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Your Take: Acceptable To Tip Less in a Recession?

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Tip Jar at a CoffeehouseKimberly Palmer of Alpha Consumer asked her readers this week whether you should tip less during a recession. There was your typical philosophical discussion about the merits of tipping (think about the opening scene of Reservoir Dogs) but it seems as though, based on the callers into NPR’s Talk of the Nation, a show that Kim was on, people, based on empirical evidence, felt it was acceptable to tip less.

I don’t think it is. I worked once as a banquet waiter and so was not subject to per-ticket gratuities and I wasn’t compensated as if I were subject to per-ticket gratuities. I was paid a handsome $10 an hour for my banquet waiter duties and the only tips I ever saw were for getting drinks for people. I may be a little biased, but not terribly so.

I think that if you don’t think you can afford to tip fairly, you should be using the services are expect tips. You can cook your own food for far less than eating out, so if money were really the issue then you wouldn’t be ordering or dining out, you’d be cooking yourself.

As for the philosophical qualms people have about tipping, our society has made it a norm. Some food service staff are paid less because there is an expectation that they will be compensated by patrons for their service through tips. If you don’t like it, don’t blame the waiter or waitress, blame the system and blame the restaurant owner for perpetuating it.

What are your opinions about tipping? Do you think it’s acceptable to tip less when money is tight? What about the philosophical angle about how tipping has really stretched itself into other areas or how tipping in general is really a terrible compensation system?

(Photo: mwichary)

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52 Responses to “Your Take: Acceptable To Tip Less in a Recession?”

  1. John K. says:

    Well, tipping is actually a negative as far as earnings and in an economic sense. Think about it this way, those jobs which are highly gratuity based are sales. Wait staff are not sales, they have no control over the revenue stream of a company whatsover (except perhaps negatively, if the service is terrible or they cannot turnover the table fast enough). Essentially, tipping gives restaurants a free ride during slow periods to overstaff since the penalty for overstaffing is less(in a marginal cost sense).

    Believe it or not, if everyone stopped tipping the wages for wait staff would quickly rise to fill in the gap. The reason is simple supply and demand labor economics. Also, this income revenue would be more easily taxed and increase the tax roles of the country. Tips are largely a negative both for the waiter and for those who eat at the restaurant. The second is less obvious than the first. The reason it is a negative for the patron is that there is pressure for fast turnover in low meal price restaurants (as well as high) and the wait staff is constantly pushing people out the door for obious reasons. This is obviously a boon to the restaurantuer, but negative for everyone else.

    Also, if no one at restaurants tipped the price of food at the restaurant would increase, but probably less than the difference between the pre and post tip bill. The fundamentals of the market would set the price and since tips are a perfectly price elastic good to the price of a meal. By removing the tips from the market it would eliminate the free riders, those who don’t tip.

    Also, I believe the fundamental of implied gratuity for parties over a certain size is illegal. You are essentially charging two different rates for the same product. If you view a meal as being a transaction between an individual and a restaurant then forcing large groups to have fewer waiter and forcing a gratuity raises the per person price above that which each would pay for the same service seperately. It is akin to saying if you book a plane flight for 12 people you are forced to pay a higher rate than if you booked for 12 people individually. This is something in which their is legal precedent.

    Finally, the tipping procedure is merely a way to incent the wait staff to push people through their meals faster. It provides no value to either the wait staff (In a monetary sense) or the customer. The customer is essentially paying for the priviledge of having someone stand over them and pester them while they are eating to eat faster and not enjoy their meal. If you don’t believe, go to a diner on a saturday morning and try to read the entire paper. Order one meal and nothing else. After 1-2 hours in a booth, the manager will try to come by and throw you out. This is not service nor is it intended to create service.

    • Philip White says:

      John K., thanks for this post — it is truly the most insightful comment I’ve ever read on the subject of tipping.

      • Sebastian says:

        John K,

        In selectively throwing your logic around, you offer little to no explanation as to how or why tipping came into being. You ignore ideas such as how tipping can be a way to transfer decision-making sovereignty to consumers (if no one tips a certain waiter, a waiter leaves the workforce – the customer has a comparative advantage in performance review), for voluntary income redistribution and normalized giving, and tricky little details such as that most consumers probably do not want to read their newspaper in a crowded diner.

