there.
1. Abolish lower minimum wages for so called "tipped" workers and raise it to a fair value.
2. Make it illegal for any business to solicit tips.
If a customer wishes to tip then they certainly can but no business should be allowed to pressure you (and just asking is pressure) into paying more than the price they are listing for an item.
Normal service as to expectations - no tip.
Service below basic expectations - manager.
How hard is it to make this the standard?
Pre-tax subtotal has always been my starting point for calculating the gratuity. In fact, if you’re ordering drinks with lunch, I was taught to deduct the bar total as well, and go by food served.
15% a bog standard percentage and completely fair. Especially if it were “many years ago”.
I have taken note that many receipt printers now try to “cheat” us by displaying tip calculations on the after-tax. Even worse, once they run your card, they may withhold that itemized receipt, so you have no information but the grand total! It’s really unfair.
And don’t forget, a rich woman does not become wealthy based on her generosity. Think about it. It’s about how much she can hold onto.
I also don’t understand why we have to tip waitstaff that is paid minimum wage - places like WA, CA, etc cannot have wage that is lower than the state minimum wage.
I’ve worked many a retail job and have had to deal with rude customers, clean up after their mess, etc. Why pay more just because someone told me what the special is and brought me the food? Isn’t that what their job is?
I don’t understand it and I just don’t eat at sit down places anymore. Take out, counter service, or bust.
That's a bit funny. Why doesn't it make sense? There is no meaningful relationship between the amount you spend, fixed brackets like 15%, 20%, 30% etc, and the job the waiter did bringing you the food. It's all made up and unnecessary. You can be expected to pay it before taxes, after taxes, 0%, 80%, only for desserts, only on your birthday... It's completely arbitrary.
If I calculated tip after tax, I’m paying a portion of my tips to the state, and they are already getting their share via sales tax.
I don't care about the loss of karma, I have plenty to spare.
I do care about encouraging positive discussion, and I am afraid I failed badly here.