Should reliance on tipping stop?

[Ruttangel]

As a major employer Disney could set the lead after this crisis.
They could increase basic wage to a level that doesn’t require tips to support the income of many of its staff.

As a Uk citizen that is what we are used to.
I’m just thinking of those who may be struggling right now to make ends meet.

 

[nkereina]

The purpose of tipping in the service industry is to incentivize staff to provide good service and keep a strong work ethic. The more they work and the better service they provide, the more money they can make. By nature of this, they strive to make customers happy which is ultimately beneficial to the employer's bottom line, which relies on repeat business and word of mouth recommendation. Many service industry employees would choose another, easier line of work if wages there were just a flat hourly rate with no tipping structure. Many like to work hard to make more money, and that's why they continue to do it. The model isn't for everyone, but it does work when crazy anomalies like pandemics aren't in the mix.

 

[jcb]

I think what OP proposes is not so much doing away with tips altogether but not having tips be required to support the employees’ livelihood. Tips are not uncommon in the UK or EU, but the employee is nevertheless paid a livable wage (in theory) and tip percentages are smaller and typically paid for above average service.

No doubt, there are people here who make a lot more as a tipped employee than they would without tips. I don’t think that is the norm. Tipping is a horribly complex issue both from a legal and tax standpoint. If those issues could be simplified, everyone would benefit. One issue Disney has is that tipping is carved into its union contracts. They would have to be changed.

 

[nkereina]

I think what OP proposes is not so much doing away with tips altogether but not having tips be required to support the employees’ livelihood. Tips are not uncommon in the UK or EU, but the employee is nevertheless paid a livable wage (in theory) and tip percentages are smaller and typically paid for above average service.

No doubt, there are people here who make a lot more as a tipped employee than they would without tips. I don’t think that is the norm. Tipping is a horribly complex issue both from a legal and tax standpoint. If those issues could be simplified, everyone would benefit. One issue Disney has is that tipping is carved into its union contracts. They would have to be changed.

Most restaurant workers I know were against the push for minimum wage/tipping changes that were proposed here in NY a while back. They do make more off tips than they would with straight minimum wage with minimal to no tips. If a service industry employee is accurately reporting their income for tax purposes, that will help with their unemployment payments during this current situation. I get that its not a full paycheck for them (or anyone in the same boat of unemployment), but accurate reporting of wages is important for these reasons, among others.

 

[Ruttangel]

Yes, I would still tip for good service. I just wish the basic pay was enough that they don’t rely on tips.

 

[PainInIL]

I think one key takeaway is a number (not all) service workers are not properly reporting their wages + tips to the IRS. Even if they just "pocket" the cash tips and report the credit card tips, this could still average out to an extra $5 an hour over a few weeks. If tipping goes away, that extra tax-free income would go away, too (for some).

I think that plays into the reasoning behind some service workers are so against a straight wage. They would now be forced to pay full taxes on their entire income. Again, this isn't all service workers.

 

[nkereina]

Yes, I would still tip for good service. I just wish the basic pay was enough that they don’t rely on tips.

I'm sure many of us would continue to tip for good service, but there would be a large number who would not anymore. Tips would no longer be the norm or be expected. The incentive to provide good customer service would be lost. I'm not saying all service people would start providing sub-par service, but the idea of work hard + please the customer = more money in your pocket would be gone and that would be a deterrent for service industry employees. In that case, why not get an easier minimum wage job with a better schedule and less of a physical toll?

I think that plays into the reasoning behind some service workers are so against a straight wage. They would now be forced to pay full taxes on their entire income. Again, this isn't all service workers

Reporting income is definitely a large part of it, but so is the fact that they stand to make more with tips. I have bartender friends who can make a killing on weekends, particularly this time of year under normal circumstances with St. Patrick's Day and March Madness. This is why they continue in these jobs. They make more than minimum wage so to be relegated to minimum wage would have a negative impact on them.

The liveable wage factor would be a non-issue if all service industry people reported their wages accurately. Yes, it would take a toll with taxes, but in odd times like these where they have to unexpectedly rely on unemployment, their unemployment rate of pay would be higher if they have been reporting accurately.

 

[CampbellzSoup]

Sure just don’t complain when your soda is $6 and your one day ticket is $150 per person.

