The truth about tipping

December 6, 2005 | George

[William Terrell]

The customer doesn't care about formulas in the same way he doesn't care about corrupt political dealings, and has about as much power to affect outcomes as an isolated individual.

And it certainly is a maxim that you charge what the market will bear.

But there is an internal problem with approaching it with the thought, "I'm gonna soak 'em for every penny I can get." The latter is a dark side of capitalism and a basic flaw in people that will coarsen society as it becomes customary.

There may not be a "just" or "fair" price, but there is a moral price.

I don't believe that owners can morally (without some guilt lurking in their hearts) justify raising their prepared food prices because the customers weren't tipping; that part of customer contributed wage they weren't paying was going into their pockets, not keeping the food prices down.

My observations.

[SoothingDave]

I'm sorry you have a sucky job. Why not try to better yourself, rather than blather on a website about how unfair it is?

If you really think it is illegal for you to have to share tips, bring a private prosecution against your employer for theft. It's perfectly legal. And you seem to believe you have the Constitution on your side.

Go for it and stop the whining.

SD

[SoothingDave]

I don't believe that owners can morally (without some guilt lurking in their hearts) justify raising their prepared food prices because the customers weren't tipping; that part of customer contributed wage they weren't paying was going into their pockets, not keeping the food prices down.

So you believe the business owner can not morally raise prices to make up for higher wages? Is that your position?

SD

[GOPPachyderm]

Thanks for clearing that up - I heard it years ago.

[William Terrell]

Please reread the last line of the paragraph you italicized.

[SoothingDave]

that part of customer contributed wage they weren't paying was going into their pockets, not keeping the food prices down.

You mean this? I don't see how you can make this blanket statement even if you have worked on restaurant software.

Do you really believe that lower wages for servers translates directly into owner profit and none of it is used to remain competitive on price? That it would be possible to eliminate tips, pay competitive wages and have food prices remain the same? That the owners would only see their profits be reduced and this would have no effect on their business?

Would you believe the same were true if, instead of paying higher wages, the business had to pay higher taxes? That they could easly absord the higher operating costs with no effect on prices charged?

SD

[William Terrell]

Do you really believe that lower wages for servers translates directly into owner profit and none of it is used to remain competitive on price?

Yes.

That it would be possible to eliminate tips, pay competitive wages and have food prices remain the same?

Yes.

That the owners would only see their profits be reduced and this would have no effect on their business?

Yes.

Wages are not taxes.

[BlueMondaySkipper]

$10 per dance, but only if she's fully naked.

I don't give her a tip if she's fully naked, I give her the W H O L E thing.

[MEGoody]

I don't care what the 'norm' is or what 'they' believe is the standard. I tip whatever I feel based on the quality of the food and service, and I give the tip to the person I feel earned it. (When my kids were little and had a particularly messy day, I used to tip the busboy who cleaned up after them.)

[SoothingDave]

Wages are not taxes.

In what ways are wages and taxes different, from the perspective that both of them are costs on a business? Aren't they both liabilities?

Why are you convinced, apparently, that a business could expend extra in wages with no effect on its prices, while a similar added expense for supplies or taxes would have an ill effect?

SD

[George14]

Let me first start off by saying there is nothing nice about stealing people's personal property. That's what tips are. Our federal laws state clearly that tips are the sole property of the tipped employee. You might ask, Who is the tipped employee? Isn't it the cooks, the hostesses, the dish washers and anyone else the business wants to give it to? No, a tip is not the property of whom ever the business owner wants to share it with, it's the property of the employee to whom it was presented. What is so nice about paying employees $2.65 an hour? The fact that employers in your state can pay their workers $5.15 an hour is an embaracement to start with. Now, about that $2.65 an hour wage your state has adopted for tipped employees. Why is your state allowing employers to pay tipped workers less in wages when it is a clear and undeniable fact that customers are tipping workers so that they will earn more money? Doesn't such tipping by the public clearly exhibit the public's will to see that certain workers earn more than simply minimum wage?

The reason it is a common practice in many restaurants to mandate that the waiters tips must be shared with other workers whom obviously did not receive tips is because businesses think that they are above the law. Can a waiter steal a tip from a customer? Then why should the business owner be able to steal a tip from the waiter? You see, I have no problem with waiters or any other employees giving fellow workers tips if it is actually in their best interest to give tips to fellow workers, however tips are defined by federal laws as a sum presented by a customer as a gift or gratuity in recognition of some service performed for him. Please note that tips are not defined as a sum given by a worker to other workers. Tips where defined by federal laws to protect both the workers and public.

You see, back in the early 1900's and even before that employers where stealing their employee's tips. Our federal government saw the need to protect tips as the property of the tipped employee and went about enacting laws to protect both the employee's and customer from the overreaching hands of employers. While waiters tipping out other employees may have become somewhat of a common practice the reason for it becoming a common practice is obvious to me. Businesses want their workers to share tips because they have figured out that if they can intimidate the workers into sharing tips they can offer part of the waiter's tips to job applicants applying for a non-tipped position while at the same time offering them less in wages.

