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Hot Tip

A number or restaurants are starting to ban tipping, and instead are paying their employees a real, living wage and even providing benefits.

I say it is about time. I wish more restaurants would ban tipping. I think it is evil. Why?

Did you know that the minimum wage for tipped workers (not just waiters) is $2.13 an hour? For a full-time worker, that’s less than $370 a month. What a joke. Adding insult to injury, mandatory tax withholding (based on an assumed level of tips they may not get) normally eats up all of their hourly wages. And the typical lack of benefits makes that even worse – no vacation time, no paid sick days, and no employer provided health insurance.

But wait, you say (pun not intended), doesn’t tipping encourage good service? Well, numerous studies have shown that tipping is almost entirely unrelated to quality of service. A waiter is more likely to get a big tip if they are attractive, especially a young, sexy (i.e., busty) woman, so tipping is sexist and ageist. And white waiters get bigger tips (more than 30% more than black waiters), making it racist as well.

Leaving big tips is really no incentive for better service. In fact, low wages for waiters encourages high turnover, resulting in worse service. Instead, the factor that most influences whether you get good service at a restaurant is whether the waiter is happy at work. And paying them a real wage and benefits is a great way to make them happy.

I lived in New Zealand for a while, where tipping is not prevalent and definitely not expected, and they pay their wait staff real wages. I always received very good service there (but it is hard to tell if that is because server’s lives aren’t dependent on tips, or just because Kiwis are really nice people anyway). One thing they normally did there was if a restaurant was open on a holiday like Christmas, they would add a surcharge (typically 15%) to the bill so they could pay their staff overtime. I think that is great.

It is said that we are moving to a service economy. It is about time we paid all our service workers a real salary and stopped stiffing them.

UPDATE: If this interests you at all, go read this fantastic rant: “The Gratuitous Injustice of American Tipping Culture“.



  1. Tom wrote:

    Sub-minimum wage used to be tied to the minimum wage. In 1985 as a bartender I was making $2.13 an hour. That it has stayed there for nearly 30 years is a testament to the lobbying of the restaurant industry. Even a jump to $6 per hour would do much to improve the lives and attitudes of service workers, but the people who serve our food deserve more than what sub-minimum has become.

    Saturday, October 4, 2014 at 1:54 am | Permalink
  2. Paul wrote:

    $3000 is incorrect. It should have been $300. $3000 would be $36,000/yr. Add to that their tips and they would be solidly middle class.

    [You’re right! oops! I fixed it. –iron]

    Saturday, October 4, 2014 at 5:12 am | Permalink
  3. westomoon wrote:

    The rest of the country must get tired of hearing about Washington State and Vermont, but I gotta report once again on a better way of doing things.

    Here in WA, there is no exemption to the minimum wage (which is the highest in the nation, because it’s self-raising — indexed to inflation) for tipped employees. So every wait person here gets at least full State minimum wage — about $7/hour higher than the Federal minimum for tipped work. And yet the restaurant industry has not collapsed under the weight of all those wages. In fact, it’s thriving.

    Even though we shouldn’t really have to, restaurant patrons here tip the same as the rest of the country — 15 to 20%. Strangely enough, the combined burden of prices that cover the exorbitant minimum wage plus tipping has not driven patrons away from restaurants.

    That means that waitstaff jobs are not just hard work, they’re good jobs. As a result, you find people working in restaurants who are real professionals — I’d say the standard of service here, fancy restaurant or greasy spoon, is about the highest in the country.

    Saturday, October 4, 2014 at 11:08 am | Permalink
  4. Tha C-Dawg wrote:

    Several states require minimum wage for ALL employees and prohibit tip credit: AK, OR, CA, WA, MN, MT, NV. Several of these states also have minimum hourly rates that are higher than the federal rate.

    NV does a really cool thing, in that their state minimum wage is the same as the federal, but if the employer does not provide health insurance, the employee must receive at least $8.25 per hour. Not a lot, but it’s more than any other state does to incentivize health insurance.

    Sourcing: I’m not sure why VT wasn’t mentioned, I suspect it was an oversight. And HI, what’s going on there? That would complete the entire West Coast states.

    Saturday, October 4, 2014 at 11:52 am | Permalink
  5. Daniel wrote:

    Completely agree.

    The question is, how do we get from here to there?

    Saturday, October 4, 2014 at 3:03 pm | Permalink
  6. Rick wrote:

    Another issue with the analysis of full time wages in tipped jobs is the difficulty of actually finding a full time service job of any sort these days. I know people who have to work two or three wait staff jobs to put together a schedule that even then is not quite full time. I know others who have a part time job with a random schedule that makes it impossible to take other work. In some cases this is explicit company policy. The NY Times ran a piece on this recently:

    I’d have thought it was an exaggeration if weren’t living with someone who is in exactly this situation.

