The Case for Doing Away with Gratuities

tipsA few years ago, I had a conversation with some friends about the practice of tipping servers every time we went out to eat. My friends were aghast at me for my resistance to tipping servers. Do not get me wrong, I believe leaving a tip at a restaurant should be about letting a server know that you appreciated the attention they bestowed upon you while serving your dinner. Tipping should not be about the server’s salary. Rather it should be about gratifying someone for the extra attention given to you. At first, I found it curious how tips were expected in the United States, as opposed to other countries. I did not understand it until someone explained to me that I was looking at tipping the wrong way. In the United States, tipping a waitperson is about supplementing their wages, instead of recompensing them for exceptional service.

The problem with this setup is that tipping has given restaurant owners someone to subsidize the salaries of their employees. My argument has been that tipping is wrong because it has been converted from a “thank you” for good service into an added surcharge for eating your meal. Curiously, many individuals in the United States do not seem to understand this because it is so engrained into the society that tipping is the standard for eating out. I think it should be renamed to what it actually is – a subsidy to the restaurant.

Many people still find my stance on this puzzling.

However, I believe that my stance on this issue is reinforced every time the public discussion on minimum wage is raised. Normally, almost every time, the debate on minimum wage and living wages is focused on the fast food establishments while completely ignoring the fact that the discussion should include, if not led by, the sit down restaurants that have benefited from the subsidies paid to their employees by the diners. I still do not understand how full-service restaurants are allowed to escape the discussion about livable wages in light of what I believe is their abuse of their employees and diners alike.

Interestingly, the city council of El Paso recently discussed the issue of wage theft and yet no one brought up the discussion of restaurants underpaying their wait staff.

I realize many of you are wondering what this issue has to with wage theft. Tipping waiters is a time-honored tradition that has stood the test of time is the reason many don’t see a link between the two. The fact is that paying someone less than the minimum wage is improper. However, it is not illegal because the discussion about livable and minimum wages has not addressed the issue of tipping.

Consider the July 10, 2014 report by the Economic Policy Institute. The report, “Twenty-Three Years and Still Waiting for Change” by Sylvia Allegretto and David Cooper clearly lays out why I believe tipping is wrong. According to the report, the federal minimum wage is $7.25 an hour. Yet, the same law that sets that minimum wage statutorily creates a lower minimum wage for servers. The servers working at the restaurant you recently dined at are only required to be paid $2.13 an hour by the restaurant’s owners.

I realize some of you are arguing that it does not matter because they make up the difference through the tips left by the diners. This thinking, though, misses the whole point. First, the gratuity has moved away from being a “thank you” for service to a subsidy for the waiter paid for by the diner.

The Economic Policy Institute report goes on into a detailed explanation about the economics and demographics of those who rely on the gratuities for living. I encourage you to take a look at it, as it is enlightening of how serious the problem is for the economic system in terms of livable wages.

The report lays out an argument of how tipping disproportionally affects minorities and perpetuates the poverty rates in certain segments of the society. Yet, no one seems to be talking about this when the debates about raising the minimum wage or paying livable wages. Why is that?

Is it because the issue of gratuities has become so engrained in the society that for the majority it is a required part of the dining experience. If this is so then it should be acknowledged as such and be classified for what it is – a subsidy added to your dining experience, not a tip.

Those arguing for higher minimum and livable wages need to include those who are unfairly subsidized by the clientele, the servers who rely on tips to make a living; otherwise, the advocacy is hypocrisy at its most insidious.

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