The American System of Tipping Makes No Sense

https://www.theatlantic.com/ideas/archive/2019/10/american-tipping-system-makes-no-sense/600865/

by flurdy • 7 years ago

61 105 7 years ago

planetzero3• 7 years ago

"By outsourcing compensation to consumers, companies can pay their employees less"

They pay their employees less because otherwise, they won't be able to stay in business without radically raising their prices.

I wonder if the same people that want to get rid of our tipping system would be willing to pay double the price for breakfast?

skinnymuch4• 7 years ago

Why would breakfast be double the price? Wouldn’t that mean tipping on avg is more than the meal price?

Spooky23• 7 years ago

Because everyone in the restaurant industry systematically underestimates tip income. It’s a pretty corrupt industry by modern standards. Waitstaff would get paid way more and the employer would actually have to pay taxes at value.

Prices wouldn’t double at most places, but some waiters at high volume or expensive restaurants make a lot of money, and factoring those wages would be tough on cash flow.

social_quotient• 7 years ago

If tips are gone then the wage would be regulated higher by the business (read as “should”). Seemingly it would just absorb the 15-30% tip amounts but a lot of places would have to account better for the time when things are slow. Instead of the server burdening there slow sales (driver of the tip) the business would have to guarantee the wage. It takes the employee out of the opportunistic approach that tipping seems to suggest. The same happens when you take commissions away. The sales staff now wants a higher equilibrium to account for the lack of an upside.

I can’t say double is the right number but I’m sure it’s higher than just the effective 15-30% tip.

planetzero3• 7 years ago

Full time employees will now cost much more to the employer: taxes, health care, benefits, a higher wage (the wage of a waiter is usually much lower than the standard minimum wage).

All these costs add up and the result will be a much higher end cost for your meals. Restaurants usually have razor thin margins as it is...if they even make it past their first couple of years in business.

Again, I feel like most people complain about the wages, but will then complain about the meal costs when they go up because they misunderstand the costs in running a business.

I know many waiters and waitresses and most make way more in tips than they would ever get if they were paid an average wage.

I think if you talked to most waiters/waitresses, they would want to keep the tipping system.

ako• 7 years ago

If you pay for it by paying a higher price, or by tipping, doesn't really matter for the customer.

This is just a scheme to circumvent paying social security and tax costs.

dawnerd• 7 years ago

15-20% is not double or radical. I would gladly pay that much more if I didn’t have to tip.

glofish12• 7 years ago

I don't get it - if you are fine paying the exact same amount why does it bother you to add that as a tip?

I can understand people that say that the cost of meals are in fact misrepresented because you are expected to tip. But if that is not factor I don't see what makes it so unbearable to add 20%

galkk2• 7 years ago

Assuming typical 15%-20% tip, from where comes the double price for the breakfast?

llampx• 7 years ago

I've lived in the US, and now live in Germany. Sit-down breakfast is often cheaper here than the States, and you don't have to leave 20% as a tip.

The only thing that I've run into is that water is not free. And that "service with a smile" doesn't really exist here as an ethos. You receive the same dour service no matter how much you pay.

pkaye• 7 years ago

So the choice is 15-20% tip or double the price? That doesn't add up.

michaelmrose3• 7 years ago

It would be more constructive if you would apply mathematical reasoning to your post and come back.

ilkan3• 7 years ago

a) That's not a business, it's a bait-and-switch scam. b) Non-tip countries have many restaurants.

planetzero3• 7 years ago

a) so something you know is the switch for the past 50 years or more is somehow bait and switch?

b) Of course non-tip countries have many restaurants. The prices are also much higher. I've traveled extensively around Europe and places that have no tips..and the meal price is much higher.

Mindless2112• 7 years ago

Tipping needs to go. It's discriminatory and a PITA. But I think the only way we'll get rid of it is if it's made illegal.

Aperocky• 7 years ago

That's impossible. People's freedom to give other people money on their own volition as a personal gift will not be infringed. We can argue about whether tipping is good or not, but you will not (realistically, it's a non-starter) ban my ability to give it.

arcticbull4• 7 years ago

Tried tipping a police officer lately? How about a border guard haha.

