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Abandon Tipping

Updated on November 2, 2015
Jeramey Conrad profile image

Jeramey is a jack-of-all-trades and master of... a bunch. Two Master's degrees, but I never refer to them for my expertise, I *use* them

Why tip?

Tipping, or a "gratuity" is often expected in restaurants or other service industry jobs, but is it mandatory? In the United States, at least, everybody learns at a young age the seemingly magic (and arbitrary) rule of 15%.

Why do we do this? Because we know that the servers "live on their tips". In other words, the amount they get paid by their employer (the restaurant) is so low, it is below the poverty line. Often the amount is just enough to pay the necessary taxes (Federal Income, FICA, Medicaid, State Income, etc) leaving employees with an official income of $0. Cha-ching!

Thanking for paying your due wage?

A countertop tip jar at a restaurant in New Jersey.
A countertop tip jar at a restaurant in New Jersey. | Source

The American system of tipping is a pain for everyone involved:

  • Diners are put in the position of needing to know what the prevailing wage for the type of work involved is. Does the establishment pool tips, or is this just for your server? Do the servers tip out the bartenders and busboys? Does this server just take your order or are they doing sidework (cleaning and organizing and preparing for the next shift) as well? How much should that sort of work be hourly? Is the restaurant empty, should we have to make up for that? Is it crowded, should we expect them to make a lot more with all these tables?
  • Servers may have a hundred different "bosses" in any given shift. It's hard enough to please one boss, imagine a dozen different priorities, a score different protocols (unspoken, of course), and an untold litany of special "could you just do this one thing?" requests. No wonder customers are called "patrons"! ("Boss" in French and Spanish!)
  • Owners and operators no longer have control over how their employees are compensated. What if you see someone work incredibly hard, pick up the slack for their colleagues, or do the jobs of three people (callouts are not infrequent), and then get paid... half of what they normally make at a typical day. That almost never happens in any job, right? Happens all the time in food service. Or, maybe your lazy co-worker lucks into some generous drunk and confused people who are out celebrating and decide they tip on the $500 bottles of wine that just need a quick opening rather than just the food? You'd be seething as you bring sendback after sendback from some picky customer who doesn't even now what "medium rare" means.

On average, for regular good service how much do you tip?

On average, for regular good service how much do you tip?

See results

The phrasing can be tricky, too.

  • "Gratuity added"
  • "Service Included"
  • "Hospitality charge"

Is this a "charge" or do I have to pay it? Is this the tip? Is all of the money going to the server or is some to the house? Why not just be explicit? "Tips" or "Payment to servers"?

And why do the front-of-the-house (or front of house or FOH -- the hosts, servers, bussers, bartenders, runners, and expediters) get lavished with monetary praise, but not the people who actually cook, prepare, and gorgeously plate your food (Back of house, or BOH)? Under the current gratuity system, waiters may expect to earn a 20 percent tip on most checks, earning upwards of $50,000 part-time at a nice restaurant. But a linecook or saucier doesn’t get extra padding to their paycheck, and the average salary is $35,000 a year for full-time work.

Gratuity included in USA

A restaurant in California includes the tip automatically.
A restaurant in California includes the tip automatically. | Source

New York State recently made headlines when Governor Cuomo implemented a "wage board" which mandated a new minimum wage for the fast food industry. Many see this as a testing ground for an unqualified substantial increase in the minimum wage across the board. Either way, in incremental steps between now and 2021, fast food workers will see their wages hike up to a new $15 an hour minimum.

But what about "slow" food? In many cases the minimum wage for tipped employees is $2.13 and most New York servers make an hourly wage of $5.00. But, wait a minute, isn't the city’s minimum wage $8.75? The five dollar wage is called the "tipped minimum," an amount employers are allowed to pay as long as gratuities bring up wages to be equal to or greater than the full minimum.

So if you serve you might get lucky and have a 40 hour work week, which is $200 a week in your wages. Or roughly $800 a month. $10,000 a year. In other words, poverty salary.

The difference is that the customers are expected to make up the difference, out of their own choosing whether you make $30,000 a year or $60,000 -- instead of your meager $10K which would qualify you for just about any government assistance program available, while working fulltime no less!

