Tipping

[explanade]

This is not the case. Tipping is not about pay levels. You do not tip at fast food and there is no tipped minimum wage there even though these are often the lowest pay positions.

Same with cashiers. Among the lowest paid in our economy and not tipped.

And pay structures were not "different" in the past unless by different you mean much lower paid than now. Wages have never been higher than now and they have risen sharply in recent years.

Very few jobs pay minimum wage and a very low percentage of our work force makes minimum wage. The minimum wage was never intended to be enough to support oneself or raise a family.

It is a starting, stepping stone wage. Most people who earn it are students heading for higher paying jobs. These folks are not trying to run a household on it.

Tipping has always been and continues to be optional.

Of course it's optional.

It's optional if you want to be more generous or not to people earning a low wage.

If it was some kid working a part time job while still going to school, they don't depend on the income to pay living expenses.

But there are a lot of adults for whom this low-wage work is their only source of income.

Minimum wage hasn't kept up with cost of living. The federal minimum wage is still 7.25, last increased in July 2009.

There are now 29 states plus DC which have higher minimum wage than the federal minimum wage, so it's changing.

But even in states with the highest minimum wage, it's still well below the living wage, apparently determined through an MIT calculator.

https://www.cnbc.com/2023/04/14/states-with-the-highest-minimum-wage.html


Since tips are entirely voluntary, you can choose to account for these facts or not when deciding how much to tip or whether to tip at all.

 

[Montecfo]

Of course it's optional.

Well I was responding to your statement "...where tipping was optional".

It's optional if you want to be more generous or not to people earning a low wage.

Tipping is not is not about income levels. Do you tip counter help at McDonalds? Or cashiers at retail stores?

If it was some kid working a part time job while still going to school, they don't depend on the income to pay living expenses.

Yet, they still earn and deserve tips if working in a tipped job. Or are you suggesting young people should not be tipped since you assume they are not relied on to support a family? And how could anyone know this?

But there are a lot of adults for whom this low-wage work is their only source of income.

Statistically, this is not the case. Less than 1% of all earners make the minimum wage. 44% of those are under 25 according to BLS. And how would you know someone's income sources just by looking at them?

Minimum wage hasn't kept up with cost of living. The federal minimum wage is still 7.25, last increased in July 2009.

Very few people earn the minimum wage. And the percentage of workers earning the minimum wage has declined sharply over time (down about 90% since 1979 according to BLS). Wage levels have risen, exactly as you would expect.

A federal minimum wage is a blunt tool given it applies both in high cost NYC and in moderate cost Nebraska for example. It is not needed in my view.

There are now 29 states plus DC which have higher minimum wage than the federal minimum wage, so it's changing.

But even in states with the highest minimum wage, it's still well below the living wage, apparently determined through an MIT calculator.

So? Markets determine wages, not websites. Higher compulsory wages cost jobs according to BLS and many other sources.

Since tips are entirely voluntary, you can choose to account for these facts or not when deciding how much to tip or whether to tip at all.

Sure. But in fact there is no way to determine a person's finances just by the job they work. So there is no way to account for them.

That is why tipping is based on tradition and personal service. Not by a customer's perception of the finances of the serving party.

I would guess a good charity would do a much better job of allocating funds for the needy than even the most well intentioned tippers.

https://www.bls.gov/opub/reports/minimum-wage/2021/pdf/home.pdf

 

[GenXguy]

Minimum wage hasn't kept up with cost of living. The federal minimum wage is still 7.25, last increased in July 2009.

There are now 29 states plus DC which have higher minimum wage than the federal minimum wage, so it's changing.

Yeah, minimum wage is $15/hr or so in places, and this is just causing additional inflation, as I mentioned before.

 

[explanade]

Yeah, minimum wage is $15/hr or so in places, and this is just causing additional inflation, as I mentioned before.

Do you have a study citing that?

Can you show prices are higher in states with higher minimum wage than the federal minimum wage?


There was a case of a lobster roll processing company in Maine. He raised prices, not because he had to increase wages but because demand went through the roof after pandemic restrictions eased and people started dining out more.

