Tipping: Why it should (or shouldn’t) exist.

The concept of tipping has always been a sore spot with me. It is not because I am cheap (anyone who knows me will attest to that) nor is it because I feel that tipping serves no purpose. It is because of the way the system works and the how it is designed to have the consumer shoulder the entire responsibility. I strongly feel that required tipping as a whole should be abolished in favor of actual, livable wages and that the practice of tipping should be followed as it was originally intended, to reward service above and beyond the norm. Many people would disagree with that statement including restaurant owners and those who’s jobs rely on tips because restaurant owners save on labor costs and your average, tip-based worker will usually pull in a larger salary than someone doing the same job not having tips factored in to their salary.

So then, what exactly is the issue? Anyone who eats out at all or lives in a metropolitan area is familiar with the modern practice of tipping. Tipping is, by definition, a gratuity given to someone for a service, usually in the form of money although it can be presented as other things such as gifts or information. Although not strictly reserved for the food service industry, the idea of tipping is most often associated with wait staff in restaurants and people who serve others as part of their day-to-day job. Unfortunately, modern society has made tipping a requirement which was never the original idea behind it. Once upon a time, a tip was given to someone as a reward for going above and beyond in their duties and used as an encouragement for someone to provide a higher level of service, thereby increasing the size of their tip. To put it simply, a tip is supposed to be an extra incentive given willingly to the server to reflect the level of satisfaction with the service provided to the tipper, not to save an employer money. This is not a hard concept to grasp!

Let’s look at a couple of examples that expose the problem with the modern tipping system we have today. We’ll use restaurant service and waiters in our examples as this is one of the more common forms of tipping.

Consider the following scenario:

Mr. Smith goes in to a nice, family-style restaurant with his wife and two kids. They are immediately seated by the host and greeted by a waiter who brings them menus and proceeds to take their drink order. Three minutes later the waiter comes back with the drinks, takes the food order and goes back to the kitchen to put the order in. Ten minutes later, the waiter brings out the food and serves the Smiths their food, which is exactly as ordered. Every five to seven minutes the waiter checks on the family to make sure their drinks are full and that they have everything they need. When the they are done eating the waiter removes the empty dishes, offers dessert and checks on the well-being of the guests. Finally, the waiter brings the check to Mr. Smith who reviews the cost and hands it back to the waiter who takes the payment, processes it and drops off the final receipt while thanking the Smiths for coming in. Mr. Smith adds a 20% tip to the bill and the Smiths get up and leave, happy and content with the meal and service provided.

Most people would say this was the perfect dining experience and I would tend to agree. The Smiths received great service, good food and a pleasant personal wait experience. The tip was well-deserved.

Now, consider the next scenario:

Mr. Jones and his family go into a family-style restaurant. Although the place looks to be fairly empty, the host is away from the the seating station so the Jones family waits to be seated. After ten minutes the host shows up and seats the Jones family and walks away. A few minutes later the waiter shows up but forgets to bring the menus. The waiter goes ahead and takes the Jones’ drink order, promising to return with the menus. Ten minutes later, neither the menus nor the drinks have arrived and Mr. Jones asks another passing waiter to check on the status. The other waiter grabs menus, hands them to the Jones’ and offers to check on the drinks. Several minutes later the original waiter shows up with the drinks, which are somewhat watered down by now, and hurriedly takes the food order. Twenty-five minutes later the waiter comes to the table for the first time since taking the order and apologizes saying the kitchen is backed up but the food should be out shortly and refills the empty glasses. Ten minutes later the food arrives. Two of the dishes are wrong and one is warm instead of hot. Mr. Jones asks the waiter to return the food and correct it. Fifteen minutes later the food comes back corrected but still not hot. It has been over an hour since the Jones’ arrived so they  decide to just eat the food. The waiter doesn’t stop back by to refill the drinks until the Jones’ have almost completed the meal. The waiter drops off the ticket which Mr. Jones reviews and then pays the bill, leaving a 15% tip. The family leaves the restaurant unhappy and dissatisfied, vowing never to come back.

This dining experience is obviously in stark contrast to the first. The service was poor, the waiter was unhelpful and the food was subpar. Should that waiter have been tipped? Emotions say no but necessity says yes.

