Have you ever tipped your auto mechanic for changing your oil? How about the surgeon who gave you a new knee? Or the cashier who toted up your grocery bill?
Then why does it make sense to tip your restaurant server?
Tipping is a practice that most consumers hate. So do most of the people who depend on tips for a living wage. It makes no economic sense, does little to improve service, and raises all sorts of ethical questions. Yet it’s mandatory in most American restaurants.
Yes, you read that right. It’s mandatory. It may seem voluntary and perhaps it is legally, but in the U.S., a tip of 15% to 20% is necessary and standard. It’s built into the wage and price structure of wherever you dine and if you leave less than that – or don’t tip at all – you are docking your server’s salary. And you have no more right to do that than you have to refuse to pay the check. It’s not that big a stretch to suggest that not leaving a tip, or leaving as little 12%, is akin to stealing from the waitress.
Many people assume that a tip is optional, not realizing that servers are paid close to nothing in salary. Restaurant managers are allowed to pay as little as $2.13 an hour (vs. the current minimum of $7.25 for other workers) on the assumption that patrons will make up the difference in tips. Yet, patrons are given little information on how the tips are used. We don’t know the base salary at a given restaurant or what happens to the tip. Sometimes it is split with the kitchen staff, the busboys, or the hostess. Sometimes the restaurant even takes a cut. If you put the tip on a credit card, some restaurants deduct the credit card fee. Some don’t. You’ll never know.
Many of us mistakenly believe that tips help promote good and efficient service. Studies show it doesn’t, but a better question is why are we doing management’s job? If a waiter is under performing, it’s the manager’s job to correct him, not ours. Docking his pay is an extreme punishment—one that exists in very few other professions. Plus it’s demeaning. That’s one of the reasons we’d never tip a doctor or any other professional. Who would want their salary to vary daily in unpredictable patterns, depending in many cases on uncontrollable factors like the weather?
The tipping system also allows management to shift much of the normal business risk to employers. Servers may do well if business is booming, but if a restaurant is doing poorly, waiters and waitresses will see their wages plummet. What other business is allowed to dock workers’ wages on an off-day or for months during a recession?
And what other salary depends on the luck of the draw? Most people tip the same amount every time, but not all people tip alike. Whether a server ends up with a night full of 15 percent tippers or a night of 20 percenters is pure luck. Plus the whole percentage idea makes no sense. Does a server do twice as much work if I order a $40 steak than if I order a $20 chicken dish?
Tipping is also influenced by prejudice. Studies have shown that waitresses do better than waiters, that pretty women make more than other women, and that whites make more than blacks. Would we tolerate this kind of wage discrimination under any other circumstance? Of course not. That’s why it’s illegal.
Studies also show that waitresses are more likely than other female workers to tolerate sexual harassment from customers because they’re afraid a rejection will hurt their bottom line.
The tipping system also creates an unfair tax burden. When labor costs are shifted to customers instead of included in meal prices, which is what tipping does, sales taxes fall, forcing states to make up the difference in other ways. While tips on credit cards are usually reported as income, servers who receive cash tips are largely on the honor system, and employers have little incentive to ride herd because lower tip reporting means lower payroll taxes for the restaurant.
Tipping also obscures the cost of dining out. Studies show that consumers perceive the cost to be lower than it is when prices are low, even though they know they’re going to tip an additional amount. That may be good for the restaurant industry and the economy in general, but it’s not so great for the consumer – and it’s unfair to other businesses that don’t have the same advantage.
Unfortunately, tipping is so well entrenched in the American economy, I doubt it’s going to disappear anytime soon. A few restaurants have ended the practice, announcing that they are adding service charges to menu prices. We ought to encourage that in whatever ways we can. But until that practice becomes widespread, we’re left with the system in place, however unethical it is. What we can do is make sure we don’t make it any worse. That means giving a fixed tip no matter what the day or your mood. It’s one certain way to eliminate any unconscious bias. And at least that’s a start toward a fairer system, inadequate as it may be.