They are also the first ones to moralize people about how tipping is a must and if you don't tip, that poor waiter will be unable to make a living.
NO! The ones that get away easy in this whole scheme are the owners that have now no responsibility to pay their employees correctly.
Profits should be split, regardless of how tips are handled.
They try to keep the cost of food at 30%, as is common in business. COG around 1/3 or less.
So when we have a really busy night, there is excess profit relative to the amount of tips.
Assuming tips are a constant percentage of sales, the amount we earn extra is proportionate to sales.
But there is a certain minimum number of sales the owner must reach to break even. At a certain volume, profit accelerates further, but tips are still relatively constant.
So my desire would be for a restaurant to split excess revenues more equitably in addition to whatever baseline wage they set.
Perhaps, but it sounds more like that your minimum wage isn't set to be a living wage[1].
That's the important part - minimum wages should be set so that someone who is working full time (~40 hours/week) should be getting enough income so that they can afford a modest standard of living for themselves and a family too.
Can I ask... Why? Shouldn't a "minimum" wage provide a "minimal" lifestyle rather than a modest lifestyle? And why should one be able to support a family on a single minimum wage?
It means being able to afford the basics: housing, food, healthcare, transport, and still being able to have enough left over to build a 'rainy day' (emergency) fund.
And the reason "modest" rather than "minimal" is because one is living, the other is effective slavery.
People who cannot afford for one moment to stop are people who are on the edge of disaster. Any (additional) misfortune that strikes - whether by their own actions or not - could send them from "surviving" to now being forced into debt, which while it might provide temporary relief, almost certainly means they are now in a downward cycle.
With a living wage, even if misfortune does drive them into debt - there's at least a better opportunity for them to work their way out.
Also, modest = minimal by the original standards.
Historical context: https://www.law.cornell.edu/wex/minimum_wage
Source: Most people i know who earn tips, are the ones who rather refuse or minimize a tip to someone else (central europe).
Sadly this one only covers Sweden but you can look up what restaurants have signed the contract with the union. This guarantees fair wages and working conditions. The law in Sweden is pretty free so there exists unions that are supposed to talk to the companies and get an agreement on what is fair both ways.
I found it here: https://www.reddit.com/r/EndTipping/
I think the bigger issues are at play whether it's is the fact that minimum wages need to be adjusted, a more modern solution is needed to replace minimum wages, whether a job in question is simply suitable for a human to perform (in this case a doorman, they don't really have them where I live so I don't know their purpose), or maybe children (even adults) need to be taught better money management skills.
I personally think that an area for quick improvement would be helping folks with managing their money. Anecdotally, I know people who haven't paid more than the minimum on student loans because they that they will automatically be forgiven in 20 years. On a $40k loan, they have easily squandered away a down payment on a house or money they could have otherwise put in their 401k.
Sure this is technically correct according to the way the law is written but it ignores the reality which is that a large group of criminals ignore the law on a daily basis and face no consequences. Wage theft is MASSIVE and widespread across America especially for low wage workers, who often rely on tips (but it even effects high wage workers too!). More money is stolen in the US through wage theft than all other methods combined. Business owners (especially small business owners) steal from their employees by not paying them when they quit (oh I guess we just lost your last paycheck, sorry, we'll get it to you soon I promise), stealing tips, intimidating employees into not reporting wages under the minimum, refusing to pay legally mandated overtime or refusing to allow legally required breaks or a variety of other ways owners can use their power to illegally extract unpaid labor from their employees.
The solution is to abolish tips and require business owners pay their workers fair wages, or help the workers bargain collectively to ensure this themselves.
* steal from their employees by not paying them when they quit * intimidating employees into not reporting wages under the minimum * refusing to pay legally mandated overtime * refusing to allow legally required breaks
I'm owed between $20,000 and $40,000 by two (New Zealand) employers in particular, who refused to pay for or record my extra hours worked, and one of them threatened me with physical harm if I went to the government watchdog.
One of them was a small business, the other a multimillionaire. It was the latter who paid less than the minimum every day I worked, and demanded I work as many free hours as he could force me to. It's not just physical harm with him, because he also promised to destroy my reputation around town if I so much as stepped out of line.