        To avoid sounding as rambling and incoherent as you do, I will write no more.

    • Mike says:

      I cannot disagree more. If you’ve ever traveled abroad you’d know the flatline service socialism provides. They don’t care if you’re happy they will get paid anyway, along with benefits and social programs, like health plans, vacation etc., sorry “Holiday”.
      The customer benefit is in how they are treated. If you’ve ever been a regular anywhere and you’ve taken care of you’re favorite bartender or waiter, you’d know what I am talking about. You get the royal treatment. Or the “Norm” from Cheers. They know what you like, remember what you drink and generally treat you as a friend if that’s appropriate. If you are a corporate big-wig your are treated with extra respect and it usually impresses clients when the staff welcomes you by name and cares about your experiences. And you would never be rushed. If you feel rushed anywhere anytime speak up and/or pick a new place.
      Socialism irraticates this. You won’t feel rushed, because there is never a sence of urgency about anything. There is no reason to go above and beyond. Just the minimum service for minimum pay or worse minimum service for very good pay and benefits.
      To understand the fiscal benefits you first have to understand the business. If all the employees of the service industry were to be given normal work force standards: benefits, medical, vacation time, sick days, raises etc. your price for dining out would exponencially increase.
      Every business has cetain built in over head costs. Real Estate (mortgage or rent) cost for product, shipping and cost for production. In many businesses you pay for their office decor and all the employees as well and never see any of it. I don’t know about you, but I have seen some pretty extravagant offices out there.
      Restaurants are no different.
      There is:
      1. the ambience and cleaning and upkeep of the space and the staff that performs those functions that you probably never see.
      2. The chefs, cooks, prep cooks, and dishwashers you also never see.
      3. The management and Maitre de, waiters, cocktailers, bartenders, busboys and food runners and in some cases security staff that you do see.
      4. Product costs: Liquor, food, ice etc.
      5. Liability insurances- much higher for businesses with public foot traffic and even higher if alcohol is served.
      6. All your home expenses- Utilities, water, Air conditioning, heat, Cable, etc.
      7. Sports packages and special events- at a much higher price than yours, because it is for public viewing so priced for “potential eyes.”
      8. The tipped employees are like private contractors. There are no benefits, no sick days, no vacation and usually no medical.
      (Yes you can go on vacation, but if you’re not working you don’t get paid.)
      9. You seem to know economics- do the math- add the cost of medical, pay raises, sick days for all the people listed above and then flatline the service you will receive…I think you’d rather throw a 15%-20% gratuity and have a nice experience than the automation alternative.
      10. To not tip, is to ask the server to work for less than minimum wage. They have a minimum tax on sales. Again do the math. After they tip the food runners, busboys, barbacks, bartenders and paying the minimum tax on your experience, you have cost them money.
      11. Illegal? I think not. Restaurants have added the gratuity for large parties as a curtousy to help eliminate bad feelings and miscalculations. And you don’t get less waiters either. Most servers will have a section of 3 or more tables. Your example means you have the undivided attention of your waiter for the legth of your stay, which will probably be well above average. To facilitate a large party (say your example of 12 people) it takes much more attention, time and effort than say 12 parties of 1, or 6 parties of 2 or even 3 parties of 4 people. The party of 12 is all going to be sat at the same time and will and should expect to be served at the same time, everything has to be timed just so. As the server you know you will need your track shoes on for this one. Most people will want refills, other rounds and special requests and usually not at the same time. When a large parties order hits the kitchen the normal flow comes to a screeching halt and everyone else in the restaurant basically suffers and has to wait for that party to be served before their order is even looked at. Some restaurants like Houstons in Beverly Hills refuses parties over 6 for just that reason. If you are the patron on a nice dinner with a friend, the wife, husband, or significant other or worse a client you are trying to impress, are you going to be understandind when your food gets backed up as much as 20-30 minutes because a party of 12 is getting their food? I didn’t think so.
      Finally, the tip is an incentive, yes, but not to rush you. To give you the best service the business, atmosphere and other cliental will allow.

