The Gratuitous Injustice of American Tipping Culture

In Depth

“Unless a waiter can be a gentleman, democracy is a failure. If any form of service is menial, democracy is a failure. Those Americans who dislike self-respect in servants are undesirable citizens; they belong in an aristocracy.”

Viewed through a modern lens, William Scott’s words in his 1916 book The Itching Palm seem equal parts quaint, commendable, and utterly, heart-wrenchingly depressing. Quaint because it’s impossible to imagine a waiter as a gentleman in modern society, commendable because Scott’s idea that everyone is worthy of self-respect regardless of their profession deserves more regard than it gets, and depressing because anyone who expressed the entirety of that sentiment in 21st Century America would be laughed out of the room. Both servers and customers are beneath us now; we force the servers to grovel for tidbits left out of the kindness of customers’ hearts, and we extort customers into paying their salaries.

No matter where you go and who you talk to, it seems like everyone hates America’s tipping culture. Finding someone who thinks our current system is just fine and dandy is more difficult than keeping track of which Kardashian is which. The fact that the above quote is now nearly 100 years old proves that opposition to America’s tipping culture isn’t something new, but no matter how much people claim to hate it, no one seems to want to do anything about it.

Less than 100 years ago, people genuinely believed that there was no such thing as “menial service” to an American, that waiters could be gentlemen, and that service didn’t mean servitude. They believed the idea of tipping was a fundamentally demeaning and classist notion of which they wanted no part. Since then, we appear to have come a long way down a road paved with good intentions.

What the hell went wrong?

How Did We Get Here?

Though tipping* culture originated in Europe (specifically in Tudor England around 1600) and came to America shortly after the Civil War, Americans were by and large against tipping as being incompatible with the ideals of an egalitarian society until the early 20th century. The reason? Because “it created an aristocratic class in a country that fought hard to eliminate a class-driven society.” Tipping certainly happened in America at the turn of the century and the following two decades, but public opinion was decidedly against it. Scott summed up the prevailing viewpoint:

In the American democracy to be servile is incompatible with citizenship. Every tip given in the United States is a blow at our experiment in democracy. The custom announces to the world…that we do not believe practically that “all men are created equal.”

So what changed? Prohibition. Yes, our problematic tipping culture is another thing for which we can ultimately blame the Temperance Movement (and holy crap, there were a lot of things to blame it for already). Lack of profit from alcohol sales meant that suddenly, businesses actively encouraged tipping in order for their workers to be able to make ends meet. This change to the status quo wasn’t met with universal acclaim; six states made tipping illegal during this time period, though all such laws were eventually repealed by 1926. Once it was in place, tipping wasn’t going anywhere without a fight.

The Fair Labor Standards Act — the act that determines the minimum wage, along with a whole host of other regulations regarding labor practices — isn’t even as old as American tipping customs; its original iteration dates to 1938. It’s been amended numerous times since then, most frequently to raise the minimum wage, and for the first three decades of its existence, tipped employees were subject to the same minimum as non-tipped workers. In 1966, however, Congress was persuaded to allow tipped workers to be paid at 50% of the Federal minimum wage. The number then fluctuated over the next 30 years between 50% and 60% of the minimum. It still wasn’t much, but at least it scaled with the minimum wage itself.

Then, in 1991, restaurant industry lobbyists helped push through an amendment that uncoupled the tipped minimum wage from the Federal minimum wage. The minimum wage for tipped employees has been frozen under Federal law at $2.13/hour ever since. Despite the fact that the minimum wage for non-tipped employees has since increased from $5.15/hour to $7.25/hour, the tipped minimum wage has not budged one cent in over two decades.**

Who Does it Benefit?

It certainly isn’t helping servers and bartenders, the overwhelming majority of whom would much rather make a decent guaranteed wage like their counterparts in every other country. It’s not doing anything for customers, either, many of whom feel extorted and uncomfortable buying into a coercive system that abuses the parties on both ends. So who stands to gain?