The fact that you have stated that it'a a nice thing that in your state employers must make up the difference between $2.65 and $5.15 an hour if customers don't tip baffles me.

If customers tip in your state, the business saves money and subsequesntly increases their own profits. Why is your state alowing business owners to profit from the tips customer present their employees? What is nice about this fruad. That's what it is. Nothing more than FRAUD...

Customers are undeniably tipping to benefit the workers and yet your state is giving over the financial benefit's of the customer's tip to the business owners of your state.

Fraud is defined as:
Deception carried out for the purpose of achieving personal gain while causing injury to another party.

Empolyers are achieving personal gain from the tips given to their employees. As a result the employees whose wages are being reduced are being injured by the loss of income your state has approved. Your state has deceptively claimed the right to determine who should benefit from the customer's tips when it is clearly the customer's right to determine who should benefit from his tip. Your state has passed a law which gives over the financial benefits of the customer's tip to the business owners of your state illegally and in violation of our Constitution.

The 14th Amendment of the Constitution of the United States.

No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.

[absolootezer0]

ok, lets start with..."tips are defined by federal laws as a sum presented by a customer as a gift or gratuity in recognition of some service performed for him." the way i see it, and i may be wrong, but the waiter is half working for the customer, half working for the employer. which is why tipping should not be a mandatory. the employer is giving the employee a token salary so the employer can be sure that the employee will be there for scheduled hours. the customer is paying the employee to be prompt, courteous and right. which is why any decent server will make 2-3x their wage in tips.

also, that token wage, makes an easy way to pay the taxes on the tips. a good server who works 40 hours at $2.65 will only end up with a $25-30 paycheck.

as far as "sharing" if its a pool that all employees pitch in and split, that's crap. i hate it. i have customers that will regularly say "this is for you, and this is for the cook." and hand me two wads of money. that's fine, he's specifically tipping the cook, but if a person hands me $5, i'm not splitting it around. however, employees tipping employees is fine in my book. because just like a customer tipping for prompt service, a server should tip the bartender and busboy for prompt service as well.

concerning state mandates for pay.. the reason i like the state telling the owner to make up the difference is because the only way that can happen to cause an employee to not make that wage- no business. and an employer is not gonna pay an employee, even if its only $2.65/hr, to do nothing. any employee standing around will end up working, usually cleaning. so its only fair to pay them janitorial wages. the way our state views tip reporting is you are required to report 8% of your sales as income. so if you sell $27 worth per hour, you're covered.
any employee that can't make an average of $5.15 while actually working, needs to find a new job.

[William Terrell]

Wages are the compensation paid to a worker for his services. Taxes are the progressive penalty paid to the taxing agency for the increase realized from the worker's services.

A restaurateur may do whatever he wishes with the renumeration to his workers. It's up to him to govern himself. He may not do what he wishes with the taxes.

If he pockets the difference between any other type worker's compensation and that he pays his serving workers, the difference being paid by his customers directly, and the cost of his prepared food is not affected by the difference, and yet he raises the price of his food to make up that customer paid difference to keep the cash flow, he has a greed problem. That problem is totally dependent on his willingness to self-govern.

No law should be passed. There is already spiritual law that covers that behavior and intention.

[SoothingDave]

Why are you convinced, apparently, that a business could expend extra in wages with no effect on its prices, while a similar added expense for supplies or taxes would have an ill effect?

You didn't answer this question except to assume:

If he pockets the difference between any other type worker's compensation and that he pays his serving workers, the difference being paid by his customers directly, and the cost of his prepared food is not affected by the difference, and yet he raises the price of his food to make up that customer paid difference to keep the cash flow, he has a greed problem.

Again, what makes you assume that the cost of the food is not related to the wages he pays? I mean, of course, the cost it takes him to prepare and present the food to the diner in a clean, comfortable environment. What you are saying is that he could pay the staff $2/hr and charge $5 for bacon and eggs or he pay $10/hr for staff and still charge $5 for bacon and eggs. The only reason he doesn't is his own greed.

What basis do you have to make this determination?

Finally, you did not answer the basic question, repeated above. Why do you think that one business expense (wages) has a different effect on the prices a business charges than another (taxes, utility cost, supplier increases)?

SD

[William Terrell]

We aren't talking about a business. We're talking about the restaurant business. And in the restaurant business, or any business that dependent on tips paid directly by the customer to the worker, paying a wage not dependent on tips has no need to affect product price. Of course, if you run such an operation and you're used to skimming this kind of cream, you may raise your prices if denied that source of income.

Does that answer your question?

Again, what makes you assume that the cost of the food is not related to the wages he pays?

Because his prices are based on the increasing unwillingness of people to cook for themselves, and the work load on his customer base to thrive in a political environment that runs on a high level of graft to sustain its socialist programs that creates that unwillingness.