  2. Gene says:

    John K. makes a good point. My wife and I lived in Germany for four and a half years and had to get used to the European habit of leisurely dinners. There, it is not unusual to see people sit at a restaurant table for two or three hours – and not necessarily re-order drinks. Nor does the waiter stop by and ask how the food was. Regarding tipping, it’s usually included in the bill (normally 15%). You can round up to the next euro, but it’s up to you.

  3. @ Non-tipper:

    Theoretically, I agree with most of what you said. If I had a magic wand to wave and affect the tipping paradigm, I would eliminate it. I can also see the sense in consciously modifying your behavior as a form of protest against a custom you deem lacking.

    However, your hostility is disturbing. There are many ways to protest the custom of tipping service staff and it is revealing that the method you choose is to penalize those you deem “uneducated, low-life” scum. Truly, the uneducated and others who have made poor life choices find themselves in such jobs. So do high school and college kids, teachers during the summer and others in “seasonal” vocations, seniors who need to supplement retirement income, stay-at-home parents whose kids have grown older, as well as a myriad of other situations which are not predicated on being “uneducated” or “low-lifes”.

    You imply that the market has dictated the appropriate “base” salary for these people already and your tip is something extra. Yet, the vast majority of patrons *do* tip so this argument is fallacious. If tipping was eliminated then in all likelihood these salaries would rise to make up the difference. So, by never tipping you are jipping these folks of the difference between your “base” and the wage a properly free market would set. Instead of being some kind of champion of the free market, you are exploiting government intervention in the labor market to pay too little for the labor of these people. I suspect you don’t care though.

    We both look at the custom of tipping and see a bad system. My actionable response has been to do what I can to address it in a positive manner; yours has been to use it as an opportunity to stick it to those you consider beneath you.

  4. AJ Kumar says:

    Tipping is not a city in China.

    I personally think that tipping is a necessity. I agree with the comments above about: if you can’t tip, then don’t eat at the restaurants.

    One thing I would like to get someone’s opinion about is:

    Do you tip if your taking the food to-go?

    • Mike says:

      Yes, but not as much. 10% is appropriate. Your order still takes time and effort and hopefully is as skillfully crafted as if you ate in.
      Bottom line here is that the people fixing and wrapping up your order are usually tipped employees and have a minimum tax on sales applied by Uncle Sam. So as I’ve said in other responces, not tipping is asking the “tipped employee” to work for less than minimum wage.
      I would say also though, not tipping because your take out is always screwed up at a particular restaurant is justified.
      Cause and effect: Most people don’t tip, so we all suffer for the servers lack of commitment to get it right, because they’re in turn going to get screwed by the us.
      Point out whenever your order is not right and especially if you’re a regular let them know, you’re not adding a tip because the orders always wrong, but would like to tip for better service. I think we’d all benefit.

  5. Steve says:

    People who are against tipping are just cheap. Why do you think the waiters are so nice at expensive restaurants? They’re earning a commission on the check. Do you think they’d bend over backwards for minimum wage? Tipping is a kind of stupid custom, but it’s what prevents you from getting McDonalds-level service (especially at corporate restaurants like Applebee’s, where the waiters are trained more like salespeople than just servers).

  6. Meg says:

    I’ve been tipping less. But that’s because I usually tip 20% – 30% for average to above-average service. I’ve recently dropped it to 15% for average service and 20% for solidly above average.

    I’ve also quit giving valet’s a $5 just because that’s what’s in my pocket – now it’s $1 – $2 depending on the effort required by the valet.

    It’s not OK to STOP tipping or to tip less than 10% for decent service. But it’s OK to reign in extra generous tipping.

  7. Curtis says:

    I would like to express my feelings by quoting the the words of the song “Waitress” by Live:

    Come on, baby, leave some change behind
    She was a b****, but I don’t care
    She brought our food out on time
    Wore a funky barrette in her hair….

    Everybody’s good enough for some change….

