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  • Writer's pictureLannie Neely III

Tipping in Excess

Tipping is an error in judgment. In its best intentions, it forgoes rationality and leads to unwanted effects, or simply isn’t worth it. As David Sax wrote in his article “Hey, Waiter! Just How Much Extra Do You Really Expect?”:


“As much as I think you’re pleasing to look at, and you do magical things with frothy milk, I just don’t see your services commanding a 70-plus percent premium over the market rate for my breakfast” (2010).

 

Tipping is when a server gets an additional payment at the discretion of the served. Low-wage servers—workers who provide a service at or around minimum wage—are typically the benefactors of this system.

But tipping has become an expectation. Some of the positive aspects of tipping have faded away, while others work in opposition to positive intentions. Tipped workers have become more prone to tax evasion, taking money from the public pool. Their tipping income has become too hefty, causing their hourly pay rate to drop. Inequality has arisen; a practice where tipped workers give poor quality service to people whom they predict will tip poorly. Its overuse negates the idea of worth—the internal measure tippers are supposed to use when deciding whether someone deserves their money. These issues conflict with the intentions of tipping. But they haven’t appeared despite tipping efforts, they’ve appeared because of it, making tipping no longer justified.

What influences tipping? The practical response is quality. It is common for a tipper to believe that what they are paying for is quality of service, future quality of service, or even the future quality of service for other patrons. With this rationale, not only should service quality be a major factor in tipping, it should be the only factor.

According to “The Norm of Restaurant Tipping” by Michael Conlin, Michael Lynn and Ted O’Donoghue, which surveyed 1,393 tippers as they were leaving a restaurant in Houston, “percent tip decreases with bill size at a decreasing rate.” They also determined that tips decreased with the age of the tipper, and increased with the size of the group, the consumption of alcohol, and individuals who took advantage of full-service restaurants often. Each of these was calculated using mathematical models designed to isolate the many factors addressed on the survey.

Other factors have been tested. One study showed that customers are more likely to tip with a credit card than with cash (Feinberg, 1986). Another—“Effects or Beliefs About Weather Conditions on Tipping” by Bruce Rind—tested what effect the idea of sunshine had on tippers. This latter study took place in a hotel in Atlantic City, where a room server told the guests what the weather outside was like: sunny, partly cloudy, cloudy, or rainy. The rooms were temperature controlled and guests couldn’t see the skyline. The result was that the guests tipped more when they heard that weather conditions were favorable (1996).

Back in “The Norm of Restaurant Tipping,” the authors gave the same analytical care to the quality of the service, which had been separated into “appearance of server,” “knowledge of server,” “friendliness of server,” “speed of service,” and “attentiveness of server.” It was shown that these factors had an effect on tipping: friendliness and speed had a positive effect, whereas, oddly, the more knowledgeable the server was, the less likely they were to be tipped; possibly because “… the tipper perceived the server to be a ‘snob’” (2003).

Although it appears that service quality does have an effect on tips, that factor is mingled in with many others. Service quality is certainly not the only determinant in a server’s tips, nor does it seem to be a very dominant one, nullifying claims that tipping is based on that quality.

Another common stance on tipping is its social “good.” It’s an exercise in charity or pride to help society by giving to people who are less fortunate—those who don’t earn as much—on the shear “merit” of their misfortune. In John Anderson and Orn Bodvarsson’s article “Tax Evasion on Gratuities,” the authors research the issue that tipping promotes tax evasion by both the servers themselves and the employers, who are expected to report the tip earnings of their employees. There are compromises among the servers and employers as they balance personal profits and IRS penalties, and the authors work out a mathematical model to reflect this (2005).

