Yves here. Early on in my time in Oz, a taxi driver took offense at my tipping him. Mind you, Australia was and I assume still is a high minimum wage country, and a 10% tip would be seen as generous.
But we in the US have the problem of existing conditions. Restaurant economics, which are lousy to begin with, mean higher base wages for waitstaff, which I agree are 100% warranted, really will translate into higher prices. In keeping, in Australia back in the early 2000s, it was noteworthy how pricey restaurant and takeout meals were, even for their cheap and cheerful venues (then Thai).
Even worse, restaurant patrons apparently greatly value their ability to reward and punish service staff. New York City restauranteur Danny Meyer, of Union Square Cafe, Gramercy Tavern and later Shake Shack fame, set out to end tipping across his empire. Some customers resisted:
And Meyer ended it upon the Covid reopening. Note he had already lost some employees over the belief that they earned less. From the New York Times in 2020:
One of the country’s best-known restaurateurs, Danny Meyer, announced five years ago that his Union Square Hospitality Group would gradually eliminate tipping…
But on Monday, the company reversed course. Mr. Meyer told his staff that Union Square Hospitality would abandon what it calls its “Hospitality Included” policy as its restaurants reopen for outdoor dining, starting on Thursday with the flagship Union Square Cafe in the Flatiron district and extending to the nearby Gramercy Tavern in the coming weeks. (Some of the group’s other businesses are already open for takeout and delivery, and all will shift to tipped wages immediately.)
Mr. Meyer said in an interview that he still believes that tipping contributes to inequitable pay, wage instability and other problems, and that he is collaborating with the national One Fair Wage campaign to eliminate it. But as the restaurants begin rehiring today — about 95 percent of the staff has been laid off since March — he is unwilling to deny any extra compensation that might be available to employees in a time of economic crisis.
“We don’t know how often people will be eating out, we don’t know what they are going to be willing to pay,” he said. “We do know that guests want to tip generously right now.”
The Hospitality Included model, which eliminated tips in favor of a consistent hourly wage, was adopted over several years as New York State’s minimum wage rose to $15 per hour. The extra labor costs for the restaurant were reflected in menu prices, which increased by 15 to 20 percent. In theory at least, the customer’s actual cost per meal would be about the same.
Wilma Cespedes-Rivera, a bartender at Blue Smoke, a Union Square Hospitality restaurant in Lower Manhattan, has worked for the company for five years. She said that for servers, the change from tipping to Hospitality Included was painful, and many talented colleagues left for other jobs.
“People understood that the goal was a healthier balance,” she said, “but it wasn’t what we signed up for financially.”
A few months later, Eater had a long-form, well-researched story on why the no-tip movement failed. I urge you to read it in full. Some key bits:
By May 2016, data bore out the beginnings of a cultural shift. An American Express survey released that month found that of 503 randomly sampled restaurateurs, 18 percent said they had already adopted no-tipping policies, 29 percent said they planned to do the same, and 17 percent said they would consider implementing no-tipping if others did. The EndTipping subreddit, one of the more complete records of no-tipping establishments from the time, listed more than 200 restaurants that were, at one point or another, without gratuity. Although these comprised a sliver of the roughly 650,000 restaurants across the country, momentum appeared to be building.
Until, it seemed, the wheels came off. Most of the restaurants that participated in the Meyer-catalyzed no-tipping movement had, by 2018, returned to gratuity. Meyer, whose organization never fully recovered from the shift to what he called “Hospitality Included,” capitulated earlier this summer, announcing that he would bring back tipping to USHG. Thus tipping won, and decisively….
The anti-tipping cohort of the mid-2010s largely consisted of restaurants like Faun: moderately priced, casually upscale table-service spots that promised a mix of hospitality and affordability…
And in the case of Faun, Stockwell found himself explaining to guests why menu prices were higher than those at comparable restaurants. “Once you get people to understand that you’re gratuity-inclusive, there’s still the next level of this visceral connection with numbers on a menu,” he told me last summer. “When entrees are all up in the 30s versus in the 20s, it doesn’t matter if [customers] know that you are gratuity-inclusive.”…
Stockwell and Swickerath waited for other restaurateurs to follow suit. But several early adopters had already reversed course, including Craft, Fedora, and Momofuku Nishi (which has since closed entirely). “It was a miscalculation that this tide was growing,” Stockwell confided. Despite positive reviews, by winter 2017, Faun was struggling. Stockwell was unsure if the restaurant could survive the coming January, with its crowd-killing short days and frigid temperatures. He didn’t want to revert to tipping, but he felt his hands were tied. “So many times that you are operating as a business, you realize, ‘Okay, my politics and my ideals are one thing, but what’s the priority here?’”