Yeah, I'm a sucker for not resigning on the spot. I know.
2. The "teach better money management skills" has really nothing to do with this problem, but is continually trotted out as some sort of solution. If you don't have enough money, there's no "managing" it. This isn't an avocado toast problem, it's a wage issue.
Additionally, the incentives are a moving target. For example, with the federal government threatening to end forgiveness plans, can you blame someone for not taking advantage of the option with the potential they will be stuck with the bag, plus interest? Same goes for home ownership incentives, charitable giving incentives, and so on. If the incentive could be gone one day due to the massively complicated and political game that is the tax code, I can hardly blame someone who doesn't have money for a financial adviser for not taking advantage of those programs.
I made no claim that $7.25/hr is a livable wage. That is the current federal minimum. Employers are required to pay the minimum, if they aren't, they're breaking the law.
Money management is certainly no silver bullet, however, it plays a role. If you net $13k/year then you have to manage that money so you don't spend more than $13k/year. Most would agree that it is extremely tough to live on $13k/year. No matter the difficulty the money still has to be managed.
In my student loan example, if you have a loan schedule of 30 years @ 6% you will pay $46k in interest on a $40k loan when only paying the minimum of $240. That same loan if paid off @ $440/mo, nets you $33k over that time period. Here you would manage your money so that you can pay as much as possible on that loan as often as possible.
Making more money doesn't solve money issues, it just covers them up. Saying that there nothing to be done because the amount spent is greater than the amount earned seems rather foolish. I'm not saying that in any given situation there exists an outcome where you can manage spending less than you earn, but managing money wisely will always improve the situation.
The problem is that calculating such an amount is more than tricky. Consider that inflation changes "constantly" or whether newly enacted bills are factored in. From my quick research, it appears as though the affordable care act made the assumption that minimum wage already factored in mandatory health insurance.
Now consider what does it mean to say a person is "living." Are you living if you have a roof over your head and food in your stomach? Is the food being considered, the same meal morning noon and night, or a variety of foods? If you are making minimum wage are you eligible for SNAP (a.k.a.food stamps)?
What about access to the Internet, OTA television, radio broadcasts, or entertainment of some sort? Biologically none of these are needed to live, but I bet an argument could be made.
I agree with you that no one should work for minimum wage, always the maximum. I think simply raising the minimum wage amount is treating symptoms of bigger issues.
You are beyond naive if you really think that because these laws are on the books they’re not being routinely and widely flouted or ignored.
If you really find it hard to be true that employers will try to spend less on employees, you’re not capable of participating in this discussion because you lack even basic familiarity with the real world.
I tried to get a labor lawyer to intervene but the total losses weren't enough for them to bother litigating. They sent a demand letter and it was ignored.
Next option would have been small claims but I didn't have the time or inclination to fight it anymore at that point. I can't imagine a waitress would fare much better.
As long as a shady employer keeps their take below $10k, it seems they are untouchable.
According to the most recent census data I could find (2015), there are approx. 27M businesses in the US[1]. Assuming half those businesses are wage thieves, that would mean 13.5M businesses are currently in violation of the the law. The DOL can place a $10k sanction on the business owner for a first infraction[2]. This would then mean that the US gov't stands to make $135B by placing sanctions on these businesses. To catch each business, let's say it costs the DOL $2500/business. After looking into each and every business, they would run a total of $67.5B. Now they have made $67.5B after all expenses have been made. To put that in perspective, the US gov't has put aside $9.7B for the DOL in 2018[3]. As you might figure on your own, $67.5B is nearly 7 (6.9587628865979381443298969072165 if you want to be super accurate) times the DOL's 2018 budget. Now if you mean to tell me that the gov't is going to leave that sort of money on the table, then you and I need to figure out how we benefit from this.
You might well be thinking something along the lines of "The gov't is inefficient, etc. There is no way they could reclaim all that." You're right this is definitely a perfect world scenario, but even if they could only claim 1%. That still makes up a 10th of next years DOL budget. For the gov't , these numbers only get better as more businesses commit these crimes.