The sad truth is that it benefits the same group as virtually everything else in America: corporations and business owners. How it helps them is obvious: they get to off-load their labor costs to their customers, paying one third of the minimum wage to the majority of their front-of-house employees.

There’s actually one other group it benefits, though: the customers who’ve figured out how to hack the system by not tipping regardless of the caliber of their service. Granted, this approach requires a capacity for greed that would make Gordon Gecko blush and a lack of basic empathy typically only found in serial killers, but to their credit, it works. The really obnoxious ones can’t resist advertising that they don’t tip, proudly proclaiming that the system is broken and they won’t support it, a veneer of truth used as a slipshod cover for the fact that their actions only serve to prop up the system they claim to abhor.

Thus the most painful part of American tipping culture is that the only groups it tangibly benefits are the worst people involved in the whole enterprise. It’s a system designed to take advantage of anyone with the barest shred of human kindness. Given that, and given the fact that most people are not fundamentally evil, what keeps it going at this point?

Enter the National Restaurant Association — the so-called “other NRA.”

Much like its better-known counterpart, the other NRA has poured millions of dollars in campaign contributions into the American political system in the last thirty years, 83% of which have gone to Republicans. Unsurprisingly, NRA Lobbyists were the ones responsible for the uncoupling of the tipped minimum wage as a percentage of the standard minimum in 1996. This is an organization that proudly boasts of their efforts to prevent both the raising of the minimum wage and the end of the tipped minimum wage, not to mention successfully preventing localities from being able to vote for themselves on paid sick day legislation. Most egregiously, they’re also the organization responsible for foisting Herman Cain on the American public. They’re a fundamentally anti-democratic organization whose goals, if realized, would effectively ensure a permanent American working class. Make no mistake — wherever you find the insidious tendrils of worker mistreatment and the propping up of our reprehensible tipping culture, the National Restaurant Association is not far behind.

The NRA’s chief opposition is Restaurant Opportunities Centers United (ROC), an organization that represents 13,000 workers, 100 employers, and 2000 consumers in 32 cities across the country. Founded in 2008, the organization’s stated goal is “to improve wages and working conditions for the nation’s 10 million restaurant workers” by tackling a variety of issues including the sexual harassment, racism, and classism endemic to the restaurant industry. This year, they shifted part of their focus to eliminating the tipped minimum wage altogether. While the ROC is still David to the NRA’s Goliath, the ground is shifting rapidly, as evidenced by the fact that the NRA has gone so far as to conduct political campaign-style opposition research and use shadowy third-party subordinates to try to smear them. They’ve even dispatched real-life Bond villain lobbyist Richard Berman, a man described by labor activists as “Dr. Evil.”

Remember the lobbyists from Thank You For Smoking? Berman is basically that, only less charming and more an amalgamation of creeping darkness given form. His preferred tactic is just to make stuff up in support of such causes as animal cruelty, getting rid of and preventing environmental regulations, and the evils of greedy teachers. This is generally accomplished by creating a surrogate website to launch unfounded attacks on his target du jour. A full list of his shill websites can be found here. He’s basically syphilis wearing a people suit.

When an organization sics that guy on you, you know they’re running scared. One can only hope ROC justifies those fears moving forward.

But Why Are Average Americans Resistant to Changing It?

American Exceptionalism. No, seriously.

You can’t divorce the discussion of American tipping culture from the nature of Americans’ toxic relationship with wealth and the value of human life. In order to understand why so many Americans don’t think tipped employees deserve a living wage (and why those same Americans tip badly regardless of service), you have to understand why those employees are regarded as less than worthy in the first place. The idea of American Exceptionalism sits squarely at the heart of that discussion.

There’s a reason non-Americans find our tipping culture so patently baffling; to the residents of basically any other First World Nation, the idea that food service workers should make $2.13/hour and have their entire income subsidized by what essentially amounts to coerced charity doesn’t just border on the preposterous, it stages an armed incursion into Bananatown. It’s tempting to make some glib response like “they’re laughing at us,” but that’s as unhelpful as it is untrue. They’re not laughing; they’re shaking their heads in uncomprehending horror and confusion. How could we allow it to get to this point? How could we possibly have so little regard for the well-being of our fellow man? How could so many of us proudly advertise such deliberate cruelty, even holding it up as the model of a just, healthy society?