 

[sweetpeama]

For those who say that if we did away with tipping resturants would have to raise their prices I say malarky. All you need to do is look at the prices of chain resturants in Montana and compare the price that you would pay for the exact same meal not including tax at that resturant in ID, ND, SD, WY (I haven't been in CO, NM, or TX since the early 2000s and while I have been in UT it was just in the SLC airport so the price we paid to eat at a chain there might have been higher just because airport prices so not sure on those states). It doesn't matter if you go to Applebees, Dennys, Golden Corral, IHOP, Olive Garden or Texas RoadHouse you pay the same price.
If you want to go a bit further out there is only a $1.50 range difference between the highest and the lowest price charged at this chain for their weekday lunch https://www.huhot.com/ (sorry not in all states as they are expanding slowly but if you ever get the chance to go to one their food is awesome and some of the grill operators put on quite a show. At least at the one I go to and they even have a tip jar for the grill workers though they used to have a better one where you voted on different things like which is better downhill or cross country skiing or which of two movies that released around the same time you liked better plus if you tell them you have an allergy they not only clean the grill they block off the area around your food while it is cooking and use a seperate clean spatula on your food no I don't work there though my sister in law started out as a waitress there and is now the front of house daytime weekday manager (they also have a back of house manager and an overall manager working at the same time and yes it is a favorite place to eat we even have our usual tables).
To those who say that people won't tip if it is not expected well according to my sister in law who was raised in WY (she moved to MT because there were more places to work in the town where I live than that town she was living in and met my brother at the resturant they both worked at she as a server and he as a cook-his cooking is now reserved for family) and worked there as a waitress/server and worked in MT as a server as well she actually got higher tips in MT compared to what she was making in WY about the same time period so 1 year difference.

 

[sethschroeder]

I think what OP proposes is not so much doing away with tips altogether but not having tips be required to support the employees’ livelihood.

Minimum wage is not enough likely to survive on but everyone is required to be paid minimum wage.

On top of that things like food stamps and unemployment will also kick in to support these individuals.

Unemployment can be collected if work cuts hours even.

Lots of sides to the equation.

 

[sethschroeder]

In that case, why not get an easier minimum wage job with a better schedule and less of a physical toll?

Better places would offer more than minimum wage for better staff.

Same could be said for anything really. Want a better employee with better qualifications? You are likely paying more.

 

[Wild4Walt]

As an ex-bartender I've worked at both type of venues - one were tipping was required and one where the wage was higher so members didn't have to tip. At the lower wage location I made 7.00 for 10 years ( never a raise and it was never needed ). On a good night, I made a minimum of 20.00 an hour in tips and during festivals I made as much as 40.00 an hour.

For me, this was a part time job so I had healthcare elsewhere. If I took a night off, I also didn't get paid but you learn to plan for those things if this is your sole income.

At the venue where I got just 15.00 an hour, I got just 15.00 an hour. No insurance or days off here either.

 

[nkereina]

For those who say that if we did away with tipping resturants would have to raise their prices I say malarky. All you need to do is look at the prices of chain resturants in Montana and compare the price that you would pay for the exact same meal not including tax at that resturant in ID, ND, SD, WY (I haven't been in CO, NM, or TX since the early 2000s and while I have been in UT it was just in the SLC airport so the price we paid to eat at a chain there might have been higher just because airport prices so not sure on those states). It doesn't matter if you go to Applebees, Dennys, Golden Corral, IHOP, Olive Garden or Texas RoadHouse you pay the same price.
If you want to go a bit further out there is only a $1.50 range difference between the highest and the lowest price charged at this chain for their weekday lunch https://www.huhot.com/ (sorry not in all states as they are expanding slowly but if you ever get the chance to go to one their food is awesome and some of the grill operators put on quite a show. At least at the one I go to and they even have a tip jar for the grill workers though they used to have a better one where you voted on different things like which is better downhill or cross country skiing or which of two movies that released around the same time you liked better plus if you tell them you have an allergy they not only clean the grill they block off the area around your food while it is cooking and use a seperate clean spatula on your food no I don't work there though my sister in law started out as a waitress there and is now the front of house daytime weekday manager (they also have a back of house manager and an overall manager working at the same time and yes it is a favorite place to eat we even have our usual tables).
To those who say that people won't tip if it is not expected well according to my sister in law who was raised in WY (she moved to MT because there were more places to work in the town where I live than that town she was living in and met my brother at the resturant they both worked at she as a server and he as a cook-his cooking is now reserved for family) and worked there as a waitress/server and worked in MT as a server as well she actually got higher tips in MT compared to what she was making in WY about the same time period so 1 year difference.

Better places would offer more than minimum wage for better staff.