So he raised prices because he could and to stem demand, not because his labor costs went up.

 

[explanade]

That is why tipping is based on tradition and personal service. Not by a customer's perception of the finances of the serving party.

I would guess a good charity would do a much better job of allocating funds for the needy than even the most well intentioned tippers.

https://www.bls.gov/opub/reports/minimum-wage/2021/pdf/home.pdf

There is no set definition or common reason why people tip or why they tip a certain amount.

Some wealthy people always tip generously all the time.

It's generational and cultural. For instance, older generations are set on this whole, they have to earn the tip with good service mind-set while younger generations want to tip regardless because they understand these workers are on meager incomes.

Or some people have lived a big part of their lives in non-tipping cultures and have some ideological opposition to tipping.


There's no reason why you can't donate as well as tip more frequently and in greater amounts.

Sure LBYM and all that but we have BTD threads here with broad participation here as well.

If you don't think some service workers are deserving, then don't tip.

I do get the irritation of the automatic tip amounts on the POS systems though, like people feel pressured to or they're asking for gratuities that they haven't earned.

The more objectionable aspect is if it turns out management is using those systems to keep some or all of the tips for themselves and screw over their workers.

 

[Montecfo]

Looks like GenXGuy is correct...


"A [2019] study by Harri revealed that a whopping 71% of restaurants have responded to the recent minimum wage increases by raising menu prices."

...but restaurants also cut hours.

"In addition to price increases (71%), reduced employee hours (64%) and job eliminations (43%) were the most common reactions to wage inflation."

https://pos.toasttab.com/blog/on-th...rri revealed,increases by raising menu prices.

 

[ShokWaveRider]

Looks like GenXGuy is correct...


"A [2019] study by Harri revealed that a whopping 71% of restaurants have responded to the recent minimum wage increases by raising menu prices."

...but restaurants also cut hours.

"In addition to price increases (71%), reduced employee hours (64%) and job eliminations (43%) were the most common reactions to wage inflation."

https://pos.toasttab.com/blog/on-th...rri revealed,increases by raising menu prices.

Personally, I would rather pay more for the food than tip and have the staff be paid a living wage. MMDV

 

[explanade]

2019 before the pandemic may not have as much relevance to what's happening today.

 

[Montecfo]

There is no set definition or common reason why people tip or why they tip a certain amount.

Some wealthy people always tip generously all the time.

It's generational and cultural. For instance, older generations are set on this whole, they have to earn the tip with good service mind-set while younger generations want to tip regardless because they understand these workers are on meager incomes.

Or some people have lived a big part of their lives in non-tipping cultures and have some ideological opposition to tipping.


There's no reason why you can't donate as well as tip more frequently and in greater amounts.

Sure LBYM and all that but we have BTD threads here with broad participation here as well.

If you don't think some service workers are deserving, then don't tip.

I do get the irritation of the automatic tip amounts on the POS systems though, like people feel pressured to or they're asking for gratuities that they haven't earned.

The more objectionable aspect is if it turns out management is using those systems to keep some or all of the tips for themselves and screw over their workers.

I don't disagree with much you said. But tipping is a very inefficient form of charity. Because that is not what tipping is. And you keep stressing income levels for some reason.

It is illegal for restaurants to keep tips. That is not a worry of mine, though it can happen.

 

[harley]

Do you have a study citing that?

Can you show prices are higher in states with higher minimum wage than the federal minimum wage?


There was a case of a lobster roll processing company in Maine. He raised prices, not because he had to increase wages but because demand went through the roof after pandemic restrictions eased and people started dining out more.

So he raised prices because he could and to stem demand, not because his labor costs went up.

I don't have one showing increasing the minimum wage causes increased prices, but there are plenty showing that it causes job losses. For example - https://www.cbo.gov/publication/55681.

And I agree with Montefco, you seem to be arguing that we should tip as a form of charity. Tipping has always been a reward for good service. I give to charities to help the less fortunate. I tip at appropriate places to acknowledge average to exceptional service. And never the twain shall meet.

