The Cost of Tipping

By Luke Devine & Marcos Cardenas-Zelaya

Every so often, a trendy restaurant owner decides to ban tipping in their eatery, and the media goes into a tizzy over what this might mean for the entire service industry.  The ensuing opinion pieces are quick to attack tipping from all angles, pointing out the arbitrariness of the custom (the ol’ “flight attendants don’t make tips” argument), and the unequal two-tiered wage system it perpetuates. The most recent wave of anti-tipping fever occurred last fall, when a top-tier New York City restaurant group, Meyers, decided to phase out gratuity in their restaurants. After the event, The Guardian predicted “the change by Meyer’s high-profile group could prompt other fine-dining establishments to reconsider tipping, which much of the world considers both puzzling and outdated.” No such change has occurred. Still, we think the topic is worth revisiting (and re-revisiting) until the anti-tipping movement makes changes, for good, in today’s economy.  

While we agree that tipping is a bizarre practice, we oppose it principally on the grounds that it promotes an often prejudiced, appearance-based, and all-around arbitrary wage system. Further, taking a lesson from the example of Meyers, it’s clear that meaningful change can only come from the provincial (or state) legislature.

Now, before you call us ‘communist, trouble-starting, rabble-rousin’ hippies’ and forsake the rest of this article, there are two important things you should know:

  1. Tipping-based wages often depend on factors totally beyond a server’s control.  

In a perfect world, a tip-dependent wage system would work fine. Tips would be directly connected to productivity levels, and would incentivize greater service as a result. However, in the flawed world we inhabit, customers do not base their tip solely upon the quality of the service provided. As one study shows, the size of a waitress’s tip is tied to arbitrary factors like weight, age, breast size, hair color, and most disturbing of all, a man’s perceived likelihood of picking her up.  

  1. This arbitrary wage system negatively affects minorities most acutely.

In the North American service industry, ethnic minorities must not only contend with a cultural fixation on European standards of beauty, but also with blatant racial prejudice. A study published by the Yale Law Journal found that black taxi drivers in New Haven, Connecticut were on average tipped approximately one-third less than their white counterparts, regardless of who provided better service. This prejudiced treatment is not too surprising, but it is nonetheless troubling. Although it is racism that is responsible for this inequality, tipping is a system that enables these prejudices to do real harm. As long as such racial prejudice exists, the earning gap between men and women, whites and people of colour will continue to be exacerbated.   

Wherever tipping exists, inequality is perpetuated at both the customer and server level.  Since, in our society, a base tip is now almost always expected (unless the service is really poor), servers only have an incentive to provide greater service to certain groups. Tipping, when viewed in such a negative light, can be seen as unconscious bribery; the mere colour of your skin can get you better service.  

The size of a waitress’s tip is tied to arbitrary factors like weight, age, breast size, hair color, and most disturbing of all, a man’s perceived likelihood of picking her up.  

A study published in 2013 revealed that servers often have their own code to refer to black customers: Canadians, cousins, moolies, black tops, and “mondays” – because “no one likes [waiting on] mondays.” Since white customers (males in particular), are widely perceived to have greater purchasing power over their non-white counterparts, servers are more likely to put more time and effort in waiting white tables. Tipping, or the law of incentives, necessitates this type of preferential treatment. A vicious cycle quickly emerges: when a member of a minority group receives comparatively poor quality service, their tip may reflect that visible disparity – thereby reinforcing the negative trope of ethnic stinginess and white generosity, while also reinforcing the server’s original disposition to serve the white customer better.  

For those aware of the problem, there is general consensus on the solution: ban tipping, raise servers to the standard minimum wage (or higher), and let market forces sort out new wages on a restaurant-by-restaurant basis. By eliminating tipping, the incomes of all workers become stabilized, and are insulated from embedded prejudices.   

In San Francisco, a wine-bar owner tried to introduce a no-tips policy and was forced to revert the experiment after only ten months. Why? His employees were understandably transferring to restaurants that maintained gratuity.  

Now you may argue that increasing workers’ wages will force restaurant owners to “clean the house,” and fire their “least productive” workers. This, in turn, may have the undesirable effect of increasing unemployment among minorities, who also tend to have lower amounts of schooling and other forms of capital. Obviously, this would work against the desired goal. In reality, though, most restaurants are pretty understaffed as it is, and cannot simply fire workers without the possibility of losing customers. Ask yourself, would you dine at an understaffed restaurant with terrible service? Probably not. More importantly, training new employees is an expensive and time-consuming ordeal. Restaurants, therefore, have a large incentive to retain workers when faced with a mandatory ban.

When faced with a mandatory ban on tips, restaurant-owners have two other options:

(1) they can redistribute wages from their own to their employees’, or
(2) they can raise the price of their food.  

If “capitalist greed” holds any water, it is more likely that they will increase the price of food. And in a place where tipping has been proscribed, the competing restaurants on the block will probably be forced to do the exact same thing. Restaurants have heavy competition, especially in big cities where restaurants have multiple owners, and restaurant groups also have greater access to credit and capital, so we can also count on some deep pockets getting reached into in order to sell this higher end (priced) food.

Again, this depends on ‘no-tips’ becoming the law of the land. If restaurants try to pave the no-tipping path on their own, they’re likely to flounder. In San Francisco, a wine-bar owner tried to introduce a no-tips policy and was forced to revert the experiment after only ten months. Why? His employees were understandably transferring to restaurants that maintained gratuity.  

“Great, you’ve convinced me in theory, but do you really expect me to stop tipping the Gerts Bartender?”

Not exactly.  Sure, you could try taking the lone-wolf, Mr.Pink from Reservoir Dogs-style boycott route, but that stinginess, principled though it may be, will not lead to any substantial change unless everyone is on board. Without collective support, you’ve realistically just shafted your server out of a livable wage.  Since the tipping system is already in place, and millions of people rely on it for their livelihood, you sort of have to play ball.  In the words of Mark Twain: “We pay that tax knowing it to be unjust and an extortion; yet we go away with a pain at the heart if we think we have been stingy with the poor fellows.”  Moreover, even if everyone spontaneously decided to stop tipping, a total crisis would ensue. Servers would quit en mass and flood standard minimum wage markets before restaurant owners would receive the anti-tipping message, and raise their workers’ wages. The only meaningful solution, then, is for tipping to be abolished at the provincial or state level, in tandem with a higher fixed wage for servers.  A top-down approach protects customer-service workers, and prevents the San Francisco wine-bar scenario from unfolding.

At the same time, we recognize that the pressure for such change has to come from somewhere.  Political parties will not pursue anti-tipping policies unless they perceive a genuine demand from constituencies. Therefore, we believe the anti-tipping movement must somehow carve out a place among worthy social justice causes. It’s not as outlandish as it seems: in the early 20th century, when progressive politics were flourishing, anti-tipping went hand-in-hand with calls for a higher minimum wage. The individuals and groups currently advocating for a higher minimum wage, especially on the grounds of social justice or equality, must come to recognize the anti-tipping campaign as part of, and crucial to, this larger movement for social change and economic equality. It’s an easy platform bullet-point.  


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