So You Want To Be A Waiter

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Tipping in US Vs. Europe Round 3

3) Tipping favors the rich over the poor.

Tipping is broken in the same way that the US Health Care system is broken. It unfairly gives rich people the power to hurt poor people on a whim. It’s true that not all restaurant clientèle are rich, but it’s also true that very rarely is a waiter much richer than their customer.

Conclusion

I admit that I have never worked as a waiter, but I have often imagined myself in their shoes, and it’s this empathy that feeds my distaste in the American tipping system. I can’t imagine that it’s more common for a waiter to see a tip and think, “Hey, wow! What a nice tip!” than for him to see a tip and mumble, “Cheapskate!” under his breath. Surely the latter is at least twice as common. Isn’t it obvious that the most fair thing to do is to just pay the waiter the extra 15% and let customers respond to bad service by either talking to management or just not going back to the restaurant (two things that they already do under the tipping system!)?

Points #2 and #3 are similar and are based on my distaste for the social divide between rich and poor. Even if I concede point #1 to you and agree that service is really better in the US because of the tipping system, that still doesn’t make the injustice acceptable. And if you’re an American waiter that disagrees with #2 and #3 and you think you make more in the tipping system than in a flat salary system, then A) there’s still some flat salary that would equal your tipping income, and B) you must be one abnormally charming and attractive person.

I’d really like to hear the opinion of someone who has worked as a waiter on both continents.

If you disagree with me, please try to avoid ad hominem arguments attacking me as a cheapskate. I tip when I’m in the US because it’s not the waiters’ fault that the system is broken. If you’re going to argue, tell me why you think the American tipping system is better than the flat salary, flat price system of Europe.

No, I don’t know how to fix the problem, other than a blanket law and going cold turkey. It’s painful, but I watched Europe convert to a new currency and it only hurts for a year or two. Ditto for the metric system. You just have to do it and recover from the change.

My reply:

Your third point doesn’t do much to further your argument.

Actually, rich people help subsidize the server by spending lots more money than the average person would. Are there some rich people who screw a server by not tipping appropriately? Sure there are. But less off people screw servers as well. Do all less off people screw servers? Of course not.

The tipping system is far from broken, which is a “myth” that you yourself has just cooked up.

I could easily find 5 reasons why tipping is better than service charges, but you won’t find me advocating for people in a continent that I don’t live in living in a situation where I haven’t consdered all of the “issues” and possible ramifications of change. I don’t claim that, because tipping seems better to me, Europeans should adopt it. I know better because I know that there are significant social and financial factors that are at play.

Since you seem to take offense to it from a social and political standpoint, just ask yourself if those greedy restauranteurs are going to pay me what I’m making now if they add service charges. I don’t think so. I actually like the idea that most of my money comes directly from the people I serve, not from the “restaurant-industrial complex”. It’s far easier for that big conglomerate to screw me every day than for a random person out of 100 to screw me every few days.

Here’s what will happen. Restaurants add 15% service charge. Even if they passed that service charge directly over to me, I’d be in the hole almost 5% because I actually average about 19% (on the post-tax amount!) of my sales (and service charges are based on pre-tax). My income would drop about 25% overnight. And, even if they took those service charges and folded them into their cash flow and paid me a straight salary as they do in Europe, I don’t think that restaurants can afford just adding the difference back out of their own pocket. The average bottom line profit on all full-service restaurants runs between 5 – 7%. Obviously, some do so well that they get into double digits, but they’re rare. There are also some that barely squeak by.

In my former restaurant, a large restaurant that seats almost 200 and sells around 5 million a year, they required about 177 manhours a day from their sub-minimum wage employees. That’s what we needed to manage doing 600 – 800 covers a day. Now, imagine going from 2.13 an hour to the roughly $13 – $18 an hour we were making with tips. If you run the math, you’ll see that there is probably a shortfall of several hundred thousand dollars with the addition of the income of a 15% service charge. Even if you added a 20% service charge, I personally don’t trust the restaurant to pass all of that money along and I think that there would still be a considerable shortfall. Maybe you have more faith in the industrialists than I do.

You write:

“I admit that I have never worked as a waiter, but I have often imagined myself in their shoes, and it’s this empathy that feeds my distaste in the American tipping system. I can’t imagine that it’s more common for a waiter to see a tip and think, “Hey, wow! What a nice tip!” than for him to see a tip and mumble, “Cheapskate!” under his breath. Surely the latter is at least twice as common.”

