THE BLOG
01/17/2015 06:43 pm ET Updated Mar 19, 2015

You Need to Know: The Debate Over Tipping

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Every year, approximately $40 billion is tipped in the United States. More than 60 percent of tipped workers in the U.S. are employed in food service. In the U.S., tipping is inherent to the dining experience, but recently, some are calling for the abolishment of the ingrained habit, or the possibility of extending tips to kitchen staff.

Do you think we should throw tipping out the door? Or is it essential to keep your restaurant running? Here's what you need to know about the debate on tipping.

What is the history of tipping in restaurants?

Back in 1966, amendments to the Fair Labor Standards Act introduced the concept of a "subminimum wage" for workers who routinely receive tips. Tips plus the sub-wage are supposed to be equal to or more than the minimum wage. This change shifted the role of tips from a sign of thanks to, in effect, a salary subsidy.

Today, many consumers feel the burden of subsidizing waiter base pay. A survey by Coupon Cabin found that 87% of diners feel obligated to tip in restaurants, regardless of service. In short, tipping is no longer a sign of gratitude, but a duty.

So what is tipping based on?

Though we all like to think our tipping behavior is related to the service we receive, studies show that it's not so. In fact, tipping barely correlates with service. Instead, it is more likely to correspond with other extraneous or subjective factors: the amount of a bill, or the server and diners' races, ages, and appearances.

Michael Lynn, Professor of Consumer Behavior and Marketing at Cornell, has found that certain physical attributes lead to more tips for servers, like being blond, slim and large breasted. Sometimes even t-shirt color can influence the tip left behind.

In fact, according to Lynn's research, getting great tips is based less on great service and instead on gender, physical attributes, whether a server introduces themselves by name, squats near the patron while taking an order, touches the customer or offers candy with the check.

So servers are dependent on tips but tips seem pretty subjective...

Exactly. In fact, Lynn argues, tipping could be deemed illegal, as issues such as race and gender factor into a person's tips.

So why do we still tip?

Changing any social norm is incredibly difficult to do. Business models are based on the assumption of tipping, and some service workers appreciate the idea of being tipped, and feel it serves as motivation. Some restaurant owners also believe it's a useful way to evaluate staff performance.

Can restaurants survive without tipping?

Many restaurant owners are nervous about the idea of raising tipped worker wages. In Washington, it has been recommended that the government up the sub-wage to 70% of the full minimum wage, putting more of the wage burden on the restaurant owner. If wages were to rise, that additional cost to the restaurant would have to be folded into food prices, or added on automatically at the end of the meal. (Read more on the minimum wage debate, here.)

What are some solutions restaurant owners are trying?

A number of restaurants across the country have begun to adopt a "no tipping policy," instead charging a 20% service fee on all checks, which then gets distributed to all staff. Any additional tip is considered a gift, not a requirement. This is also a potential solution for restaurants in states where minimum sub-wages are rising. But it remains to be seen if staffs respond well to the missing incentive, and whether tip-oriented patrons will pine for the opportunity to show their evaluation of the meal.

Originally posted on Plate Online.
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