You absolutely can restrict it. An employer can forbid their employees from taking tips, there are plenty who do so already. There's all sorts of regulation around tipping, and under federal law, employers can require employees to participate in a tip pool or otherwise share their tips with other employees.

That means by extension that the state or federal governments can require employers forbid employees from taking tips. You're free to give anyone you want money in a personal capacity but in a professional capacity their ability to receive it can absolutely be curtailed by the government. There's lots of prior art here, especially around business conflict of interest. You can't tip a government employee for their service.

As a thought exercise, if you go to a restaurant today where tipping isn't permitted, you offer $10 to the server. They refuse, because their employer doesn't permit them to accept tips. What do you do? Force them to take it?

toast0• 7 years ago

If you prohibit a tip line on checks and a tip entry on customer operated card machines, it becomes difficult to tip if you don't carry cash. If it's difficult to tip, I can't be expected to tip, and the prices need to be set appropriately, and I don't care if a few people tip.

astura2• 7 years ago

It's very possible.

If I gave my customers a gift it would be an illegal bribe and I could go to jail. My customers are government.

When I was a teenager I worked at a hospital. One of my coworkers was fired for accepting a $1 tip from a patient, we were not allowed to accept any money or gifts from patients or families.

Data_Junkie• 7 years ago

Tipping is banned legally and culturally more than it's allowed.

voldacar• 7 years ago

It should be illegal to voluntarily give your own money to a server as a reward for good service?

arcticbull4• 7 years ago

Yeah, if it improves welfare of the wait staff, forcing the employer to pay a living wage. The practice is discriminatory, there's lots of data that shows that the distribution of the tips is highly un-equal. The state already permits things like pooling, so it has the right to restrict tipping entirely. Further, tipped employees are allowed to be paid an absolute pittance well below minimum wage, which doubles down on the impacts of the discriminatory distribution.

Could or should are different questions, but you're intentionally reducing the conversation to something much simpler than it really is.

crooked-v• 7 years ago

Change the laws that allow businesses to count tips as part of minimum wage and I bet you'd seem them change their tune on the subject right quick.

gamesbrainiac2• 7 years ago

This also made no sense to me when I visited the US. If you don't tip, people are going to be seriously mad at you. Living in Europe, you never tip. You just pay for your meal, and you call it a day.

svara3• 7 years ago

Where in Europe are you talking about? Here in Germany, and everywhere I've traveled so far, tipping is expected. You just tip less than in the US. I guess you could not tip, but your server will be miffed and assume something was wrong with the food or service.

kimi• 7 years ago

In continental Europe there is no tipping. Yes, if you leave a tip they sure won't mind (and they maybe kind of expect it from tourists in tourist traps), but there is no obligation.

hn_throwaway_994• 7 years ago

In France basically there is no tipping. I tipped because I'm American and force of habit, but it certainly wasn't expected. I don't ever recall seeing a tip line when paying by credit card.

nl• 7 years ago

Are you American?

If you are, you may not realise that the people serving you realise Americans are used to tipping and so act as if they expect it too. And yes, they'll like it if you do tip.

No where I've been in Europe or the UK is tipping expected.

gamesbrainiac2• 7 years ago

I've been to Germany on several occasions, and I've never tipped, and have never seen any of my German and/or European friends tip. Sometimes, you just round up to the nearest whole number, but that is it.

Also, in countries that do a better job with pin+chip, you never have to even round up. You only do this in Germany, because you mostly pay for things in cash over there.

CM30• 7 years ago

Over here in the UK people certainly tip. Servers in restaurants are paid minimal wage or above, but it's still the expected practice to give a tip if the service is good (or in some restaurants, when the tip/service charge is added to the bill).

We also often give tips to delivery drivers for takeaways and pizza places, as well as barbers/hairdressers.

yodsanklai3• 7 years ago

This also made no sense to me when I visited the US.

This is not because we don't tip in (parts of) Europe that "it made no sense". These are just minor cultural differences.

You just pay for your meal, and you call it a day.

In the US, you pay for your meal + tax + 15% tip and call it a day. It's really not that different once you realize that the price you're going to pay isn't the one that is advertised on the menu.

glofish12• 7 years ago

In the US, you pay for your meal + tax + 15% tip and call it a day.

