What Money Magazine has to say about tipping (or not)

Money and Ethics: How you stack up?

Money Magazine asked 1,000 adults nationwide the question, Have you refused to leave a tip for bad service? By Jeanne Fleming, Ph.D., and Leonard Schwarz, Money Magazine's ethicists

Survey Results:

Frequently 8%
Occasionally 21%
Once or twice 38%
Never 33%

Money Magazine ethicists said: While tips are the principal portion of a waiter's compensation - and in that sense, they're not optional - tips are also meant to insure that waiters provide good service. That incentive loses its punch - and service suffers for everyone - if diners are unwilling to vote with their wallets when the service stinks.

What say you? Do you agree with the ethicists?

.... tips are the principal portion of a waiter's compensation - and in that sense, they're not optional ....

Really! Are the pay rates in the hospitality industry that bad. And this 'not optional' part - is that writtten or unwritten law?

[Robin Garr]

Are the pay rates in the hospitality industry that bad.

Unfortunately, yes. Because of the tipping tradition, servers are not governed by minimum-wage laws and generally earn much less salary than other workers, on the assumption that part of their income will come as tips. This is speaking of the US, note.

And this 'not optional' part - is that writtten or unwritten law?

Figurative speech. Diners are not required by law to pay a decent tip, but failure to do so would be an extreme social sin, the mark of a real rube.

servers are not governed by minimum-wage laws and generally earn much less salary than other workers

Unless they are lucky enough to live in California - not only does the state have a higher minimum wage than the Federal law requires, but it also does not exempt servers.

servers are not governed by minimum-wage laws

This is only a partial truth. My state has the highest wage in the nation, just ahead of Oregon and California respectively. Kentucky ties for the lowest in the nation. You can view the state wage standards here:

http://www.dol.gov/esa/programs/whd/state/tipped.htm

I have on occasion left a very low tip for truly bad service. Enough that they understand that I didn't simply "forget" to tip.

I also have a chat with the manager or owner about my experience. Anyone can have an off night, but if it happens twice at a particular place, there is something wrong from the top down and I won't go there again. And I let them know why.

(Note: I have been ITB so I am low maintenance and cut people a lot of slack because of that and I generally over tip, but I also notice and appreciate the niceties and details, and when the basics are lacking.)

[Robin Garr]

servers are not governed by minimum-wage laws

This is only a partial truth.

Ambiguously stated, rather. I would have been more accurate if I had said that servers <i>in every state</i> may legally be paid below the state's minimum wage, because they are expected to make it up in tips.

[Robin Garr]

servers are not governed by minimum-wage laws and generally earn much less salary than other workers

Unless they are lucky enough to live in California - not only does the state have a higher minimum wage than the Federal law requires, but it also does not exempt servers.

I didn't know that! Make it "in most of the states," then.

I wonder if servers in California would be pleased with the idea of a citizen movement to reduce the tipping standard to, say 5 percent, since one of the primary arguments in favor of generosity has thus been removed from the debate.

On the other hand, even in California, minimum wage is hardly enough to live on ...

On the other hand, even in California, minimum wage is hardly enough to live on ...

I think even an upper-middle-class income is barely enough to live on in Kalifornia.

Ambiguously stated, rather. I would have been more accurate if I had said that servers in every state may legally be paid below the state's minimum wage...

Trying the old ropa dopa on me? Still not true -- Washington is $7.93 an hour minimum, Oregon $7.80 and California $7.50 to mention nearby states.

[Robin Garr]

Trying the old ropa dopa on me?

Naw, I'll save that one for when I'm in real trouble.

Still not true -- Washington is $7.93 an hour minimum, Oregon $7.80 and California $7.50 to mention nearby states.

Okay, granted - JT already made that point about California. It's true in most of the 50 states, though. Maybe the 20 percent tip should be re-evaluated in states where service workers aren't penalized for working in a tipping environment?

Maybe the 20 percent tip should be re-evaluated in states where service workers aren't penalized for working in a tipping environment?

Nah - let 'em eat cake!

If diners have to remember who gets what, where, every time they travel to a different state, they likely won't be in a mood to tip at all!

The fact is, it costs more to live here, so whatever extra they earn hourly isn't exactly going to put them on easy street.

The other side of the coin is, we have high school students with server's jobs, knocking down what many would consider very good money for an afternoon's work.
So the argument for raising the mw because someone can't support a family on it doesn't get much traction with me. I don't see too many heads of households earning the minimum. (not to say that there aren't any.)

Great link, Randy. As you know I'm in the group that always tips, although I sometimes cut/enhance my standard 20%.

A few observations:

1. If an adult can remember not tipping one or two times, I would lump them in with the folks that always tip, which makes the ratio 70/30 -- the great majority of adults in this sample tip regardless of the level of service.