Now we have to look at this from the perspective of a business. Again there is only roughly 27M in the US. To make it fiscally responsible to take the $10k bet of sorts the business must save at least $10k/violation, obviously. For the sake of this argument let's say violations are handed out per person per month. ((404)7.25)+(((3024)-(404))(7.251.5)) = $7250, that is how much you make at minimum wage including overtime... If you worked literally every hour of every day for a month (30 days, technically). So if we assume the business thinks a person is going to report the violation, they are better off just paying minimum wage upfront. Let's reel this in a bit and say you work 40/wk/mo in overtime. ((404)7.25)+((404)(7.25*1.5)) = $2900. So now the business definitely comes out ahead. They would risk $7000 by trying to save, what, $1000? Remember, this is an extreme case, not everyone is going to work 80 hours a week. Even if a business isn't more likely to hire another person to cover your 40 hours of overtime a week, they can only save $580/mo compared to the $10k/violation.
I know that there are businesses that will literally do anything under the sun to make a buck, but I find it hard to believe that even half of businesses would go against some of the math above.
[1]: https://www.census.gov/data/tables/2015/econ/susb/2015-susb-...
[2]: https://webapps.dol.gov/elaws/elg/minwage.htm#Penalites
[3]: https://www.dol.gov/sites/default/files/FY2018BIB_0.pdf
A report from the Economic Policy Institute[1] found that minimum wage violations affected 17% of workers in the states surveyed (the ten most populous in the US) and averaged $3,300 per worker who was affected.
[1] http://www.epi.org/publication/employers-steal-billions-from...
Tipping in the service industry in the US is part of the culture, which has been historically difficult to change by declaration.
However, I'd like to start with two labor patches (in the same set).
1) Pro-rate all benefits (with 3/4ths of median 'full time' work hours as full time).
2) Eliminate that tip as part of wage 'loophole'.
That is interesting. As I understand it now, the way tips are factored into wages, it benefits the employee more so than the employer. Society loses because the employee is supposed to report tips so they are taxed, the employer loses because they still have to pay minimum wage, and the employee wins because they are paid minimum wage and get their tips tax free.
Maybe I'm just being dense, but how would this elimination be beneficial?
Employers of workers in customarily tipped jobs can and do use tips as a performance metric, so if the employer has to top up your tips to minimum wage, it probably also means you are also losing your job. This also motivates overreporting tips.
Not tax free. Your employer reports 8% of your total receipts to the IRS as income. It's likely less than you make in tips, but you still pay some tax.
Even if customers end up paying the same price in the end they are not thinking about the cost of the tip when ordering their food. They are just looking at the price on the menu.
https://en.wikipedia.org/wiki/Digicash
That said, what makes you think having a cash-oriented society guarantees tipping? There are industrialized nations that still rely on cash but where tipping is not ingrained in the culture; my experience in Japan was that if I left a tip people would assume I had made an error in my arithmetic or forgot my change.
I agree that privacy is a problem with going cashless. Let's ignore tipping and instead focus on an actual problem.
Cash provides for people in a lot of ways that digital money can't or never will. Tipping, getting paid under-the-table, drug purchases... can digicash benefit all these people? Those groups should stay with cash, the amount of OpSec required for digital alternatives is too much...
Why the obsession with replacing everything with technology when sometimes the old system works fine?
How is that more convenient? You've a pipe dream if you think one option is more convenient for everyone
Are you a GNOME UI designer?
Just think about how a great a deal tips are for waiters. 10-20% of gross revenue is huge.
What cashless tipping does here is take away the ease of under-reporting.
Sure there is. In tipped professions, tips go directly to the waitstaff the day they are earned. It's what makes being a waiter a fantastic starter job when you move to a new city, say, or get kicked out of your home by an abusive spouse, or just need to make money without waiting 2-3 weeks for your first paycheck. It also reduces the opportunity for your employer to cheat you out of wages earned: you settle your tips at the end of the night, in full view of everyone, instead of receiving a deposit or paycheck that may take weeks to "correct."
So the idea that tips reward performance is a joke. If I was excellent one night, a coworker who was terrible would get a boost (in average) while my take was lowered.