Locally owned, non-chain restaurants would not be able to afford it. This is why restaurants banded together here in NY in opposition to this exact scenario about a year or two ago. The employees preferred a tipping structure due to the chance of making much more than minimum wage per hour (as PP indicated), and restaurant owners would either have to close up shop or drastically cut staff to afford higher wages, which creates a less than desirable customer service environment if you're understaffed.

Also, most servers I know would say that if they are going to make a flat $15 or $17 per hour with no tips, they'd rather work in a different industry with less physical demands and a normal schedule. The service industry would no longer be worth their while.

 

[sethschroeder]

Locally owned, non-chain restaurants would not be able to afford it.

I am so sick of this reasoning because they could and there is not a law requiring it either just the idea that big players should move to this model.

As a diner if your meal today is $14 plus a 20% tip you really are paying $16.80. If that diner stated "no tips allowed" and charged $16.50 for that meal instead they likely would be coming out ahead in the long run. Heck they could likely even charge $17-$18. There will be periods like mid-afternoon or lunch which would see the owner slightly under perform but in the evenings during their prime business you would make up for it with the additional upcharge added to all the menu items.

Basically NO ONE is saying you can't change the food pricing. They are saying to remove tipping or at least the requirement of it. If your guests have less common sense you can then put up signs explaining the math.

These restaurants already need to pay their staff minimum wage (or higher in some states) per shift worked unless tips make up for it. All that is happening is baseline tips are now built in to the wage moving forward. Each business can figure out the upcharge they would build in to the pricing based on historical tipping patterns.

This would also cut out this market of unreported income in the US as well.

Also, most servers I know would say that if they are going to make a flat $15 or $17 per hour with no tips, they'd rather work in a different industry with less physical demands and a normal schedule. The service industry would no longer be worth their while.

I am sorry but where are you getting a $15-$17 job that is easier and has 0 education or background requirement. I have to call BS on this because its not like there this is cushy $15 job that is not being filled even in the booming economy we had.

As an ex-bartender I've worked at both type of venues - one were tipping was required and one where the wage was higher so members didn't have to tip. At the lower wage location I made 7.00 for 10 years ( never a raise and it was never needed ). On a good night, I made a minimum of 20.00 an hour in tips and during festivals I made as much as 40.00 an hour.

For me, this was a part time job so I had healthcare elsewhere. If I took a night off, I also didn't get paid but you learn to plan for those things if this is your sole income.

At the venue where I got just 15.00 an hour, I got just 15.00 an hour. No insurance or days off here either.

Oh I know tipping is better for good bartenders and servers especially if you are in a good restaurant or bar. I think you would find the best places in a particular area likely wouldn't have a "no tipping" policy so people would still be doing tips albeit smaller in nature.

It would really restructure the food industry ecosystem for sure and I am sure many restaurants would handle it differently. Some might pay more hourly and some might do a bonus structure.

 

[sethschroeder]

Sure just don’t complain when your soda is $6 and your one day ticket is $150 per person.

Except neither of these equate to a tipping environment. You are not tipping the ticket salesman 10-20% when you pay for your day entry. You also are not tipping the quick service staff for giving you a soda.

The costs of going to a tipless or minimal tipping system would be built in to the locations where the tipping is occuring. In hotels its an extra $1-$2 a night. In restaurants its a 20% or less increase to food items and in Disney it likely could be way less than 20% because of how full they consistently are and how expensive the dishes are.

Disney already jacks up pricing across the board and likely has crazy margin on food.

 

[nkereina]

I am so sick of this reasoning because they could and there is not a law requiring it either just the idea that big players should move to this model

You can't blanket statement saying that they could, because truly not all of them can. In order to make up the difference, they would have to either raise prices which may drive customers away, or they'd have to let some servers go which means they'd have fewer servers on shift, which may lead to bad service also driving customers away.

I don't disagree with your math that customers are ultimately going to pay roughly the same, but people don't like the optics of it. People will balk at an $8 breakfast special, but have no issue paying $4.99 and leaving the girl a $2-$3 tip. Same cost, but psychologically feels different. Marketing concepts.

One problem that still remains though is how do you incentivize servers to work hard to provide good service? Of course, many still would because of their good work ethics, but there's less motivation to take tables and put up with customer's crap if you're getting paid the same regardless.

I am sorry but where are you getting a $15-$17 job that is easier and has 0 education or background requirement. I have to call BS on this because its not like there this is cushy $15 job that is not being filled even in the booming economy we had.

