In North America, we tip. A lot. In fact, anything below fifteen percent is deemed inappropriate. Whether you are dining at a restaurant or hopping into a taxi, you are expected to leave a little something. Why is that?
Tipping first emerged in Europe during the 17th century, and spread west to North America in the 1800s. The practice was common among the rich, who wanted to seem sophisticated. At the time, employers often collected tips to pay their previously enslaved servants instead of providing them with real wages.
As societies evolved and workers’ rights improved, tipping became less customary in many parts of the world. Today, in Europe, a five percent tip is more than acceptable, and people typically only leave a Euro or two as gratuity. In Australia, tipping is not expected and in Japan, it can even come off as offensive. However, that’s not the case in Canada and the United States, where tipping remains prevalent in part because of the very structure of tipped workers’ wages.
In the US, most states adhere to the Fair Labor Standards Act (FLSA), originally published in 1938. Under the FLSA, employers can use tips “as a credit against the minimum wage”. What this means is that instead of paying tipped workers the $7.25 national minimum wage (per hour), employers may choose to pay them as low as $2.13 in cash, and issue a maximum “tip credit” of $5.12. The idea is: Why should I, the employer, pay my employees the standard minimum wage if they are receiving tips? The customer will make up for the wage cut! . If the employee does not receive enough tips to earn minimum wage, the employer is obliged to make up for the difference.
In Canada, some provinces also have adjusted wages for tipped employees. In British Columbia, tipped workers’ minimum wage is set at $10.45 (USD) compared to $10.93 for other employees. In Quebec, $7.83 for tipped employees, and $9.81 for other workers. While Canadians may seem well off compared to their neighbors to the south, they still earn less than they would in many other developed countries. In France, the minimum wage is $11.86 irrespective of tips, while in Australia, that number is over $14 per hour.
Far too often, tips are no longer seen as a sign of appreciation for outstanding service. Tipping has almost become a cultural obligation, an automatic gesture. In restaurants, as soon as the bill gets to your table, you immediately start calculating the tip amount…not quite: the credit card machine has got you covered! When handed to the customer, the credit card machine often displays several tipping options based on your level of satisfaction. A typical example is: “ 20%: good; 15%: fair; 10%: mediocre”. Don’t want to tip? Press the “Other” option, and manually enter 0%, but expect to be perceived as cheap by the server and your friends at the table.
Since tipping is so customary, employees might not feel incentivized to provide quality service, since they expect a tip regardless. Additionally, a culture where tips are almost mandatory can lead employers to lower wages, as they feel that workers are already being remunerated by clients. Gratuity lost momentum in developed countries because governments finally gave workers livable wages. Isn’t it time for the US and Canada to jump on the bandwagon?