Should Restaurant Culture Change in America?
After more than a hundred years of tipping in America, is the country finally ready to put the two-tiered system to rest? It may be more complicated than most people think. Brought up in 2019, the government proposed raising the national minimum wage to $15 an hour. As of now, this is still an ongoing debate. However, if this were to pass this could bring the end of tipping to tipped employees. Especially those that work in the restaurant industry. For the servers, this could be a really big pay increase. This will ensure that the employees will receive proper payment and they will not have to worry about getting stiffed. For managers and owners of restaurants, it may be more difficult to accommodate this new minimum wage. Some owners and workers are for it while others warn it will cause devastating effects. Also, how will this pay increase affect consumer spending in restaurants? Is America really ready for a new way to pay tipped employees or will the practice of tipping last for another hundred years?
Where exactly did the idea of tipping come from? Well, it doesn’t exactly have a favorable origin story. The practice of tipping actually originated back in Europe and was adopted by the U.S. as a “practice of sophistication,” according to one article written by Sophia Ling, for The Emory Wheel. The article focuses on how tipping is actually doing more harm than good to servers. Tipping was later popularized after the Civil War, mostly in hospitality industries, as a way to avoid properly paying former black slaves (Ling, 1). Later in the 1900s, most states hope to eliminate the practice but restaurants pushed back because they would have to offer higher wages and ultimately raise menu prices. (Ling, 1).
Raising the service wage has been a long-time debate. As an employee in the restaurant industry, I asked some of my server friends what they thought about raising the serving wage to $15 an hour. Most were for it because on numerous occasions they have gotten stiffed or tipped very little by patrons, even by large parties. In addition, some work well over eight hours because they said that they needed the money. If servers across the country start receiving the national minimum wage of fifteen dollars an hour this could potentially allow tipped workers to work the typical eight-hour workday. As of now in Pennsylvania, servers in restaurants earn about $2.33 an hour plus tips. That is way below the state minimum wage of $7.25. Since tipping is a huge part of a server’s income, they become very reliant on it. Especially if they have bills to pay or a family to take care of. According to the Economic Institute, servers make up about 12.8% of the poverty rate and at least 46% of tipped workers and their families rely on public benefits compared to 35.5% of non-tipped workers and their families (Economic Insitute, 3). Another advantage of increasing servers’ pay would be providing more for themselves and for their families.
If this proposal were to pass this would eventually end tipping across the country. “How Should Your Favorite Restaurants Pay Their Workers”, an article written by Sam Gringlas, gives both perspectives from servers and restaurant managers on raising servers’ wages. In one interview, Laurie Torres, who owns a Mexican restaurant in Ohio warns that raising tipped workers’ wages will hurt the restaurant industry and will harm small businesses that can’t make that high cost (Gringlas, 2). A server who worked at Olive Garden in Baltimore even warned that a huge layoff could be on its way if tipping is banned (Gringlas,2). That server is not entirely wrong. The Congressional Budget Office mentioned that $15 dollars an hour would be a massive increase to 27 million Americans, but warns it may also result in the loss of 1.4 million jobs (Gringlas, 2). The C.B.O. then goes on to mention that higher wages would increase the production of goods and services for employers. Eventually, those higher costs would pass on to the consumer who would end up paying more for certain items and as a result would buy fewer goods and services (C.B.O, 8). However, these are just estimates. So is raising the minimum wage to fifteen too much? Or should employers start paying their servers the state minimum wage and forget tips entirely? In states, such as Montana, Minnesota, Nevada, Washington, Orgon, and California the tipped employees receive the state minimum wage, but they do not receive tips. How these restaurants were able to accomplish this, according to the Economic Institute, was through slight increases in prices, less turnover, and higher productivity. Could this be one solution to the tipping issue in America? But why does the U.S. have trouble trying to stop the practice of tipping?
Hosts, Stacey Vanek Smith, and Cardiff Garcia, of the podcast The Indicator of Money, interviewed Cornell Professor of consumer behavior and marketing, Micheal Lynn, about why restaurant tipping is still a thing today. He replies that he actually does not know, however, one argument is that tipping allows restaurants to legally pay their servers less than the state minimum wage because tips are expected to go above the minimum wage already. Plus restaurant owners can charge lower prices on the menus. Micheal Lynn states, “When customers evaluate the expensiveness of a restaurant they look at menu prices. They don’t take into account the fact that they do or do not allow tipping. And so a restaurant with 15% higher menu prices and no tipping is going to be perceived as more expensive than a restaurant with slightly lower prices, but they expect tips,” (Vanek- Smith, Garcia, “Why Americans Can’t Quit Tipping”, The Indicator of Money). Lynn believes that adding a service charge or automatic gratuity may be beneficial to the restaurant and argues that it will separate the paying services from the payment for food and keeps menu prices low (Wofford, 1). Consumers will still pay slightly more, but if the menu prices are low plus the service fee consumers are still going to think they are paying the regular price for food (Wofford,1). Perhaps adding service charges or automatic gratuity may be the future of tipping if the new minimum wage doesn’t pass.
After over a hundred years of tipping, is America finally ready for another way to pay servers? One possible solution is raising the national minimum wage to $15 an hour. Some will argue, though, that this wage increase will cause more harm than good, or even at $15 an hour workers still won’t be making nearly enough to get by. Ideally, it may be better to add service fees or automatic gratuity because this way it is guaranteed the server will receive the proper payment. In Europe, restaurants do include service fees. Since we adopted the practice of tipping from Europe perhaps the United States can adopt service fees. America still has a long way to go before anything can be done, but perhaps there is a possible solution to this issue.
Resources
Gringlas, Sam. “So How Should Your Favorite Restaurant Pay Its Servers?”
WHYY PBS, 20 Mar. 2021, https://www.npr.org/2021/03/20/977958521/so-how-should-your-favorite-restaurant-pay-its-servers-well-its-complicated.
Ling, Sophia. “American Tipping Culture Is Harming the Food Service Industry | Sophia’s Smorgasbord | The Emory Wheel.” The Emory Wheel, https://www.facebook.com/emorywheel, 24 Apr. 2021, https://emorywheel.com/american-tipping-culture-is-harming-the-food-service-industry-sophias-smorgasbord/.
“Overtime and Tipped Worker Rules in Pa.” PA Department of Labor & Industry, https://www.dli.pa.gov/Individuals/Labor-Management-Relations/llc/Pages/Overtime-Rules.aspx
“Seven Facts about Tipped Workers and the Tipped Minimum Wage | Economic Policy Institute.” Economic Policy Institute, https://www.facebook.com/EconomicPolicy, https://www.epi.org/blog/seven-facts-about-tipped-workers-and-the-tipped-minimum-wage/.
Vanek-Smith, Stacey, and Cardiff Garcia. “Why Americans Can’t Quit Tipping.” The Indicator From Planet Money, 20 Feb. 2019, https://www.npr.org/transcripts/696421086.
Wofford, Chris. “Should We Abandon Tipping? Here’s What Would Happen.” ECORNELL #IMPACT, https://ecornell-impact.cornell.edu/should-we-abandon-tipping-heres-what-would-happen/.