How can we pay the BOH staff more and ensure servers' salaries are even (either across the board at the location (eliminating the influence good and bad luck have on their wallets) and across the calendar)? Pay everyone a reasonable, living wage.

We can't extend the extant tips to everyone who works in the restaurant. Gratuities are the legal earnings of the waitstaff. Pooling tips is an acceptable way to divvy up the night's collective bounty among the wairers, bussers, and bartenders, but owners can’t direct these funds to back of house staff like the cooks and dishwashers.


No tipping on an Irish bill

A check from a cafe in Ireland doesn't request a gratuity.
A check from a cafe in Ireland doesn't request a gratuity. | Source

By ending tipping we can pay everyone in the restaurant industry more equitable hourly rates or salaries. There are progressive laws on the books that are going to be raising the wages across the board over the coming years, and these current imbalances will only become exacerbated later.

New federal regulations make more employees eligible for overtime and many states have or or are developing sick leave laws. Nobody wants the embarrassment of being a successful restaurateur and yet still seeing one of your best servers leaving your business to work the register at Burger King earning a steady $15 an hour in 2018.

The solution is simple. Raise all prices by 15% (or less) and make it obvious that tipping is not needed. Pay everyone 10-20% more. Tips can still be included, but it would in a more European-like system. Something small or sentimental to show appreciation. Customers will get the hang of it.

Don't think it'll work? Checkout:

  • Upscale Pittsburgh eatery Bar Marco, that abolished tipping, started offering all employees a base salary of $35,000 and tripled their profits. After a few months of the experiment, employees are expecting to see $48K for the next year.
  • The Linkery restaurant in San Diego, uses the 18% "service charge" but distributes it to all staff as it is not a "tip". They've seen improvements in their food and sales.
  • New York City spot Sushi Yasuda after 14 years stopped offering the option of leaving tips in 2013, and all employees get salary, vacation, and paid sick leave

Obviously, unlike some, I am not advocating you stop tipping right now, hoping to topple the system via painful revolution. But look out for restaurants in your area that don't encourage tipping, it might be easier than you think. Burger-sensation Danny Meyer (Is there a Shake Shack near you) of the Union Square Hospitality Group is eliminating tipping at all of his brands in 2015.

Will you still choose to tip?

After reading this, how do you feel about tipping now?

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© 2015 Jeramey Conrad

Comments

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  • paperfacets profile image

    Sherry Venegas 2 years ago from La Verne, CA

    I do not think I said it very harshly. Maybe just the truth hurts. The Rep. Party Representatives ( in States and National) are the majority of the time, against all manner of pay raises and even assistance to the very poor. It is part of the record.

  • tirelesstraveler profile image

    Judy Specht 2 years ago from California

    Paperfacts, "Harsh words".

  • paperfacets profile image

    Sherry Venegas 2 years ago from La Verne, CA

    Even with dozens of cooking spots on TV, the new generation eats out a lot. Your plan of no tipping is a hard sale for many, though. Too many spenders think others in some groups do not deserve a living wage. (Think: Republican Party).

  • tirelesstraveler profile image

    Judy Specht 2 years ago from California

    You are correct in saying you are paying/per foot. Twenty four thousand a year ,which is what you make, assuming you work a forty hour work week, doesn't even pay for a one bedroom apartment within 30 miles of San Francisco. How is $24K improving the lives of anyone? That wage with a fifty to hundred dollars a night in tips might help someone manage. The real key to helping people is to encourage them to learn skills and get jobs which pay more than minimum.

  • Kailua-KonaGirl profile image

    June Parker 2 years ago from New York

    Jeramey, And indeed you have succeeded with your intent. Well done!

  • Jeramey Conrad profile image
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    Jeramey Conrad 2 years ago from Northeastern United States

    Hi Kailua,

    Yes, that my fault as well as it is sometimes hard to discern in comments whether they are meant directly for the article (or author) or just pontificating on the topic separately.

    Although, once again, I did mention the gradual process in the hub, "in incremental steps between now and 2021".

    Of course in the interim on an individual level tipping can, should, and MUST be done by customers. My goal was to bring attention to the need for a systematic removal of tipping as a de facto, yet exploitative, part of our culture.