I agree that there are problems with a cashless society. I just do not see the end of tipping as one of those problems.
> changing from a tip-based system to just having a higher base salary does not sound so terrible
Of course it doesn't. But that isn't what's happening. Instead, they get paid the same base salary and don't get tips. And the profound disinterest in problems like this is why more and more people resent Silicon Valley rather than look up to it.
Why do people expect tech companies to fix this problem? Tech companies did not invent tipping and tech companies did not create a system where certain professions rely on tips.
Other industrialized countries are doing fine without tipping, and some of those countries still rely on cash. What do you think doormen and bartenders in those countries do?
> tech companies did not invent tipping and tech companies did not create a system where certain professions rely on tips.
No, but they did break the existing model whereby workers received tips, without thought how for what an alternative looks like. And it happens time and time again, like enabling the gig economy without considering what happens to the benefits and job security of those forced into it. And each time the industry as a whole throws up its hands and says "society needs to fix it" rather than engaging proactively.
Like I said, people resent Silicon Valley. Maybe not the majority yet, but it's on the rise. Before long Silicon Valley will replace Wall Street in many people's perception, as it helps to concentrate wealth to the haves and away from the have-nots. Those of us working in the industry ought to be concerned about that.
The reason the tech industry will almost certainly not wind up with the negative image that financial companies suffer with is that people actually like the things new technologies do. People prefer Orbitz to dealing with travel agents. People prefer email to postal mail. People prefer downloading to buying CDs, and they prefered CDs to vinyl, and they preferred recorded music to buying sheet music and learning how to play an instrument. Despite decades of complaints by all these various affected stakeholders, people still have a positive opinion of the tech industry, because at the end of the day they see tangible improvements in their lives.
I did not propose this strawman at any point. I merely said that tech companies should be actively engaged in solving the follow on problems from their creations, not that they shouldn't be allowed to create things.
There are a few limited cases where it makes sense to force companies to deal with negative impacts of their technology -- environmental pollution comes to mind. For the most part, society simply has to adapt to change, because change is the story of human progress. Some jobs may be lost, some people may be inconvenienced, but saddling every innovator with the responsibility for those negative outcomes (yes, that is what it means to demand that they be "actively engaged" in finding the solution) will only serve to freeze our society in time.
"Hey! We created this great, convenient new method of paying for things, you should sign up to process all your payments through it"
"Wow, looks fantastic. I'm signed up. One problem, though: you can't tip people through it like you used to be able to."
"Oh, goodness, yes, that's a problem alright. A real bug in the system. Someone should do something about that. Anyway, I've got to go, good luck getting that fixed!"
Actually getting your hands on cash money is surprisingly hard in my country though, ATMs are rapidly vanishing.
The solution is not tipping, the solution is applying the law and closing loopholes.
[1] http://www.lemonde.fr/economie/article/2017/08/26/en-colere-...
My experience traveling is that places like France with legally mandated tip amounts have very inconsistent service quality. It can be good, but it can also be very bad. And when a server decides to make your service bad, there is nothing that you can really do about it and nobody will care.
People tip based on the following:
The amount of the bill (everyone knows that a server who carries filet mignon works three times as hard as a server who carries an omelette and a cocktail is five times harder to pick up from the service bar than a soda - facts of life)
Guilt.
Their upbringing.
The server's gender and race (really)
How attractive the server is.
Their mood.
The weather.
The noise level of the restaurant.
If the they were touched by the server.
In practice, once you actually study this stuff, tips have very, very little to do with the quality of service received. Specifically, its around 2% of the tip amount.
https://www.vox.com/2014/7/17/5888347/one-more-case-against-...
Service can be really inconsistent and also bad in the US too.
Above all restaurant service is a team effort and the service you receive is merely a function of the quality of management. Its insanely unemphatic to believe your server deserves a dock in pay for things out of their control.
So in addition to worse service, you get stick with the unnecessary burden of having to calculate a tip at the end instead of simply getting a bill and paying for it. If you're paying cash it can be difficult to end up with the exact change you need to pay the tip you want, and if you're splitting the bill it can lead to frustrations when different people want to tip different amounts (or some people calculate the tip wrong).