 

[gayl]

2019 before the pandemic may not have as much relevance to what's happening today.

EXACTLY!! Pre-pandemic I was only asked if I wanted to tip at hairdressers / groomers, full service restaurants, and on cruises. Now it's everywhere and I'm reacting to that by tipping less ... but still tip 25%-33% at Koda's groomer (based on his mood, sometimes my boy can be difficult and she's worth it), 20% at my hairdresser & full service restaurants. Always pay the auto gratuity on cruises

 

[MarieIG]

EXACTLY!! Pre-pandemic I was only asked if I wanted to tip at hairdressers / groomers, full service restaurants, and on cruises. Now it's everywhere and I'm reacting to that by tipping less ... but still tip 25%-33% at Koda's groomer (based on his mood, sometimes my boy can be difficult and she's worth it), 20% at my hairdresser & full service restaurants. Always pay the auto gratuity on cruises

I'm the groomer so I take my tips in tail wagging and kisses.

DS has to do the bathing and gets no appreciation whatsoever. He is very gentle, but she just hears the "B" word, and starts shaking.

 

[Midpack]

EXACTLY!! Pre-pandemic I was only asked if I wanted to tip at hairdressers / groomers, full service restaurants, and on cruises. Now it's everywhere and I'm reacting to that by tipping less ... but still tip 25%-33% at Koda's groomer (based on his mood, sometimes my boy can be difficult and she's worth it), 20% at my hairdresser & full service restaurants. Always pay the auto gratuity on cruises

While the pandemic certainly expanded tipping and maybe expectations (though it’s still voluntary), the practice had already grown well beyond “hairdressers / groomers, full service restaurants, and on cruises” long before the pandemic. Tip jars started to appear years ago and insecure customers being intimidated by digital payment systems well before the pandemic.

Reports I’ve seen say people have pulled back from tips since the height of the pandemic regardless of (new) opportunities. And while I have seen some pretty outrageous digital tip suggestions, I have no problem selecting other or a smaller amount - if you do that’s your issue. I just paid for a $16 service that offered tips of $5 (31%), $7, $10 (63%), or other - I left $4 without hesitation.

 

[Sunset]

.....
......
The more objectionable aspect is if it turns out management is using those systems to keep some or all of the tips for themselves and screw over their workers.

That should be illegal if it isn't already illegal...

 

[Midpack]

That should be illegal if it isn't already illegal...

It is illegal, with a few narrow exceptions.

https://kickfin.com/blog/can-restaurant-owners-keep-tips/

 

[GenXguy]

EXACTLY!! Pre-pandemic I was only asked if I wanted to tip at hairdressers / groomers, full service restaurants, and on cruises. Now it's everywhere and I'm reacting to that by tipping less ... but still tip 25%-33% at Koda's groomer (based on his mood, sometimes my boy can be difficult and she's worth it), 20% at my hairdresser & full service restaurants. Always pay the auto gratuity on cruises

Exactly? That 2019 comment you responded to wasn't even about tipping. It was about businesses increasing prices due to minimum wage increases or laying off workers because of the higher labor costs. He didn't think the 2019 study was relevant to today, but he's wrong.

It's still relevant today. Minimum wage keeps getting increased in my state, and prices jump after each one, and some businesses lay off staff or even go out of business. The pandemic didn't make it any easier for businesses. It ends up pushing up wages and inflation on everything else as well.

And his comments about tipping being a charity are ridiculous. Many of these workers getting tips are not making a reduced minimum wage, and even that is not that low in some states with all of the minimum wage increases. Someone should provide good service to deserve a tip rather than just "needing the money".

 

[Chuckanut]

Once again, I remind people that states have differing amount of minimum wage requirements for tipped jobs. My state requires the payment of the FULL minimum wage amount. No reduction for tipped jobs. That's one reason I don't feel too guilty about not tipping 20%+ for somebody to hand me a muffin and an empty coffee cup over the counter. Especially, when I fill the coffee cup myself, clean the crumbs off the table when I leave, and put my dirty cup in the to-be-washed bin.