2. In fact, Cornell University issued a report that service has very little to do with tipping. Its conclusion:

What is surprising is that, among the factors that determine how much money a server makes, quality of service is fairly insignificant. The Center for Hospitality Research at Cornell University, where Lynn works, found in a 20-year study that level of service explained only a miniscule two percent of the variation between tips. "Literally how sunny it is outside has the same impact on a tip as good service does," says Lynn. "The relationship between tips and service is weak enough that you have to really question the incentive for servers to give good service."

The Center for Hospitality Research lists a number of other factors that affect your tip, many of which are completely out of a server's control. Good weather, good moods and a piece of candy with the check are all important tip boosters. For the server, being attractive improves your tip, being a woman improves your tip, and being an attractive woman exponentially increases it.

3. Diners who cut or don't tip, impact not only the server, but also a large number of other workers. As a former waiter, I know that servers invariably have to "tip out" -- pool together and share -- their nightly income with other service staff such as bartenders, bussers and runners. A tip-out can be as much as 40 percent or as little as 10 percent. Each restaurant develops a unique method of division.

4. Many restaurants "pool" all tips, particularly since so many diners add the tip to the credit card -- poor servers then have absolutely no penalty for poor service.

5. That same Cornell study showed that many servers can't survive on their income, there is enormous turnover, and therefore no incentive on management to spend money on training. servers have a greater turnover rate than virtually any other profession.

Overall, this is one of the most befuddling parts of dining out. Ethics aside, I have decided that 20% is a fair amount to add to the bill and treat it as a cost of the experience. One true fact: if you tip 20% and decide to go back to the restaurant, you will get relatively good service. In that sense, it's personally beneficial. And, it gives me one less thing to think about.

Regards, Bob

What is surprising is that, among the factors that determine how much money a server makes, quality of service is fairly insignificant. The Center for Hospitality Research at Cornell University, where Lynn works, found in a 20-year study that level of service explained only a miniscule two percent of the variation between tips.

That's fascinating, Bob. Thinking back to all of the times we have dined out, it has been pretty rare that we did not get acceptable service. The servers usually work their backsides off. It is not easy work.

.... tips are the principal portion of a waiter's compensation - and in that sense, they're not optional ....

Really! Are the pay rates in the hospitality industry that bad. And this 'not optional' part - is that writtten or unwritten law?

Law? No, it's a custom, but one that's seldom disregarded by Americans. Here's an example of how ingrained the tipping custom has become. In American officers' and non-commissioned officers' clubs abroad where the United States stations its forces, their locally hired employees are paid prevailing local wages for similar positions, which means, say, a waiter hired in Japan is paid approximately what other Japanese waiters are paid. And even though wait staff in the local economies in many countries do not receive tips, the American officer and NCO club members individually for the most part elect to tip, which means their wait staff receive prevailing local wages PLUS tips. In the clubs it's common to hear members complain about bad service and then tip, which makes no more sense than giving an unsatisfactory well-paid postman or plumber a bonus, but evidently custom is hard to overcome.

So it's not hard to understand why when one of our states raises its minimum wage and applies it to restaurant staff the customers go right on tipping the same amount they did before.

And even though wait staff in the local economies in many countries do not receive tips, the American officer and NCO club members individually for the most part elect to tip

Even though the custom is to round up in France, we still tip. The service usually far exceeds what we are accustomed to here...

Interesting thread. In Canada (or at least Alberta) wait staff are included in the minimum wage legislation. And the customary amount is 15%.

I'll usually tip 20% for excellent service - that is, when the waiter really impresses us. Most times I'll tip 15% or so for good service.

There have been times when I've intentionally left nothing or a very small amount, though it's rare.

I believe the amount of the gratuity should be relative to the quality of service. I mean, if it weren't the case, then why not just raise menu prices 20%, pay the staff better and scrap the practice of tipping all together?

I agree that the amount of tip should be related to the quality of service, but it's also important to remember that in many restaurants, people other than your actual server are depending on tips. Hosts, food runners, and bussers are usually paid, at least in part, by a percentage of the tips the servers earned during the night (on average, their wages are somewhere between what the servers earn per hour and minimum wage). My recommendation (and I admit I'm biased because I have worked as a host/food runner) is if your server was awful, but all the support staff was great, talk to the manager or leave a note that the tip should go only to them. I've seen it done before, and it works.[/i]

My recommendation (and I admit I'm biased because I have worked as a host/food runner) is if your server was awful, but all the support staff was great, talk to the manager or leave a note that the tip should go only to them. I've seen it done before, and it works

Excellent!

"My recommendation (and I admit I'm biased because I have worked as a host/food runner) is if your server was awful, but all the support staff was great, talk to the manager or leave a note that the tip should go only to them. I've seen it done before, and it works."

Great suggestion, Lizbeth. Regards, Bob