I have several good friends that work in this business in Seattle, where several restauranteurs tried the "no tipping" model. Anecdotally, in a popular quintessentially Seattle restaurant, a good front-of-house person may net around $40/hr after tips, some more and some less. I don't have a lot of sample data for the "no tipping" restaurants, but my general impression is that it was on the order of a 10% reduction in pay.

One reason several of them have mentioned is that many customers are happy to regularly tip much more than 20%, and this is often correlated with the highest spending customers. Making it a non-discretionary 20% puts an artificially low cap on how much they earn from the customers that pay the most. At one time some customers would leave extra cash on the table after paying the "no tipping" bill, but no one carries cash anymore.

Places that net $40/hr have enormous difficulty hiring right now. These are not poorly paying jobs but the broader lifestyle is pretty terrible even at good restaurants, made even more terrible because of the employee shortage.

One overlooked issue is that many restaurant workers in the big cities are originally from "flyover country". When the restaurants closed during COVID, a large number went back home. I was talking to a waitress in the middle-of-nowhere Iowa a few months ago and she had just moved back after several years working in New York City restaurants.

One would think a sign out front that said "Now hiring: Wait staff, starting pay @ $40/hr (or even $30/hr)" would have no trouble finding and retaining talent, even in big cities like Seattle.

I don't think I've ever seen a sign advertising anything near that for restaurants.

These are skilled restaurant jobs, they don't advertise with signs. Same reason there isn't a "help wanted" sign for my job. It is a social market. There were shortages already before COVID in Seattle, but now the shortages are extreme. Restaurants are reducing opening hours and days.

I have friends working these jobs. The consistent pattern is that they are only working the minimum number of shifts required to pay their bills, and they live pretty cheaply. You can't staff the restaurants when all of your employees only want to work 1-2 days a week. They could easily work more hours, and did before COVID, but are choosing not to now. And because restaurant work is extremely flexible and available on-demand, it makes their life flexible.

Many people have adapted their lifestyles to having less money and not working, especially with the generous unemployment benefits. Restaurant workers I know fall into that camp. My SO was receiving $75k/year on unemployment during COVID and turned down jobs paying $125k+ because they discovered the unemployment benefit was sufficient for a lifestyle of doing nothing that they were happy with. Not likely to take a job anytime soon either.

As a tangential observation, while I know many people in this position, none of them is doing much with their newfound free time. Just kind of coasting.