Faun reintroduced tipping the first week of January 2018. According to Stockwell, the effect was striking. “Immediately, it made this whole thing possible,” he recalled. Although he and Swickerath would have preferred to remain tip-free for ethical reasons, he said that ultimately, “we couldn’t let the ship keep sinking.”
The article was hopeful that no-tipping might come back, but I don’t see any evidence of that.
By Sonali Kolhatkar, an award-winning multimedia journalist. She is the founder, host, and executive producer of “Rising Up With Sonali,” a weekly television and radio show that airs on Free Speech TV and Pacifica stations. Her forthcoming book is Rising Up: The Power of Narrative in Pursuing Racial Justice (City Lights Books, 2023). She is a writing fellow for the Economy for All project at the Independent Media Institute and the racial justice and civil liberties editor at Yes! Magazine. She serves as the co-director of the nonprofit solidarity organization the Afghan Women’s Mission and is a co-author of Bleeding Afghanistan. She also sits on the board of directors of Justice Action Center, an immigrant rights organization. Produced by Economy for All, a project of the Independent Media Institute
One of the things that new visitors to the United States learn—but often don’t understand—is that they are expected to tip nearly every service worker they encounter. The most obvious tipping expectation is at restaurants and bars, where they must gift an additional 18-25 percent of their total bill to their waitstaff or bartender.
Taxi and rideshare drivers also expect tips, as do hotel bellhops and cleaning staff, as well as hair stylists, and even babysitters. Delivery drivers, in the age of online shopping, expect tips—but only those delivering food via such services as DoorDash, and not, say, your Amazon package deliverer, and certainly not your local postal worker bringing you your daily dose of junk mail.
Forget those who are new to the U.S.—the expectations about when to tip and how much to tip are bewildering even for those of us who have lived here our whole lives. There are detailed guides now for the confused consumer, such as New York magazine’s explaining-and-shaming approach to tipping etiquette after the COVID-19 pandemic changed the rules of “polite society,” while exhorting readers to accept the status quo: “It’s just the rules; don’t complain.” Real Simple magazine recently issued a primer that billed itself as the “Ultimate Guide” for the confused tipper. “Tipping used to be about showing appreciation for good service,” lifestyle writer Julie Vadnal says in the Real Simple article. “[B]ut as the minimum wage has plateaued (the federal minimum wage has been $7.25 since 2009), workers have come to depend on it.” The federal government’s baseline wage for tipped workers is an unimaginably low $2.13 an hour.
What we need is an “Ultimate Guide” on how to make our economy fairer so that ordinary people are not subsidizing the salaries of low-wage workers—because that’s ultimately what tipping is. How—and why—do we tolerate it?
Think about the explicit requests for tips that are cropping up at walk-up cafes where the cashier taking your coffee order offers you a digital tablet to complete your cashless transaction and where you must choose a tip amount of anything between 10 and 22 percent in view of the worker. Sometimes the machine suggests even explicit dollar amounts—a $2 tip on a $4 coffee?—that obscures the tip percentage. If the worker you interacted with has been rude or cold, you can choose a low tip or no tip at all in retaliation. If they have been kind and you still tip frugally, you are the rude, cold one.
This quick interaction between customer and server is a veritable minefield of values, placing the onus of paying a worker directly on the person being served rather than on the worker’s employer.
It’s a sly calculation on the part of business owners to ensure compliant workers while gouging customers: A worker’s take-home pay could be diminished simply if they had a bad day and didn’t feel like smiling, while at the same time, the customer feels obligated to pay for their product, and then some. Tipping is just another way for businesses to pass their costs on to customers.
Worse, it encourages sexism and sexual harassment, especially for women workers who often lose out on tips if they snub sexual advances by male customers. According to One Fair Wage, nearly 7 out of 10 tipped workers are women.