 

[Montecfo]

Once again, I remind people that states have differing amount of minimum wage requirements for tipped jobs. My state requires the payment of the FULL minimum wage amount. No reduction for tipped jobs. That's one reason I don't feel too guilty about not tipping 20%+ for somebody to hand me a muffin and an empty coffee cup over the counter. Especially, when I fill the coffee cup myself, clean the crumbs off the table when I leave, and put my dirty cup in the to-be-washed bin.

Agree on counter help. But those would be full minimum wage positions pretty much anywhere in America.

As a rule I do not tip them.

I have seen a few places where they have table service with some sort of an add-in on the bill. It amounts to "additional dealer markup" at a car dealership. Sometimes they call it "restaurant recovery".

If I was not expecting it I ask about it. If they do not volunteer to remove it I consider it part of the tip.

 

[youbet]

Personally, I would rather pay more for the food than tip and have the staff be paid a living wage. MMDV

I agree about having the servers' wages built into the menu price and the elimination of tipping. But I'd like the wages to be determined by the amount it takes to attract and retain staff, not by what someone thinks is a "living wage." There are way too many variations of how much a "living wage" is.

 

[GenXguy]

I agree about having the servers' wages built into the menu price and the elimination of tipping. But I'd like the wages to be determined by the amount it takes to attract and retain staff, not by what someone thinks is a "living wage." There are way too many variations of how much a "living wage" is.

Exactly. I always hated that term "living wage". Just like "minimum wage". The market should set the wage.

 

[Montecfo]

Exactly. I always hated that term "living wage". Just like "minimum wage". The market should set the wage.

Yes. Any government set wage just reduces jobs and opportunities and raises prices generally speaking.

Few folks make the minimum wage but it can trigger higher wages higher tiers in the ladder. I wonder how much of our current inflation is explained by that.

 

[Texas Proud]

Exactly. I always hated that term "living wage". Just like "minimum wage". The market should set the wage.

Going off topic but....


I hate "I am living on a fixed income" meaning they are retired and getting a pension or SS.... well, almost EVERYBODY is living on a fixed income... when I was working I got a fixed amount of pay for my work... I did not get any more than that... it was fixed...


And there are a good number of people on SS or pension that adjusts for inflation... well, wages might not adjust... it might be a bad example but I read that Vanna White has not had a salary increase for 18 years... sure, she is highly paid but 18 years

 

[Montecfo]

Yes I agree. Retiree income is never actually "fixed" if it includes SS. I know my SS drawing inlaws got raises more regularly than I was.

 

[CardsFan]

Going off topic but....


I hate "I am living on a fixed income" meaning they are retired and getting a pension or SS.... well, almost EVERYBODY is living on a fixed income... when I was working I got a fixed amount of pay for my work... I did not get any more than that... it was fixed...


And there are a good number of people on SS or pension that adjusts for inflation... well, wages might not adjust... it might be a bad example but I read that Vanna White has not had a salary increase for 18 years... sure, she is highly paid but 18 years

I hated that comment before I retired, for the reasons you point out. After I retired, when ever anyone said it, I would reply, "Well, we are living on NO income". Which was not quite true, counting Dividends, Interest and Capital gains, but it was true we had no fixed income.

 

[marko]

I know servers that make $10k wages ($13.xx minimum wage here), plus $40k tips. Part time. None of them declare $40k in tips, not even close.

A good friend's son averages $150 a night at Olive Garden. In addition to $14 an hour.

Maybe they're not getting rich, but they're doing a LOT better than every other entry level low wage job out there.

This is quite difficult nowadays. The IRS now tracks each server's sales--cash, charge or otherwise--and calculates a rough percentage of what they figure you got in tips. You can slightly "underestimate", but if it's blatant, you will raise a red flag. It shows up on your W2.
The W2 will show your reported tips and it needs to reasonably line up as a percentage of your sales.

A new twist is that servers are reporting accurately, especially in seasonal work, so that they can get higher unemployment benefits.