Yeah, I think this is what Europeans have such a hard time with - why should you pay more than what the sticker says.

In US we accept that more readily, because the combined price: sticker + tax + tip is still smaller than what an official sticker price would be in say Europe, and you get more for the same price, you get the chance to reward someone.

galkk2• 7 years ago

I haven't used Lyft for a while due to the fact that it had tip request - I've used Uber extensively, because it didn't asked for tips.

HenryBemis3• 7 years ago

Uber in Europe does ask for s tip, buy also gives the option to leave none.

poisonborz• 7 years ago

There is no system for tipping that makes sense. It's a bad social construct, just plain harmful from every angle. Let's abolish it.

weberc22• 7 years ago

I’m fine with the notion of tipping as a reward for extraordinary service, but it absolutely shouldn’t be part of a standard compensation package and especially not considered as part of a minimum wage requirement.

glofish12• 7 years ago

A well-intentioned misconception at work here.

Really ... in what other circumstance would you ever reward an "extraordinary" accomplishment with a mere 15-20% bonus. What extraordinary thing costs just 15% more than the regular, run of the mill normal thing.

gojomo2• 7 years ago

That's 3 assertions without evidence/reasoning, and then a stated preferred course-of-action. Here's the same in the opposite direction:

"Lots of tipping systems make sense. It's a good social construct, and beneficial from every angle. Let's expand it."

Both formulations are just longwinded ways to say "I dislike tipping" or "I like tipping", without adding anything for people trying to form an opinion on the merits.

kittiepryde• 7 years ago

I'm having a hard time finding it now. I've seen a graph before that showed that as tip percentage has increased over the decades, the pay the restaurant gives to the workers has gone down. Tipping more in effect hasn't rewarded the workers, it's rewarded the restaurant.

michaelmrose3• 7 years ago

Here is a longer form of argument from another person.

Tipping shifts the burden of paying staff from the employer who already derive most of the benefit from the staffs work to the patron who is pressured to pay a large bill than presented to make up for how shoddy the employer pays.

For the most effective and the most attractive wait staff especially white females in the most lucrative or the most inebriated environments they actually may make more than they would if paid a flat rate by their employers.

For the majority they are probably paid less. It's like a tax collected from black, ugly, or fat girls and given to 20 something females with nice boobs.

It replaces a negotiated predictable bargain struck after due consideration between adults with the whims of the odious masses who get to decide if their server gets paid based on whether she has sufficiently kissed their overly broad asses.

In some states they allow the servers to be paid less than minimum wage so long as they "tip out" which is to say they earned enough tips to ensure they earned between both sources the federal or state minimum.

Requesting the employer to make up the difference between tips and minimum even on a slow shift without enough business is a sure route to termination so staff are strongly encouraged to help their employers break the law and ultimately steal from them.

There are so many downsides and so few upsides and the upsides accrue nearly entirely to employers and a fraction of servers its hard to imagine anyone seriously arguing in favor of tipping.

stouset• 7 years ago

Except for the fact that virtually all of the available experiential data supports GP's take, and not yours.

hn_throwaway_994• 7 years ago

Feels like we have these tipping articles every two or three months now.

1. Yes, tipping in the US is insane, and it's getting more insane with iPad tipping.

2. No, it's not ever going to go away in the US. There are many, many stories of restaurants that tried to go no-tip (and crowed about it) but eventually had to go back to tipping because (a) the best servers prefer tipping and (b) people will judge you more expensive, even if you're not compared to their price+tip.

3. If you are a highly paid professional living in a major US city, you should tip and tip generously (assuming normal or better service). At the end of the day the difference to you is a miniscule, teeny amount of your salary, but for the server, barista or cashier receiving the tip it's a huge difference.

bluejekyll2• 7 years ago

Even if the service isn’t great, b/c tipping is baked into their total compensation, is argue that you should always tip. Only changes the amounts that you tip by.

arcticbull4• 7 years ago

The thing that's crazy is you hear a lot of people talking about "what's the incentive to provide good services if employees aren't motivated by tips" -- which is it?