  • Jeramey Conrad profile image
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    Jeramey Conrad 2 years ago from Northeastern United States

    Hi Tireless, I think you misunderstand. On two counts.

    My theory works great, especially in San Francisco. Those cities that have implemented a $15 minimum wage have seen an across-the-board increase in quality of life for the working class. Tipping is still an option *as a tip* but not as a way to subsidize the employer for not paying a reasonable modern wage.

    As to how much things cost in Starbucks, that is completely besides the point. I don't California Labor Law, but in general Starbucks employees are treated like regular employees (as in Fast Food or retail or any other business) not as "tipped employees". Their tips (pooled) are just that, a tip. They at least make a minimum wage like at an In-and-Out (I'm not completely oblivious to CA!) or any other storefront work, which is different than the minimum wage for what the IRS considers a "tipped employee".

    Hope that clears it up, and thanks for the comment!

    Also, SF being a dense city on a tiny peninsula -- prices have very very little there to do with labor costs. You're paying by the square foot, whether for a sandwich, a sweater, or a monthly gym membership -- you're paying a markup for the real estate, not the product or service. Labor costs is a drop in the bucket.

  • Kailua-KonaGirl profile image

    June Parker 2 years ago from New York

    Jeramy, no argument, just my opinion. Apologies if I came off as if I was indicating one. And yes I did read it and well written, BTW. However, the $15 is not going to be seen immediately, as you did say. It is my understanding the approval was signed by the State Labor Commissioner, but will be a gradual increase to $15. They are guestimating in NYC by 2018 and the rest of the state by 2021 IF it does not receive any opposition from the Senate. I could be wrong, but I don't believe it is exactly a done deal yet, except for Syracuse.

    I guess the only point I was attempting to get across to anyone reading is that the people working as servers in the restaurant/bar industry are making substandard wages and deserve to be tipped until the wages are better regulated in all 50 states.

    Often people who have never worked in, or known anyone working in, this industry, do not understand how the tips we leave are actually paying their wages and I did want to clarify that not everyone earning below poverty wages is eligible for government assistance.

    I am sure that anyone reading this article is now so much better informed.

    Again, apologies for writing in haste without thinking it all the way through before posting.

  • tirelesstraveler profile image

    Judy Specht 2 years ago from California

    Your theory doesn't work in San Francisco, where wages are good and you are still expected to tip. I bought a salad(It was very good) and a small coffee during lunch last week and it cost $12 at Starbucks. I try to never eat in the city if I can avoid it. Well maybe your theory of abandoning tipping would be good here. The food would be more affordable.

  • Jeramey Conrad profile image
    Author

    Jeramey Conrad 2 years ago from Northeastern United States

    That's what I'm confused about William, you seem to be putting words in my mouth. I'm not against tipping for tipping's sake, I'm against the ingrained process whereby clients are directly paying the employed person's actual salary, not giving them a tip.

  • William F. Torpey profile image

    William F Torpey 2 years ago from South Valley Stream, N.Y.

    Yes, Jeramey, restaurateurs should compensate their employees adequately for the work they do. Insofar as they own the facility and the business they can set standards consistent with the operation of the place. But employees and the customers do not sold their souls to restaurant owners. They are still free and independent human beings and as such may communicate with one another freely on any subject -- including the exchange of views, ideas -- or gratuities.

  • Kailua-KonaGirl profile image

    June Parker 2 years ago from New York

    One more thing. Generally, most American servers cringe when they see the Aussies sitting in their sections because of their tipping skills, or lack thereof. Aussies, while in America, please leave these low paid workers a well-deserved tip.

  • Jeramey Conrad profile image
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    Jeramey Conrad 2 years ago from Northeastern United States

    Hi Kailua,

    Thanks for the comment.

    "First of all," one can clearly see that I specifically stated that the specially-convened NYS Wage Board for Fast Food workers suggested this wage, and the Assembly, Senate, and Governor all approved it. We will see their wage gradually upped to $15/hour. This happened in early September, 2015 and has been well documented and covered. Even by Fox News.

    The difference between "Fast Food" and "Restaurant" seems to usually be pretty well understood. One of the biggest distinctions is that almost always FF workers aren't ever tipped at all. How they fit into this argument... I'm not sure what your point is? I brought that wholly separate industry up in the article as a comparison and using the fact that the Wage Board's recommendation was one step towards an actual broadly-applied $15/hour minimum wage across the state, which again, wouldn't affect restaurant workers because the minimum wage for tipped workers is different.