You shouldn’t imagine anything about it. Why not? Because it can lead to some wrong conclusions. For the overwhelming number of servers in the States, it’s FAR more common to get an above average tip (above 15% percent) than a below average tip. I’ve averaged around 18 – 19% since I’ve been a server in 4 joints – two of them mass market $20 per per head/dinner places, one of them a $45 per head/dinner “American bistro” and my current one $75 per head/dinner high end steakhouse. I don’t know any servers out of the hundreds that I have known or worked with that haven’t averaged over 15% for any time frame over a couple of days period. Most of us, and I’m going out on a limb here, average around 17% day in and day out if you run an average of at least a week (because, let’s face it, there might be a weird day or two tucked in there). Believe it or not, I average over 20% if you look at the post tax total instead of the pretax total, because more people tip on that total than on the pre-tax subtotal. AVERAGE over 20%. And I’m not unusual, or the greatest server that ever lived or look like Cary Grant or Angelina Jolie, for that matter. Having said that, because of tipout to fellow service workers, I don’t get to keep all of that money. Yes, there’s some distribution of income. I probably walk with about 13%. But I can guarantee you that some of the “service charge” money would also get to go to those bartenders and server assistants and food runners that currently get paid less than minimum wage.

If it sounds like I don’t want to change the status quo because it would hurt ME, the server, you’re spot on. But it’s not just me as an individual, it’s a collective “server me”.

If you want to argue against tipping, here are the real reasons:

The state (i.e. the Federal Government) gets shorted on tax income by many servers due to underreporting (I’ve always reported 100% of my income for several reasons – first of all, it’s the right thing to do and I don’t want to be a tax cheat. Second, my Social Security is based on my income. I think it’s stupid to short that. And third, my ability to get credit is based on my income) This means that money that could go to the social network that a good government provides its people and that the US falls short on by modern standards doesn’t get paid into the system. You could argue that this is one of the reasons that the US can’t seem to get a really good health care system rolling. Having said that, most tip income actually does get reported these days due to tighter enforcement by the IRS and because most people pay their tips by credit cards, which leave a paper trail (I’d say 95% of my transactions are credit card based).

Tipping often leaves the server paying a big tax bill on April 15th. However, the server isn’t paying more taxes, they’re just having less able to be withheld, so really, this is a server not paying in extra withholding taxes on his or her own throughout the year. It would be like condemning the checking system based on someone who bounces a lot of checks.

A few people are offended by being put into the position of judging service standards. Some of their problems are: “I think this should be the job of the restaurant to reward or penalize based on performance”. “It makes me uncomfortable to potentially dock someone’s pay because they didn’t provide very good service. Once again, that shouldn’t be on me”. “It adds added unnecessary complexity to the transaction”. “I like to pay one amount, not two”. “I don’t like to have to whip out a calculator and do higher math when I’m finishing up my dining experience”. “I don’t like the idea of people playing up to me just for my tip”. These are things I’ve read on the internet and I’m sure that there are a tiny minority of people who feel strongly about these issues (there might be a larger minority that believes somewhat in one or more of those points). However, I’ve never heard any of these in real life. Most people tip almost reflexively and with little apparent turmoil or conflict. But I don’t deny that those feelings might be there for some.

The thing is, the American people overwhelmingly prefer tipping to service charges, although, when asked, they would like to see servers paid more than below minimum wage. Both of these are documented in polls. The thing is, when asked the second question, they don’t add “if it means that your dining price would go up. I’ll bet that figure would erode if it were part of the question.

Sorry to be so wordy. The last thing I would add is that the effect of paying a server more on the menu price is already easily seen if you compare the menu prices of chains in California where they already pay $8 an hour and in Tennessee, where they only pay 2.13 an hour. You’ll find that the menu prices are around 9 – 10% higher with tipping in place in both locations. A couple of percentage points might be based on higher rent and utilities and the like, but most of it is because of the higher payroll costs, payroll being the second highest expense, right behind food, for a restaurant.

That’s all I should write right now because it’s already lengthy enough. But I’d leave you with this – with a tip, there’s no middleman. There’s no institution to mess with it. It’s the economically most efficient way to pay for a service. directly to the service provider, not filtered through a corporation.

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Image copyright Hasbro.

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