Either we've accepted it's a "fuel surcharge" for an airline ticket (as if the fuel isn't part of the price and I'm free to grab my own dishes from the kitchen) -- or it's meant to incentivize behavior. If we pick both, we're not really achieving either.

luckydata5• 7 years ago

Or, simply stop tipping altogether, cold turkey. Let's do that all at once. Tipped professions will turn on a dime and start expecting a living wage, and everything will be fine, just like everywhere else in the world.

When things don't make sense you DON'T need to participate in them.

19f191ty• 7 years ago

Absolutely! The only way this will ever change is if the customers decide to just not tip. Yes, in a few restaurants, especially in a big city servers get paid better in tips. But I bet that is not true for the vast majority.

jandrewrogers2• 7 years ago

Tipping is important to many people who already make a solid living wage, it is what puts them in the middle class. I know people that earn $60-70k, some significant fraction of which is tips. It isn't just important to low-wage workers.

An under-appreciated aspect of tipping is that it is a form of wage elasticity in industries with small margins and highly variable revenue. Hedging revenue risk is going to come out of employee paychecks, and tipping allows the employee to take on some of that risk for higher average take-home pay. Eliminating tipping has been tried in bars and restaurants many times in the US with poor results, such that they revert; employees hate it because they would rather have the income variability and higher average income, and it also impacts the quality of their hours.

There are some complex economics going on with tipping that it would be foolish to ignore.

hn_throwaway_994• 7 years ago

If your only solution involves "let's do that all at once", then it's not a serious proposal.

yodsanklai3• 7 years ago

Yes, tipping in the US is insane, and it's getting more insane with iPad tipping.

Is iPad ordering becoming something common in the US?

A few months ago, I had a layover in Newark (or maybe it was JFK). I was surprised that all restaurants in the terminal used iPad for ordering, there were literally iPad everywhere. The staff didn't even bother to inform me that ordering via the iPad was the only option. Eventually, I ordered but felt entitled not to tip.

hn_throwaway_994• 7 years ago

Not mainly talking about restaurants, but mainly cafés and places with counter service.

HenryBemis3• 7 years ago

I am pro tipping (living in the UK). But it doesn't make sense to subsidize/outsource the staff's salary to the customer (via tipping). I respect the people to make and serve my coffee just as a respect the person who drives me to work (bus, underground). I prefer that these people receive a decent salary from their employer so they can also have proportionally large-r pension contributions. Nobody mentions that.

gojomo2• 7 years ago

Thompson quotes the Uber study showing that ride quality/service does affect tip rates (after other stronger factors) – but then claims the study shows the opposite!

For tipping to be a useful feedback mechanism for the quality/service dimension, quality/service doesn't have to be the strongest, or among the strongest, factors determining the tip size. Just a factor.

And given that all of the other factors mentioned (like demographics of driver/rider, rider habits, location/duration of ride, etc) are fully determined once a ride is matched, it appears that quality/service is the single influenceable contributor to tip size.

So, contra Thompson, it is absolutely the case that, once all the non-controllable factors are fixed, the remaining differential in tip size is a reward for excellent service.

ilkan3• 7 years ago

The meaning of non-controllable is "can't be fixed".

“The quality of the drive does seem to affect the tip,” List said. “It just matters way less than all these [other] factors.”

throwawayuuuu52• 7 years ago

I like tipping my barber. His skill and care makes a substantial difference on the outcome. This feels like an appropriate place for tipping.

luckydata5• 7 years ago

Doesn't the barber set his own rates?

n4r92• 7 years ago

If he's skilled and careful then why doesn't he charge in line with his value?

throwawayuuuu52• 7 years ago

The barber dishes out haircuts with average utility of X, where the average price for a X utils of haircutting is Y. I personally receive more than X utils from this guy’s haircuts. As a courtesy to compensate the additional value that I personally receive from him, which would not be fungible to a randomly chosen barber of equal skill based on anecdata, I provide a tip.

glofish12• 7 years ago

Having traveled extensively in Europe I will say that I came to believe that the American wait staff is more attentive, more courteous and more friendly by large margins.

I am talking casual dining here, Applebee, TGI Friday, etc level of restaurants where you get a decent sample size across many locations.

European restaurants just charge you an arm and leg for water - 300ml - that will be 3 euros, refill ... pff, cough up another 3 euros! There is your "tip" built into that overpriced water, right there.