The Economic Policy Institute (EPI) lays the blame for our national tipping culture on the 1966 amendments creating a so-called “tip credit” to the Fair Labor Standards Act. According to EPI, “The creation of the tip credit—the difference, paid for by customers’ tips, between the regular minimum wage and the sub-wage for tipped workers—fundamentally changed the practice of tipping.”
The National Restaurant Association, which is the major lobbying arm of an industry that disproportionately relies on tipped workers, has for years pressured lawmakers to keep the tip credit in place and enable the continued underpaying of workers. In a press release in November 2022, it denounced the successful Washington, D.C., vote to eliminate the tipped wage, claiming bizarrely that tipping is good for both workers and customers. The subtitle of the press release reads: “Current tipping system increases earning potential for tipped workers and allows operators to staff at levels needed for exceptional hospitality.”
According to a National Restaurant Association executive, the vote to eliminate tipped wages means that “some operators will reduce their workforce.” It’s the same logic that fiscal conservatives use to counter an increase in the federal minimum wage: raising salaries will mean people will be fired because employers won’t be able to afford to pay the higher wages. But EPI points out that “[p]aying tipped workers the regular minimum wage has had no discernable effect on leisure and hospitality employment growth in the seven states where tipped workers receive the full regular minimum wage.”
The lobbyist also condescendingly claims that “[t]he tipped income system often comes under fire because there is widespread misunderstanding about how it works.” Apparently, the rest of us ignoramuses don’t get that “[e]very tipped restaurant employee earns at least their state’s minimum wage” (emphasis in original) and that “[t]his amount is paid partly by the operator and partly by tips.”
In truth, employers, especially corporate chains, don’t always bother ensuring that their workers make at least the full minimum wage. Outback Steakhouse’s workers, for example, are suing their boss over this very issue. And, if it were true that tipped workers actually take home what is owed to them, there wouldn’t be a stark discrepancy in poverty levels between tipped workers and non-tipped workers. EPI points out that “in the states where tipped workers are paid the federal tipped minimum wage of $2.13 per hour… 18.5 percent of waiters, waitresses, and bartenders are in poverty.” But, “in the states where they are paid the regular minimum wage before tips… the poverty rate for waitstaff and bartenders is only 11.1 percent.”
Not only is the National Restaurant Association obscuring the fact that subminimum wages are beneficial to employer profit margins, but it has even deceived workers into subsidizing the cost of the lobbying that keeps wages suppressed. The New York Times recently revealed how the National Restaurant Association runs a company called ServSafe, widely used by new workers for mandatory training on things like food safety. But ServSafe is also the association’s fundraising arm.
In other words, workers are inadvertently paying to ensure their wages remain low. And the lobbying has been wildly successful.
For example, when Washington, D.C., voters passed Initiative 77 in 2018 to raise the tipped wage, the city council repealed it, instead passing a law raising awareness of the rights of tipped workers. But lawmakers never funded the law. Then, in November 2022, voters passed a similar measure, Initiative 82, with the support of nearly three-quarters of all voters (this was the vote that prompted the association’s aforementioned defensive press release). The D.C. city council has again tried to thwart the measure, delaying its implementation by a few months. Activists for 82 say they believe the restaurant industry’s lobbying has played a role.
Now, some New York lawmakers are getting ready to propose a similar bill that would phase out the subminimum wage for tipped workers in their state. And, there is strong public will to do so. A survey by Data for Progress found robust bipartisan support among likely voters to do away with a system requiring workers to depend on tips. The progressive organization One Fair Wage has several campaigns—including in New York, Washington, D.C., Michigan, Maine, Massachusetts, and Illinois—to eliminate the tipped wage system.
There are nations in the world where tipping is not only unusual, but considered downright rude. For example, according to one social media influencer of Japanese descent, tipping in Japan is frowned upon because it’s seen as “petty,” and akin to an insult. TikTok user Cyber Bunny compares a customer tipping a server in Japan to a parent giving a child an allowance.
Ouch.
Such a dynamic can develop here in the U.S. too, if we had a culture and set of laws that respected worker dignity. After all, money is power, and for a customer to wield power over a worker in such a direct manner ought to be considered unthinkable. Wages are not allowances, and workers are not children.