What you are saying is that he could pay the staff $2/hr and charge $5 for bacon and eggs or he pay $10/hr for staff and still charge $5 for bacon and eggs. The only reason he doesn't is his own greed.

No, I'm talking about charging $5 for what costs about $.65 in raw food expense, and then expects customers to directly pay the lion's share of his delivery system (waiters) cost, which leaves only the production system (kitchen) costs.

The article discusses an attempt to sustain this type of activity to keep his less motivated members of that delivery system happy at no cost to himself. He probably can't increase the price of food; it will have been jacked up to the max the traffic will bear.

What basis do you have to make this determination?

My first or second post.

Let's get something straight here. Capitalism is the best, in my opinion, system of economic production and distribution we have. That was pretty much proved in this country as early as the Plymouth Colony.

But it has its paths of abuse and its destructive principles like any other system. Entrenching that abuse in custom can break down a society as well as any other system. The capitalist system depends more on self-governance and the condition of the heart more than any other system.

I run a business that combines a manufacturing system and a retail marketing system. I base my prices not on what the market will bear but what I figure allows as many people as possible that like it and need to access the product. My product has therapeutic application for muscular dystrophy and other special problems. I do not jack up my price because of that need and use.

There must be a morality in capitalism or the society that uses the capitalist system becomes an immoral society.

My opinion.

[SoothingDave]

We aren't talking about a business. We're talking about the restaurant business. And in the restaurant business, or any business that dependent on tips paid directly by the customer to the worker, paying a wage not dependent on tips has no need to affect product price. Of course, if you run such an operation and you're used to skimming this kind of cream, you may raise your prices if denied that source of income. Does that answer your question?

No, it doesn't. You just keep re-asserting your assumptions without proving them. Have a good day.

SD

[George14]

The bartender and waiter get your tip, after the business has taken part of it from them and shared it with barbacks, busboys, hostesses and an ever growing list of other workers.

While you may have given the waiter a $40 tip many businesses are forcing the waiter to give $10 of their tip to other workers leaving the waiter with only $30. After stripping the waiter of $10 of his tips, the business then reduces the wages of the waiter by $24 or more, depending on the state, and the $40 tip you gave the waiter becomes a $6. The tip credit has allowed businesses to reduce the wages of an employee by as much as $5 an hour if customers tip them. What this means is that your tip of $40 can be reduced to nothing. Currently the federal minimum wage for tipped employees is $2.12 an hour while the regular minimum wage stands at $5.15 an hour. That's a difference of $3.03 an hour. If customers tip an employee, the employer can reduce the employee's wages by up to $3.03 an hour. So, when you give a waiter a $40 tip what it menas is that the employer can now reduce his wages by $24.00 for that days work. These workers aren't getting your tip. The business is taking the finacial benefit's of your tip for themselves. That's what the tip credit does. It gives over the financial benefits of your tip to the business. You see, while the waiter may go home with your $40 tip, he is going home with a paycheck which is $24.00 less than it would have been had you not tipped him. Who is actually benefitting from your tip? While the waiter went home with an extra $6 in his pocket the business saved $24.00 and as a result the business owner went home with an additional $24.00 in his pocket. Now the question which remains and which has never been answered is why are businesses being allowed to financially benefit themselves to the customer's tip. Is this not stealing?

[George14]

No, what is being said is not because you get tips I don't have to pay you the minimum wage. What is being said is because we have a federal government that will allow businesses to financially benefit from their customer's tips, I can pay you less and take away most of the financial benefits customers are attempting to bestow on you. You see the problem isn't that the public is tipping employees, the problem is that our corrupt federal government has passed a bill which allows businesses to fraudulently benefit from money not belonging to them, tips. The worst part about the tip credit bill is, if business need additional income they have every right and ability to simply charge more for their services. Of course fraud is much more lucrative. Our government has passed a bill which allows business owners a ability to fraudulently financially benefit from the tips our public presents their employees even though businesses could simply charge more for their services and increase their own profits legally.

[Coffee_drinker]

I'm not sure about other states but in Oregon it doesn't work this way. In Oregon all workers including servers and bussers get paid Oregon's minimum wage which is something like $7.50/hr. So the tips directly affect their income, and the business owners cannot decrease the other tipped employees wages because they also benefit from getting tipped.

[George14]

If you feel that someone doesn't deserve a tip, then don't tip. That's the genius of the American way. The European way is idiotic for it automatically includes the service in the price of the meal where customers will have to put up with what ever service the business chooses to hire. Chances are the servers they hire will be uncaring, unproffesional and unmotivated, for the expense of hiring good waiters would only cut into the owner's profits. Service is about carng and those that take a job for a set wage obviously don't care about what they earn or what level of service they give. I've heard the service in Europe is deplorable. You wait forever just to get the waiter to take your order and you wait even longer to get your bill. I'll take the American way where what you give dictates what you get. While the current situation in America does have it's problems with businesses stealing their employee's tips, eventually this problem will come to a boil and be dipensed with once and for all.