But that’s the secret: it isn’t deliberate cruelty at all. It’s something far, far worse.

Americans are taught from moment one that we’re the Greatest Country in the History of Humanity™. We’re also taught that the reason we’re the Greatest Country in the History of Humanity™ is because anyone can make it here if they try. What being taught both of those things does is inexorably lead to the conclusion that those in poverty deserve their misery. Because they deserve their misery, it is therefore not just beyond our responsibility to provide a safety net for them, but providing them things like worker protections, paid sick leave, basic medical care, and above all fair pay is thus actively unethical. Give a man a fish and he’ll become an unending burden on the limited resources of the state. Teach a man to fish and you’ve placed the burden for his education on those who have no responsibility to help him — he should be able to figure out for himself how to fish, and if he can’t, well, that’s not our problem.

Now, obviously, to any thinking person, every statement in that paragraph is wrong in every possible way a human being can be wrong about anything. It’s wrong in so many different rage-inducing directions and in such an all-encompassing way that it feels almost impossible to even begin to categorize the ways in which it is wrong. The particular irony of the fact that many of the people who proudly don’t give a shit about the poor consider themselves ardently Christian is so staggering that it’ll make your head hurt and your soul cry if you think about it for longer than ten seconds. But while everything there is so wrong that it’s amazing the cognitive dissonance required to believe all the contradicting accompanying implications at once doesn’t cause space-time anomalies, people believe it because facing the truth of American society is just too painful. Such is the callous, terrible legacy of Objectivism, which would be the world’s most laughably inept socio-economic philosophy if not for the horrifying fact that there are people who think it would actually work, many of whom are among the most prominent names in Congress.

Every part of the wealth = worth philosophy is inherently a selfish paean to one’s own pathos, but not just in the obvious ways. The real reason people believe it is that they can’t confront the fact that the game is rigged from the word go. They have to pretend that if they worked hard enough, they would be just as successful as those whose wealth dates back decades and centuries, because seeing the truth and working to change it is too painful for them to contemplate. I strongly suspect that even a lot of the most flag-toting, eagle-humping, ardently pro-‘MURICA people in this country have at least a tiny sliver of doubt worming its way through their consciousness about our country’s primacy in the history of man, even if they can’t bear to admit it to anyone, least of all themselves. British author Terry Pratchett has pointed out numerous times that when the human brain sees something too horrible to cope with, it simply ignores it altogether — the indifference with which many Americans treat our poor proves him right.

The philosophy that those we see as beneath us (including service workers) deserve their misery — because if they didn’t deserve it they wouldn’t be suffering it — is exactly the reason tipping culture exists, and why so many people so ardently resist the idea of fair pay for fair work. Ultimately, tipping hasn’t changed because people can’t bring themselves to care about those they see as beneath them. The aristocratic class early-20th century Americans feared has come to pass, only a significant portion of the country will do whatever they can to avoid seeing it.

Would Changing it Work?


But What About Job Creators and Welfare Queens and Obummer And —

Please stop talking, Fox News pundit.

But Seriously, What About —


The fact of the matter is that paying tipped workers would not and does not hit restaurants’ bottom line in a way that even remotely approaches cost-prohibition. Labor costs are not what sink full-service restaurants unless they’re so horribly mismanaged that changing wages wouldn’t save the place anyway. Small pricing increases to offset labor costs are more than made up for from the customer’s perspective by the 20% they’re no longer being asked to tip.

It’s likewise important to point out that there are seven states where tipped and non-tipped employees have the same minimum wage: Alaska ($7.75), California ($9, in the process of raising to $10), Minnesota ($7.25), Montana ($7.65), Nevada ($8.25), Oregon ($9.10), and Washington ($9.32).*** Interestingly, this isn’t the case of the biggest states with the most liberal city-dwellers choosing to pay their tipped employees fairly, as there appears to be absolutely no correlation between the size of a state’s economy (they rank #1, #14, #17, #26, #31, #45, and #48 in GDP) or its political leanings (Alaska and Montana aren’t exactly known as bastions of liberalism or urbanization) and what they choose to pay tipped employees.

