YES FROM EXPERTS IN THE FIELD
NO FROM EXPERTS IN THE FIELD
THE ASSUMPTION IS often that tipped workers are largely 30-something white
men, working in fine dining and netting six figures. In reality, they are largely women
and people of color. In all but seven states, tipped workers are paid a separate, lower
minimum wage that starts at $2.13 an hour at the federal level. The subminimum
wage system forces them to rely on tips, and thus the whims of customers, rather than
their employer to support their families.
As a result, they face disproportionate rates of poverty, discrimination and sexual
harassment. In fact, restaurants are the single largest source of sexual harassment claims
in the U.S. Although 7 percent of American women work in the restaurant industry, it
is responsible for 37 percent of all sexual harassment claims to the Equal Employment
Opportunity Commission ( eeoc.gov). According to studies, women living off tips in
states with a $2.13-an-hour minimum wage are twice as likely to experience sexual
harassment as women in states that pay the full minimum wage to all workers.
As ROC United wrote in The Glass Floor, our 2014 report on sexual harassment
(posted on rocunited.org), the restaurant industry’s “philosophy of service as pleasing
customers, indulging them and giving them what they want,” is part of a system that
creates an environment of inappropriate behavior by customers toward service staff.
Nearly 90 percent experience some kind of sexual harassment from customers and
other staff—inappropriate touching, lewd comments, insults, leering and so on.
The demeaning consequences of America’s subminimum wage system should
come as no surprise; it’s rooted in slavery and racism. Post-slavery America viewed
tipping as a practice fit only for former slaves, whom business owners resented having
to pay in the first place.
Due to the lobbying efforts of groups like the National Restaurant Association,
the tipped subminimum wage system persists today. We must end this exploitative
legacy once and for all. Restaurant Opportunities Centers United is working with
legislators in eight states and in Congress to pass legislation requiring employers to
pay the full minimum wage, with tips on top. These are our mothers, our sisters and
our daughters—it’s time to stop forcing them to depend on tips to survive, and establish one fair wage for all workers. C
RESTAURANTS IN THE United States are incredibly diverse in terms of their products and server pay. However, tipping abolitionists seem oblivious to this fact as they
seek mandated no-tipping policies accompanied by mandated hourly server wages
and, necessarily, higher menu prices.
Diverse markets must have the ability to tailor prices and server pay for different
conditions. A tipping ban would force the industry to follow the “one size fits all” rule,
a recipe for market failure, leaving many owners, servers and customers worse off.
My own survey of 40 servers in moderately priced sit-down restaurants in
Orange County, California, revealed that 62 percent of servers would require a wage
of $30 to $50 an hour in order to replace lost tip income. All the servers were quick
to assert that if tipping were replaced by a fixed hourly rate of pay, they would be
disincentivized to provide a higher level of service.
In 2015, the owner of a San Francisco tavern and a restaurant with above moderate prices eliminated tipping and raised prices by 20 percent to provide higher hourly
wages across servers and kitchen staffers. During this failed 10-month experiment
the restaurants lost 70 percent of their servers. The reason was clear on reflection:
Servers experienced an hourly wage drop from an average range of $40 to $20.
Tipping abolitionists also fail to appreciate what economists dub the “principal–
agent problem.” Many owners and executives of restaurants know a lot about the
industry and their locations’ performance at the macro level, in areas such as sales,
costs, trends and fads. But remote owners know little about individual customers in
different locations across the diverse microeconomies of their restaurant locations.
The economics of tipping can be understood in this framework. Tipping incen-tivizes servers to use their localized information for their own and their company’s
benefit. Through tipping, servers effectively become commissioned salespeople,
enticed to add to customers’ experience and company sales. Tipping aligns the incentives of servers and managers and owners for a common objective: to make people’s
restaurant experiences a win for everyone. C
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