    For my own part, I always leave at least the socially accepted 15%, and will leave 20% for even moderately above average service. I used to be uptight about it, but I’ve found (much like Mr. Maddock above) that in almost every instance the cause of the problems I’ve had are not due to the waitress but some other employee or the establishment’s policies/practices in general. I sometimes also leave an extra 5% if the waitress is pretty, and to those who say that’s discrimination, you’re right.

  8. Urgh – I believe the opposite. A recession is an important time to make sure you’re providing a right-sized tip. People who are tip-dependent can be hit hard during a recession. Yes, I worked in a restaurant once, as a hostess, so I wasn’t tip-dependent myself, but I had servers come up and beg me to seat lots of tables in their sections, because they needed enough tip money to pay the rent.

  9. Dave says:

    Why are waitresses untouchable in a recession… I’m in financial services (self employed, and my friend is in Tool and Dye… we’re both feeling the effects of the economy… and we’re cutting back, but still go out and have fun (less often).

    The bar is still packed as it was during the bull market. So why should waitresses, or bartenders make the same amount?

    Everybody hurts during a recession… bottom line. Fuck this bullshit “if you can’t afford the service then stay home” bullshit. If I want to tip less… while I’m cutting back on other bills too… then who the fuck are you to pass judgment.

    • Jim says:

      You can do whatever you want, but the fact you’re getting so worked up about it is a sign that you recognize the hypocrisy in your statements. If your customers were able to decide how much they wanted to pay you for your financial services and arbitrarily decided to lower that payment because of some external factor, would you think that’s right? I doubt it.

    • Mike says:

      I am the Angel on your shoulder telling you to do the right thing.
      You’ve actually just answered you’re own question. The place is still packed. So, you’re saying let the staff continue do bust their butts for you as usual and in turn you would like to pay them less. That’s Rich! If your business is down you probably have less work, so less money. Would you accept less money for more or the same work? I don’t think so. Why ask the staff of your favorite restaurant to. The nights you go maybe they are still busy, but I gaurantee the off nights are much more off than you know.

  10. Mike says:

    Here’s the bottom line, good, bad or indifferent. The industry standards are:
    For service- 15%-18%, for excellent service and/or if the establishment is super busy and everyone is scrambling to accommodate the business- 20% is customary or more if you’ve been pampered or needy. (For an example of needy see When Harry met Sally- Sally ordering her food/ You know who you are…)
    For Waiters, Cocktailers and Bartenders, Uncle Sam actually expects you to be tipped and you have a minimum tax on your sales. When a customer leaves a nasty tip or no tip they are asking you to work for less than minimum wage, just because they “feel justified, for whatever reason”. Most customer’s do not know or understand this. Most people also do not know that the Waiter, Cocktailer and Bartender then, at the end of the day, tip the Runner who brought your food, the busboy who cleared your table, the barback that assisted the bartender and yes the runner who packed up and brought your to-go food. (You should be tipping 10% for to-go food at establishments that employ waiters to service you. If this is too much for you, may I suggest drive thru. It takes time and effort to do to-go food. Some restaurants won’t even do it at all, because it takes too much time away from the guests.)
    To put it in normal terms: How would you feel, if your boss randomly came to you at the end of the day and told you, “I’m gonna pay you less than minimum wage, because I feel justified, for whatever reason”. Would there ever be a good enough reason?
    IT’S JUST WRONG, RUDE, AND UNACCEPTABLE. If you want to play with the big boys you need to pay with the big boys. If you cannot afford to go out, don’t. Or do it less if it’s a strain on the purse strings. The economy stinks for everyone, but no one should ever have to work for less than minimum wage.
    “If your time is money, so is ours.”

  11. Wilma says:

    When I go out to eat I always tip well. Especially if the server is doing their best. I have found in the past that when you leave good tips, they remember you and the service only gets better each time you go back. Some times the owner will pay a visit to your table with a sample and ask what you think. When I used to bar hop in my younger days the bar tender had my drink in front of me as I sat down. I LOVE good service and I’m happy to pay extra for it if the server is willing to go the extra mile of remembering my favorite drink etc. It’s hard work to serve the public. I don’t envy wait staff in the least.


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