The data also shows that paying tipped and non-tipped workers equally does nothing to hurt those states’ economies: research shows that these seven states actually experience above-average employment growth, an increase in per capita restaurant sales, and no decrease in employment (there actually appears to be a slight growth in employment relative to states with the sub-minimum tipped wage). The fact that restaurants successfully operate within these states gives the lie to corporations’ claim that their profit margins are so thin they couldn’t possibly pay their workers fairly. It’s not as if there are fewer restaurants in those states, either — only two of the seven are even in the bottom half of number of restaurants per capita (Nevada at #38 and Minnesota at #42). Montana even sits at #2 overall, trailing only the District of Columbia. Restaurants in states with fair wages get by just fine.

Oh, and there’s also the fact that a fair wage for service workers rather than a mandatory tipping culture functions just fine in every other country on the planet. That too.

What Should We Change It To?

Here’s a far more interesting and divisive question, yet it’s one that doesn’t get talked about nearly enough.

The simple answer would be to change the system to an hourly wage and make tips what they are in other countries: an occasional extra reward for exceptional service, but not something workers have to rely on. In theory, this sounds ideal, and it’s certainly possible it’d work just fine. It does everywhere else, after all.

What worries me, though, is that Americans typically aren’t good at half-measures, nor are we very good at seeing any sort of grey area — if tipped workers had to be paid the same as non-tipped workers, there would be absolutely no reason to tip anything from the perspective of the vast majority of Americans. This would be fine if the minimum wage was, say, $12-15/hour, but there’s absolutely no chance of that happening due to the tremendous number of Americans who’ve been brainwashed into believing that raising the minimum wage hurts the economy (NOPE NOPE NOPE).

Restaurants will pay service workers the minimum they can get away with, because businesses are by their very nature sociopathic entities. That isn’t a knock on business owners and CEO’s (well, except for the ones who actually are psychopaths); businesses have to be inherently sociopathic to succeed. Businesses that operate on altruism rather than profit motive will fail, another of the seemingly limitless reasons corporations are in no way people. Considering that restaurants currently pay their servers $2.13/hour, does anyone really think there’s any chance they’d pay their employees anything beyond their absolute minimum obligation under the law? The idea that the service industry wage market would suddenly self-regulate to something reasonable is patently laughable considering its utter, abject, and all-encompassing failure to ever do so in any capacity.

The real problem is that working as a server or bartender in America is fundamentally incompatible with the idea of a minimum wage job. It’s not just that no one deserves to work for less than a living wage, as those making the current minimum do (including non-tipped employees, obviously). That’s certainly true, but the nature of working as a server is different from minimum wage jobs in a few key ways. An employee at, say, McDonald’s will show up at work at a set time, work a certain number of hours, and leave. A server or bartender, meanwhile, will likewise show up at a set time, but how long they stay — or if they even stay at all — is often determined entirely by management. If the restaurant doesn’t have customers (or if the manager is looking to cut labor hours), shifts will be cut short and people sent home. This is one of the only practices that works fine under the current system, because if you’re not getting customers as a server/bartender, there’s absolutely no reason for you to be there anyway, but it’s a problem if you’re making minimum wage. Even if you work a full shift, unless you’re pulling a double or closing, the nature of the industry means servers and bartenders are going to work for short periods of often brutally-intense activity (lunch, dinner) then go home, but only get paid a few hours at the minimum wage.