    "Second of all," I very clearly said that many servers get less than $5 and that $2.13 is a common minimum rate. Which I myself have earned in NYC. It was actually in the same sentence you are referring to. So, at this point, I'm just going to stop responding to your comment because it is obvious you did not read this Hub.

  • Kailua-KonaGirl profile image

    June Parker 2 years ago from New York

    First of all, the $15 an hour wage has not yet passed in NY state.

    Second, servers in NYC may get paid $5 an hour (ridiculous when compared to the high cost of restaurant meals in the city) but in most establishments in upstate NY (anywhere north of NYC) servers earn substantially less per hour and it varies per establishment.

    Thirdly, these servers do not usually qualify for financial aid from the government (DSS) unless they have children. Poverty stricken doesn't always qualify for assistance.

    Until there is some sort of standard set across the board in all 50 states as a federal law, I will continue to tip at least 20% and more if the server has given me exceptionally great service (above & beyond).

    Once servers can earn a livable wage, qualify for the same health, sick & vacation benefits as an office worker then I would only tip for that extraordinary service.

    To address the restaurants who have had the fortitude to pay such wages while giving well deserving employees benefits and banning the tipping custom, I applaud their forward thinking.

    However, on the other hand, one of the great things about America is our freedom and I feel that even under the best of conditions, as stated by @William F. Torpey, if I want to give a "gift" for great service, I have the freedom to do so and it ain't nobody's business but my own.

  • Jeramey Conrad profile image
    Author

    Jeramey Conrad 2 years ago from Northeastern United States

    Thanks for the comments!

    @MPG and @Jodah, yes, I'm not surprised at the cultural transfers, and tipping should be welcome for personal service above and beyond, not expected for mere perfunctory duty. There is a seachange in the works in the States for a higher minimum wage (states and even municipalities can set their own above the Federal minimum), but that is for the regular minimum as "tipped workers" get a lower one, typically $2.13 up $5.

    @Heidi, thank you so much! I'm not even a fully-fledged published Hubber yet (only 3 Hubs) so I can't really take advantage of the traffic but hopefully they like what they see and come back! I really appreciate your share.

    @William, Are you saying that the employer should pay a fair wage exclusive of tips? Or admonishing them for meddling with tips, which, I hope doesn't happen too often -- though in a lot of food service jobs it is impossible to know.

  • William F. Torpey profile image

    William F Torpey 2 years ago from South Valley Stream, N.Y.

    Employers should pay their staff appropriately. Tipping, in my opinion, is none of their business! They are selling a product and can charge whatever they like, but if a customer likes their server and wants to give them a "gift" then why should the restaurateur have anything to do with that?

  • Jodah profile image

    John Hansen 2 years ago from Queensland Australia

    In Australia it is not mandatory to tip and most people don't. However if you feel you have been offered exceptional service above and beyond the norm and are feeling generous you are quite welcome to do so. Our minimum wages are much higher though as well.

  • heidithorne profile image

    Heidi Thorne 2 years ago from Chicago Area

    Great article and insight! Shared on Twitter and LinkedIn. Cheers!

  • MPG Narratives profile image

    Marie Giunta 2 years ago from Sydney, Australia

    I can see both points of view too but living in Australia we are not obliged to tip, we only tip for exceptional service. Having said that Australia does tend to follow America when it comes to certain things, eg Halloween is now big here where it wasn't say 10 years ago. Tipping therefore has become more common even though our minimum wage for restaurant staff is higher compared to America. I guess globalisation is happening everywhere. Congrats on a great hub.

  • Jeramey Conrad profile image
    Author

    Jeramey Conrad 2 years ago from Northeastern United States

    Thanks Farawaytree, a lot of people in the industry (I was for years) are vehemently opposed to it or all for it. Hard to find any middle ground.

  • Farawaytree profile image

    Michelle Zunter 2 years ago from California

    Another fantastic hub! I was a waitress for years and can see both sides, but yes, the wage paid to waiters and waitresses is just obscenely low.