So, the question is, why tip at all in the second scenario? The answer is simple. The waiter is dependent on tips to make up his/her salary. Unlike most blue-collar workers, wait staff get paid a base salary far below minimum wage standards and are expected to make up the rest in tips. This, unfortunately, puts the burden on you and me as the consumers to pick up the slack in their abysmal pay and every time you stiff someone by withholding their tip, whether deserved or not, you are inhibiting their ability to provide for themselves and their families. I have heard the argument that if the service is poor and the tip is withheld then that is the waiter’s fault, they should have done a better job and, although that may be fine in theory, in real life it doesn’t fit because it is one sided and unbalanced. What if the poor service of the wait staff is caused by something outside of their control, something unknown to you, the diner? Should they still be penalized for it? What if they do a great job but the kitchen screws up? Some people would still penalize the waiter by withholding the tip. Look at other work scenarios. If you go through a fast-food drive through and get crappy service you can’t “withhold” part of the cashier’s salary the way you can with a waiter. If you go to a department store and get horrible service you can’t deduct part of the sales associate’s pay for their performance. Sure, you can complain and maybe get free coupons or whatever else compensation the company wants to give you to win you back but assuming the worker isn’t fired over the incident (and they seldom are) they still get paid the same despite their poor performance.

A bigger problem to all of this is that big corporation has deemed it necessary for the consumer to foot the bill for as much as can be gotten for any service or product. We’ve all heard the phrase “nothing in life is free” but in this day and age that saying has evolved to “everything in life is worth as much as someone is willing to pay for it” and we, as the consumer, have swallowed this philosophy hook, line and sinker. Look at the airline industry. Airplane seats are smaller and packed closer together, ticket prices are higher, checked bags are no longer free and everything is extra. Do we complain? Sure. Do we stop flying in favor of other means of transportation? No. We, as the consumer, continue to pay inflated prices for declining service. To move closer to the original example, food costs are higher, quality and quantity are lower and we’re still expected to pick up the extra and pay for poor service. And we do.

I think the worst part of the tipping system is the process itself. Even though tips are supposed to be based on the worker’s performance (or lack thereof) we don’t do it that way. Tips are calculated based on the size of the bill, which is just plain stupid. If 10 people go to restaurant A and spend $100 and tip 20% the waiter makes $20. If those same people go to restaurant B down the street and spend $300 that waiter makes $60 for doing the same amount of work as the first just because the food is pricer. Even if waiter B does a shoddier job than waiter A who maybe had to deal with fussier guests and more drama waiter B still makes more per hour.

So, is there a solution to tipping that would benefit the company owner, worker and customer equally? No, because somebody has to foot the bill for the service and it will always be the consumer. If tipping were eliminated and workers given fair and competitive wages then the prices of the products and services would go up to cover the increased cost. On top of that, those in favor of tipping would revolt because it is human nature not to want to be thought of as “cheap” and so we tend to tip, not based on performance as it should be, but based on what we have been told by society is the right amount so that, to continue our restaurant analogy, a person working for tips in a high-end restaurant will always make more per hour and a person in a low-end restaurant will make less per hour than someone who is fairly compensated but not tipped.

Example:

Let’s say the standard tip is 20% and a fair, non-tipped wage for a wait job in a particular city is $12/hour. I go to a high-end restaurant and spend one hour at that restaurant being served after which time I get the bill which is $100 before taxes. If I tip the standard my total spend would be $120 + tax. Let’s say that the waiter is compensated by the restaurant $3/hour plus 100% of the tips. Assuming I’m the only person that was waited on during this hour, when all is said and done, the waiter made $23/hour just by serving me. Not bad at all! Of course, the chances that I’m the only one  being waited on are slim so if we add two, three or even four more tables to this equation the waiter would make much more than $23/hour. As a guest of that restaurant, not only have I paid a higher price for the food than I would have at a low-end restaurant (granted, the quality of the food may have been better but often times it is not) in all reality I’ve paid for the privilege of eating at that restaurant by subsidizing the wait staff’s salary. Now, take this exact same scenario and apply it to a lower-priced restaurant where my bill is $40 instead of $100. That waiter, for the same amount of work, would make only $11/hour. Why then, does the price of the food dictate the size of the tip rather than the performance of the people serving the food?

I do think that there is a fair solution to the problem but one which will never be realized due to the nature of the service industry. I believe that the company employing the service workers should be held accountable for the base tip that makes up an employee’s salary and let me, the customer, decide how much above that the service was worth. How would this work? By subtracting it from the overall, pre-tax bill. So, if my meal costs $100 and the standard tip is 20% let the restaurant subtract $20 from the price of my meal and pay their employee that $20. If I feel I received exceptional service I would happily add another 10% to 20% to the ticket as having been earned. If not, then at least the employer and not I would be paying for subpar service. If that’s too hard to swallow, let the company split the difference. They pay 10% of the obligatory tip and I pay 10%. If I feel the server has earned it, I can add another 5% to my tip. Either way, it should be my choice, not theirs.

To sum it all up, I believe in tipping and I believe in good service. I also believe that the two should go hand-in-hand. The idea of using gratuity to compensate for an employer’s refusal to pay proper wages is wrong. Companies should be held accountable by the public to pay their employees marketable wages and leave the amount of gratuity to the consumer’s conscience, where it belongs.

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