I work at a bank - our contact center and collections call center employ hundreds of entry levels staff with only high school required. They have a high turnover and we consistently have positions open. They start at $16 per hour, dependent on experience. My husband works for a commercial construction company that provides on the job training, no experience or education required, and they have customer service positions in addition to ones in the field. They start at $14 per hour. All of these, at the very least, provide M-F 9-5 hours, and some provide an office environment that is physically easier. Everyone is different, but if I were a server and was getting paid the same, I would opt for the M-F office job over the serving job any day.

There's also many people who do serving jobs part time as a second job or because they are home with kids during the day. They rely on tips to help supplement their income - like PP mentioned, they can really make some money on busy weekends, which is likely when this base would be working.

 

[UKYRob29]

Except neither of these equate to a tipping environment. You are not tipping the ticket salesman 10-20% when you pay for your day entry. You also are not tipping the quick service staff for giving you a soda.

The costs of going to a tipless or minimal tipping system would be built in to the locations where the tipping is occuring. In hotels its an extra $1-$2 a night. In restaurants its a 20% or less increase to food items and in Disney it likely could be way less than 20% because of how full they consistently are and how expensive the dishes are.

Disney already jacks up pricing across the board and likely has crazy margin on food.

So here's a situation - you work at a high end steakhouse....You crush it on a busy night with checks that average 300-500$ a table. You think you are going to get the restaurant to meet that hourly rate that the tipping provides? zero point zero chance

 

[sethschroeder]

I don't disagree with your math that customers are ultimately going to pay roughly the same, but people don't like the optics of it. People will balk at an $8 breakfast special, but have no issue paying $4.99 and leaving the girl a $2-$3 tip. Same cost, but psychologically feels different. Marketing concepts.

Except if everyone is doing this the optics go away. Businesses can also still market a $4.99 breakfast and include a required 20% upcharge with no extra tipping. You could even show pricing in the menu such as $4.99 ($7).

There are ways around it and to spin it while removing tipping as it stands today. Also how does it work with any other price increase? Eventually people accept it and move on from complaining if its across the board.

I work at a bank - our contact center and collections call center employ hundreds of entry levels staff with only high school required. They have a high turnover and we consistently have positions open. They start at $16 per hour, dependent on experience. My husband works for a commercial construction company that provides on the job training, no experience or education required, and they have customer service positions in addition to ones in the field. They start at $14 per hour. All of these, at the very least, provide M-F 9-5 hours, and some provide an office environment that is physically easier. Everyone is different, but if I were a server and was getting paid the same, I would opt for the M-F office job over the serving job any day.

I don't know if you have worked in a call center but there is a reason they have high turnover and its because people hate those jobs. So again I ask where are these cushy $15/hr jobs that everyone wants? Any of them that do exist are not going to have much turnover and you are not getting in. There are also many people who swear they will never sit behind a desk or will never work on their feet. People are all different and value different things and have different backgrounds.

So here's a situation - you work at a high end steakhouse....You crush it on a busy night with checks that average 300-500$ a table. You think you are going to get the restaurant to meet that hourly rate that the tipping provides? zero point zero chance

Guess what I just crushed my quarter. Sold over $10m in product do you think I am getting a 20% tip on that?

If you are working where its $500/check then you push for higher hourly, salary, health insurance, bonus structure, profit sharing, commission, ect....

Again as I stated some servers are not going to like this and some will make much less money if all they get is an hourly wage. We also need to dial this back because this really all started from Disney the rest of the US is not going to a no tipping system anytime soon if ever.

 

[Queen2PrincessG]

If C19 has taught us anything, it is that teachers and service workers are the fuel that makes our systems move. They deserve more pay, not the CEOS. Its greed. Plain and simple.

 

[TheMaxRebo]

I don't disagree with your math that customers are ultimately going to pay roughly the same, but people don't like the optics of it. People will balk at an $8 breakfast special, but have no issue paying $4.99 and leaving the girl a $2-$3 tip. Same cost, but psychologically feels different. Marketing concepts.

One problem that still remains though is how do you incentivize servers to work hard to provide good service? Of course, many still would because of their good work ethics, but there's less motivation to take tables and put up with customer's crap if you're getting paid the same regardless.

In the short term, yest people will struggle with the optics. But they will adjust. When they realize they don't have to leave a tip and breakfast is costing them the same they will adjust

And the incentive is to keep your job. There aren't a million job openings out there that people are looking at their 17 job offers and taking the one as a server ... that is one they can get. and if it takes offering a few more $ an hour to keep the good ones then successful restaurants will do that

Plus I think most people are ok with some tip for really good service. Just instead of working for $2/hour plus $18/hour in tips, you would work for $15/hour plus $5/tips