That said, if Trump's proposed revision of regulations around tipping go through, I'm going to probably greatly cut back on tipping. It is one thing to reward the waiter. It is quite another to believe that the money is going to the owner of the restaurant.
This steak is nice, but it's not $17 nice. I think I'll just pay $14 for it.
These new tires for my car don't ride as well as the old ones. I think I'll only pay $50 for them, instead of the $75 asking price.
It was a nice concert, but I don't think it was really worth the $90 I paid. I'm going to pay $50.
There was a bit too much traffic on the bridge today. I'm going to only pay 75% of the usual toll.
If the contract has, "This is what I pay", I am willing to pay that. I agreed to it, it would be dishonest to do otherwise.
If there is no contract, I am free to choose whether or how much I pay. I err on the side of generosity. But if you spill my drink on my clothing, then fail to serve my child, then I see no reason why I should voluntarily reward your incompetence.
Incidentally even if there is a contract, you would be amazed at how much leeway there turns out to be if you have a problem.
For example if your restaurant gave me steak with Brussel sprouts served with it, I'll send it back because I'm allergic to cooked Brussel sprouts. I'm willing to pay for the meal even though I can't enjoy it, but you'd be amazed at how many restaurants will take it back, and offer me a different meal for free.
If the new tires that you just installed immediately spring a leak and I complain, you'd be amazed how many tire shops will replace them for free.
And so on. If you have a real problem with what you received, and you're polite about it, frequently establishments will try to make it right.
Unless you are an uncaring psychopath you should pay servers in the US for bad service as well - everyone should be paid for the labor they do. If they aren't doing an adequate job they should be reprimanded or fired. That's not your job though, that's their boss's job. You don't know if they are just having an off day or the problem you had was caused by someone else.
Furthermore, most places pool tips so you're probably docking the pay of a really good server.
But if I take my clothing to a drycleaner, and my clothing comes back torn due to their incompetence, I'm not expected to pay for the drycleaning. Ditto if the valet damages my car.
The fact that someone put time in does not entitle them to my money. If I receive something of value, I give something of value. If this makes me a person that you do not wish to know, then I'm happy that I don't know you because you sound like an unpleasant person for me to be around.
Compare it to the business world, where if you ship a pallet of widgets and a few of them get damaged, you can't just tell UPS "you broke my shit, I'm not paying you." No, they delivered your shit, however subpar, so they expect payment for the trouble. If you keep withholding based on principle you'll find yourself blacklisted and have your account sent to collections.
And to that: a server is very rarely personally responsible for a bad experience. Restaurant service is a team effort and the service you get merely reflects how well management functions.
Also while I can't speak to why other people don't tip, the reasons why I (very occasionally) don't are usually under the server's control. Even if the immediate cause of my unhappiness was not under their control, they had the option of acknowledging the problem and offering an apology. It takes a lot to lose my tip.
I would not have complained if there were no tips and our salaries were increased a bit to compensate.
No, I do not have a lot of empathy for people who are unwilling to accept change or who think that a company that introduced some new technology should be held responsible for how that technology personally affected them. I have no interest in freezing society in time and only allowing new ideas that have no negative impact on anyone to be put into practice.
As if you are going to change the tipping culture in the US?
I use cash because there are less fees to small business, and I like privacy. You are obviously free to participate in FB or whatever privacy-compromising activity you want
(pdfs):
http://scholarship.sha.cornell.edu/cgi/viewcontent.cgi?artic...
http://scholarship.sha.cornell.edu/cgi/viewcontent.cgi?artic...
There are also issues where tipping can be biased due to racial or gender discrimination. Racial discrimination (I don't have a gender study handy): https://psmag.com/economics/racism-black-restaurant-waiters-...
I wonder if anybody has ever done a study with a group of waiters where on alternate days they alter the quality of service they provide but nothing else. Are their tips constant?
My experience in France, is, in fact, quite different from yours. I found the same bell curve of service that I see in the US.
If anything, the waiters in France were LESS irritating than in the US in that they tended to not interrupt you unnecessarily.