If servers were minimum wage workers, the vast majority would thus make even less than they currently do. Considering that the poverty rate for tipped workers is more than double that of non-tipped workers, that’s a potentially catastrophic situation for a not-insignificant percentage of the American labor force (servers and bartenders combined comprised roughly 2% of the employed American labor force in 2012).****

But let’s say you don’t buy that explanation. Let’s say you’re hell-bent on an hourly wage for servers for whatever reason: you think some people will still leave tips, you think the wages market would self-regulate, whatever. Fine. For the sake of this argument, let’s even assume the minimum wage goes up to $10/hour everywhere. Even if we assume I’m completely wrong (always a possibility), there’s still a potentially much better system for everyone involved, and it’s already in place in at least one restaurant in America — and we have ample evidence that it works.

Packhouse Meats in Newport, Kentucky (just across the river from Cincinnati) came up with a really intriguing and wholly unique solution to the tips vs. wages conundrum. Packhouse owner Bob Conway bans all tipping within his restaurant; there are signs on the walls that tipping isn’t allowed, cash tips are returned, and the credit card receipts don’t even have a tips line. Instead, his servers have two choices, which they can pick between at the end of every shift: they can take a flat $10/hour rate (low, but not as catastrophically low as would be $7.25) or get paid with a commission of 20% of their food sales. Again, the choice is up to the servers.

Here’s why that system works: there’s a minimum in place that servers can’t fall under, but unless business is horrible that day, servers don’t need to worry about having to take the minimum. Unsurprisingly, Conway reports that the vast majority of server shifts end with them going for the 20%. In general, a percentage of sales model allows servers to control their own destiny far more than a simple hourly wage system would. Maybe the best thing about the percentage of sales model is it actually accomplishes what tipping was meant to do (incentivize selling) without succumbing to tipping’s lack of a guaranteed living wage. As a former server, I’d have picked that system (or at least a moderately tweaked version of it for fine dining that accounted for, say, 10% of alcohol sales for servers and 20% for bartenders) over any simple hourly model. If you sell $500 in food sales on a dinner shift (an eminently reasonable target number), you’d earn $100 for a five-hour shift, giving you an hourly rate of $20.

It’s also better for the restaurant than a flat hourly model, because it ensures they’re not paying servers more than they can afford; after all, they’re paying employees out of sales they’ve already made, so costs are predictable and controllable. Conway had to raise his prices to make it work, but not to a prohibitive degree — he reports that his modest price increase hasn’t done anything to hurt his business. We know this works because we’ve seen it work. The argument cannot credibly be made that this system is not tenable.

Regardless of which system you prefer, the sad truth of the whole situation is that business interests’ need to prop the system up is probably enough to stop it from changing unless people actually start to give a crap about this issue. As we’ve seen in this country, the rights of businesses almost always trump the rights of actual human beings. All the current tipping system does, though, is widen the divide between the American aristocracy and everyone else. Something has to give.

It’s time to end this farce once and for all.

* Let’s just get this out of the way right now: the idea that “tips” is an acronym for “to insure promptness” or “to insure proper service” is completely and totally false. Anyone who tells you otherwise is talking out of their ass.

** It’s also important to note that the $2.13/hour figure is a bit of a smokescreen, because that goes straight to tax obligations for the server and the restaurant. The vast majority of the time as a server, you’re going to be receiving checks that say “This is Not a Check” on them. It’s a running joke-that-isn’t-really-a-joke within the industry that if your checks actually have money on them, you’re really, really screwed.

*** Seattle has taken the idea to raise the minimum wage further, enacting a seven-year-plan to raise the minimum wage to $15/hour. I can’t even imagine how pissed the National Restaurant Association is about the fact that they pushed that through. Additionally, lawmakers in Hawaii have voted to raise the state’s minimum wage to $10.10/hour by 2018, at which point the new wage will apply equally to tipped and non-tipped workers.

**** For those who are curious as to how I got this number (because apparently, the Bureau of Labor and Statistics doesn’t track it directly), I came up with approximately 2% by adding the number of servers working in 2012 to the number of bartenders, then averaged the number of total employed US citizens for all twelve months in 2012, then divided for a workable percentage. The actual number is around 2.0449% of the employed US Labor Force for that year. Keep in mind that this is only servers and bartenders and does not include other food service workers.

Image via Shutterstock.

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