When many foreigners first receive their bill after eating at a New York City restaurant, two things will take them by surprise: the sky-high prices they have to pay for a simple entree and the few lines at the bottom suggesting tip amounts that were provided for convenience. This is the disguise of a social norm in the United States that implies if you do not tip, you will be perceived as a rude, cheap and heartless customer. However, this expectation should be ignored.
The main argument in favor of tipping is that, without tips, the waiters will receive only their basic salary, which is too low. But is that really the customer’s problem? In an economy with a relatively free market, why should customers bother to accommodate their servers? That should be the employer’s problem. As a matter of fact, this is how most industries work. We tip waiters, but we do not tip sales associates or delivery men. These occupations also revolve around providing customers with a product. Furthermore, why do we tip waiters, when we do not tip the chefs who also took part in providing the service?
When we tip, we are actually creating the perfect incentive for employers to pay a low wage. U.S. labor laws state that an employer of a tipped employee must pay at least $2.13 per hour. If such amount and the employee’s gratuities do not add up to the federal minimum wage — which is currently $7.25 per hour — the employer must compensate the difference. However, this does not necessarily occur in reality, and the waiter ends up with a lower return for his work than what the law mandates. The unfortunate result is that waiters are more likely than other workers to fall into poverty.
Some may argue that waiters are paid according to their performance and, therefore, have the incentive to do a better job. However, this is another myth. A Cornell University study shows that service quality does not seem to be associated with the size of the tip. Determinant factors were customer’s sex, group size and the individual bill amount. This means that, contrary to popular belief, the better service a waiter provides does not mean he will get a higher tip. Furthermore, another study conducted by a team of Cornell University and Mississippi College professors demonstrated that there is racial discrimination in tipping, as black waiters get significantly lower gratuities than their white peers, regardless of the customer’s race. Under a fairer, non-tipped employee job regime, they would receive the same wage.
Tipping is not as bad as it seems — it is worse. Tipping culture indirectly fosters poverty and discrimination at the expense of employees who are not necessarily rewarded according to the service they provided. If politicians do not want to change the labor law, it is up to us, the customers, to generate adequate incentives for them to do it.
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A version of this appeared in the Tuesday, Feb. 20 print edition. Email Diego Maguina Razuri at [email protected].