    Saturday, October 4, 2014 at 3:08 pm | Permalink
  7. Daniel wrote:

    Interesting read:

    The Gratuitous Injustice of American Tipping Culture

    Mentions restaurants with alternative tipping policies.

    Saturday, October 4, 2014 at 4:58 pm | Permalink
  8. Iron Knee wrote:

    Daniel, that is a brilliant article. Everyone who is interested in this (and if you read this far, that’s you), please read it. I’m going to put the link in the post.

    As to how do we get from here to there … see the first line. Restaurants are starting to ban tipping. Encourage your favorite restaurants to follow suit. Promise them you will keep eating there, even if it means they have to raise prices. Even if they do raise prices on the menu, you won’t be required to leave 20%. The only people who will be hurt is those cretins that think that punishing the victims will solve the problem — those people who don’t leave tips anyway.

    Saturday, October 4, 2014 at 8:13 pm | Permalink
  9. Daniel wrote:

    I just got home from a restaurant that has a no-tipping policy. (Complete coincidence.)

    My friends were a bit worried that this meant the staff were worse off. So we asked what the no-tipping policy means. The wait staff were very forthcoming and explained that they get paid by the hour no matter what the volume, and that this gives them peace of mind.

    Saturday, October 4, 2014 at 9:17 pm | Permalink
  10. Michael wrote:

    Here’s one of the interesting ironies that I observed in my years as a server: Overt Christians, especially those coming in for a nice Sunday brunch after church, are *the* absolute worst patrons and tippers imaginable. By “overt Christians,” I am referring to the ones who wear outward symbols, get the whole table to bow their heads in prayer, engage in boisterous discussions about religion, etc., etc. Basically, the ones who are doing anything and everything to put their faith on display.

    As a server, if you got one of those tables, you groaned. Here’s how the meal would go down: You arrive at the table to get drink orders, then go get them. You come back with their drinks to take their orders to discover that they haven’t even cracked the menus yet. So you come back a few minutes later, and half of them have decided. The other half want to ask about the specials then think about it a few minutes later. One of them hands you an empty glass asking for a refill. You get the refill, then come back a few minutes later to finally take all the food orders. Two more refills. You go put the order in and deliver the two refills. As you are setting the glass down, one person chugs the rest of their drink and hands you their empty glass. Repeat the refill nonsense ad nauseum.

    In short, this table (you have 3 or 4 others at the same time) will do everything in their power to take up 90% of your time. They are so self-absorbed and focused on their holiness that they do not realize how inconsiderate they are acting. But that’s not the worst part yet. This table, which demonstrates every possible bad behavior that will make a server hate you and want to spit in your food (no, I never did that, but damn did I want to sometimes), will reward you with a 5-10% tip. Oh, did I mention irony earlier? It’s because one of the common topics of their discussion is often the bad treatment of the poor. And, no, I don’t hold grudges against all Christians. Rather, my observation was that tips were often inversely proportional to patrons’ observable piety, while their bad behavior was directly proportional to piety.

    Sunday, October 5, 2014 at 8:50 am | Permalink
  11. Michael wrote:

    More to the point, here is why tipping is completely non-sensical: In what other business is it possible to receive a good or service in its entirety, then you get to name your own price while the business owner just has to accept your choice? You secure an airline ticket from NY to Las Vegas. On the way, you encounter some turbulence, the flight was delayed, the flight attendants didn’t serve drinks at the appropriate time, etc. After you arrive, you decide the experience was so bad that you only pay the airline $10. Or you buy a car, drive it for a week, then ram it into a telephone poll and total it. You decide to pay the dealership only $100 for the car since you only owned it for a week.

    How insane is it that the entire pay structure in food service is based on the assumption that servers (a) know how much they should paid and (b) are honest enough to pay what they should?

    Sunday, October 5, 2014 at 9:01 am | Permalink
  12. Don wrote:

    In most of western Europe, tipping is not expected and, from what I can tell, wait staffs are paid well enough that they earn a living wage. Waiting is an honored profession. On our last European sojourn, restaurant service was very good, even in Paris (we had Parisian waiters apologizing to us for their inability to speak better English!).

    Westomoon’s comments on how a higher wage for restaurant workers hasn’t crippled the restaurant business there is a good starting point. Waiting tables is a job that many of us would rather forgo – not necessarily because of the wages (although I’m sure that would be one factor) but because it is truly hard work.

    Sunday, October 5, 2014 at 11:20 am | Permalink