  • Jeramey Conrad profile image
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    Jeramey Conrad 2 years ago from Northeastern United States

    Hi Mel, thanks for the comment and the fan mail. Yes, this is largely true, many restaurants are on thin margins and it is also well cited that x% of new restaurants close within x months. Well, I guess not that well-cited as I can't cite the numbers, but let's just say 20-40% in the first 6-12 months sounds familiar.

    Perhaps this is why the New York State fast food minimum wage hike is only being applied to chains (at first) -- to first prove its sustainability at places with the ability to absorb a potential hit without shuttering.

    But remember! The owners will not be completely shut out in this process, they are, after all, raising their prices to the true cost of the menu item inclusive of labor. This should benefit all three parties.

  • Mel Carriere profile image

    Mel Carriere 2 years ago from San Diego California

    Restaurants usually operate on very thin margins, so I'm not opposed to small business restaurants using the practice of tipping to supplement income. Many waiters and waitresses do very well with tips. I understand your sentiment, but some of these small business owners are struggling as much as their employees are. Interesting hub.

  • Jeramey Conrad profile image
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    Jeramey Conrad 2 years ago from Northeastern United States

    Calculus_Geometry,

    Thanks for the comment! I do agree that it is quite backwards and surprising that such a thing still occurs so commonplace and we think nothing of it.

    However, I have to point out that in my experience the businesses that have moved to a fixed rate system tend to pay well above the required State minimum wage, but no matter how much they are still far from common. If they were common we wouldn't hear about them in the news!

    Cheers,

    Jeramey

  • Jeramey Conrad profile image
    Author

    Jeramey Conrad 2 years ago from Northeastern United States

    HSchneider,

    Thanks for the comment! Yes, it was actually the Danny Meyer news that inspired me to write this. I've worked in the food service industry in a lot of different ways in different states over time, and it's something I've long thought about. Something everyone seems to be complicit in and we need a radical out-of-the-box change to help out hard-working people!

    Cheers,

    Jeramey

  • Jeramey Conrad profile image
    Author

    Jeramey Conrad 2 years ago from Northeastern United States

    Hi My girl sara,

    Thanks for the interesting comment! The point I'm trying to make is that increase in cost of food we as end users see will not be as great to us as the increase in pay both servers and total food service staff will see in their paychecks. A lot of that is going to owners. They can charge say $20 for something and say "it's up to you to smile and run around like crazy and overly placate people to earn $4" or they can raise the price to $22 for all those dishes served and afford to pay someone a flat wage of $15 rather than $2.13.

    As to your second point, $15 isn't middle class, but it is a living wage. It's a huge difference between the poverty wages being doled out to tens of millions right now. Also, bear in mind this is the *minimum* that should be legally allowed! The movement is not advocating everyone make $15 an hour, but *at least* $15. Prices will go up a little, but will be balanced out by a lot more people with spending money pumping it into the economy, to say nothing of the Federal and State tax dollars freed up.

    Thanks again for the insightful comment!

  • profile image

    calculus-geometry 2 years ago

    There are some no-tip restaurants that pay the staff regular minimum wage and don't accept tips, but they are still far too uncommon. It's hard to believe the "waiter wage" exception is still in effect in many places in this day and age; it's so backwards.

  • profile image

    Howard Schneider 2 years ago from Parsippany, New Jersey

    I totally agree that employers use the tipping system to underpay their employees. I sincerely hope that Danny Meyer's move takes hold. The minimum wage should be $15 for all people. let's stop giving greedy owners a free ride. Great Hub, Jeramey.

  • my_girl_sara profile image

    Cynthia Lyerly 2 years ago from Georgia

    We, as customers, pay this tip either way. If the employees get a higher salary, it's reflected in the cost of food. Tipping is nice because you can reward good service, When I waited on tables, I made way more than what any employer would have paid me in a hourly wage,

    Companies can't afford to pay their employees better wages because they are so bogged down in taxes and costs associated with running a business (insurance, rent, security, etc.) I agree it stinks that most jobs pay so little. Jobs pay about what they paid a decade ago but the cost of living has skyrocketed. There's a lot of talk about a living wage of $15/hour. Don't know about you but I can't live off that! And if fast food workers make that much, our beloved cheap meals will no longer be cheap.