Thus I find these types of articles quite unconvincing, where all personal empirical evidence says different

Symbiote3• 7 years ago

You need to travel a bit more in Europe, then you can understand that many Europeans find the overattentiveness and simpering friendliness of American waiters shallow and insincere.

You will also find that whether tap water is free or not varies between (and sometimes within) countries.

glofish12• 7 years ago

Really, your problem is over attentiveness? That someone comes over a few times to ask you if you something?

What I found immensely insincere and fake is exactly the European style.

There is this pomp, where initially the waiter is expected almost humiliate themselves, seems like the customer expects to be treated you like royalty, but in fact the waiter is sick and tired of another "royalty" bossing them around, getting nothing for good service, and will screw you over at their first opportunity

In the US the waiter fakes that they are your friend

In Europe the waiter fakes that they are your servant

glofish12• 7 years ago

Tipping is something completely different. I have come to believe that in America tipping is to recognize acceptable service. It is a feedback mechanism to weed out, to mark and penalize undesirable behaviors. The best people to make that determination are the customers themselves.

The only time you should not tip is when the service is bad.

Do understand that if we did not tip the prices would simply rise, we would still pay the same as with tipping, but it would take away a mechanism by which you can make ourselves heard.

ilkan3• 7 years ago

Imagine if every coder was paid below minimum wage and depended on tips in every paycheck... it assumes a default that the employee needs a daily threat of punishment from moody strangers to do acceptable work. Not a fun environment.

glofish12• 7 years ago

it is not a good analogy, you can't immediately tell that a piece of code is good or bad. If you could tell that in 10 minutes, if you could separate a good coder from bad just like that, tipping would improve coding as well.

Tipping is not about moody strangers, the vast majority of people eating at restaurants are normal people with normal, predictable and reasonably benevolent behaviors. People will tip if the service is at least average. Won't tip when the service or food is bad. What better way is there to tell how your business is doing?

As many others in this thread pointed out, both waiters and customers like tipping. The minority that hates it has various misconceptions about both how it works, what it does to salaries etc read a few very salient replies in this thread.

Gibbon1• 7 years ago

What I find interesting about these discussions is the servers side is unrepresented as if it's unimportant. I've come around to the idea that the majority of servers like tipping. And most patrons also like tipping. But there is a minority that finds the arrangement somehow transgressive to how they perceive the power structure. The server is supposed to be at the bottom of the totem pole and yet here they are expecting me to hand them some money.

grok2• 7 years ago

I don't know -- if service at a place is bad, you just end up not going there eventually -- you still can be heard without having tipping as a mechanism to do it. I don't mind that the price is higher and everyone gets a proper wage without having to worry about the variability of tipping.

stronglikedan• 7 years ago

The best people to make that determination are the customers themselves.

The only time you should not tip is when the service is bad.

IME, many servers don't seem to think they got stiffed for poor service, but instead blame the customer for being cheap. That's why I always leave something, but at a percentage relative to the service. It's probably the same outcome in the servers' minds, but at least I know I tried to convince them otherwise.

luckydata5• 7 years ago

if you believe in fairy tales that's the way it works. If you believe in evidence, then...

https://scholarship.sha.cornell.edu/cgi/viewcontent.cgi?arti...

RickJWagner• 7 years ago

I don't mind tipping, especially if I feel the server did a good job. (Not even exceptional. Just 'good'.)

But I am a little concerned about 'tip inflation'. I am just now comfortable going over 10% (with it's easy math), and it seems 15% and even 18% are fading quickly into the past. I'm not wild about paying 20% or more as a tip, it feels like I'm being gouged.

BrandoElFollito• 7 years ago

From what I read, this is stealing from the customer by everyone.

The owner is happy to pay less.

The waiter is happy to get tax free money.

Since nr_customers >> (nr_owners + nr_waiters) I have zero empathy towards anybody in this wicked system.

But I still tip when in the US because peer pressure, and I am there only once every few years.

danieltillett• 7 years ago

I have often wondered if the solution is to tip the manager/owner of the business and let them distribute the tip (or not) as they see fit. Ultimately tipping or not tipping will be built into the overall cost of the meal so why not give the money directly to the person with the greatest ability to optimise the dining experience.

The American System of Tipping Makes No Sense

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