Using data from Brian Erard and Chih-Chin Ho, tipped servers report around half of their overall earnings (2003). The U.S. Bureau of Labor estimated that during 2009, waiters’ and waitresses’ annual wages averaged $20,380, and they made up 1.8% of the employed population at 2,302,070. If it is assumed that those waiters and waitresses only reported half of their earnings, at least 47 billion more dollars should have been seen by the government. And this example only uses waiters and waitresses; if all tipped earners were analyzed, that figure would be much larger. Not only does reporting this money allow the government to better analyze how the American populous is fairing, but the taxes from that money could be used to pay off national debt, fund schools, rebuild highways, or potentially take the burden from many other national strains.

Moreover, the people who do pay full taxes are the ones tipping. Every penny is taxed for an earner. When that money is spent, the next earner is also taxed on that same penny—unless it’s a tip. If nothing else, this chain of events should seem unfair: the tipper is being taxed for money that another person gets to spend freely.

In The Itching Palm, William Scott refers to tipping as “Democracy’s deadly foe.” His viewpoint is that tip expectations rob hard working citizens and gives their wealth to people who expect to get paid not to work; he goes so far as to compare them to pirates. Scott argued that the bill is based on all of the costs—a typical business owner’s approach to offsetting expenditures. Assuming the patron tips, Scott said:


“The patron, getting only one service, pays two people for it—the employer and the employee. The payment to the employer is fixed, but the employee is dependent on the whim of the patron. To make this situation normal, the patron should pay only once, and this should cover both the cost of the food and the services of the waiter” (1916).

 

Kerry Segrave discusses how in the 1930’s, none of the wage codes adopted by industries took into account tips—or at least didn’t mention them to the government. She points out that, “Taking tips into consideration meant that wages paid could be lower for workers in the nontipped positions” (2009). To correct this, many states have implemented a two-tier minimum wage system. According to the Illinois Department of Labor, adults (18 or over) are given a minimum wage of $8.25. “Tipped employees” are paid $4.95, a little over half of minimum wage (2010). Although this way of paying tipped employees can be seen as motivation to tip, the truth is that wages are reduced because far too much income is received.

Essentially, business owners are handing patrons the bill for a full service and expecting them to pay the cost of employees. Scott goes on to say that, on the economic side, tipping “is payment for no service, or double payment for one service” and is an “exchange of wealth without mutual gain.”

Another detrimental effect of the tipping expectation is inequality to “poor tippers.” This isn’t confined to who a particular server may deem a poor tipper—although that can certainly be argued—but also expands into ethnic stereotypes.

Black Americans are one of the groups seen by servers as poor tippers. Evidence does support this: In a survey of ninety-nine servers in twenty restaurants, three-quarters of servers stated that black customers tipped below 15% (Noll, 2004). However, the reduced tips may not be the cause of poor service, but the effect.

In the article “‘Dining while black’: tipping as a social artifact,” Danielle Dirk and Stephen Rice say that “servers’ logic regarding tipping is self-perpetuating in the sense that they avoid serving parties of black customers because they anticipate poor tips.” The authors use prior studies to argue that black customers are overtly and covertly discriminated against; they are slower to be seated, seated in undesirable locations, and more likely to be ignored by the serving staff. They say that the low tipping rates of blacks “…correlate with the level of service they receive” (2004). Noll states that “…informal and formal surveys indicate that servers are equally mindful of the factors, including customers’ race, that are likely to result in less than the customary tip” (2004).        One reason for this negligence of black customers, as explained by Zachary Brewster and Christine Mallinson, is that:


“…black–white variation in tipping behaviours persist as a result of utilitarian processes in which service providers attempt to minimize economic uncertainty and occupational powerlessness by withholding subtle forms of service from patrons whom they view to be unpredictable tippers and thus undesirable patrons. It is suggested that this labour process approach extends… to include other social groups that are also thought to be below-average tippers” (2009).

 

However sensible this may seem to a worker, it is counterintuitive to the idea of tipping as a reward for good service. A tipped server should feel the need to earn their tip, rather than pander to groups of people more likely to tip. Not only does this practice indicate an overall lack of work ethic in the server, but also constitutes as discrimination: all social groups should be treated, or served, equally.

In light of the detrimental effects of overuse, what justification is there for tipping? What value is being gained by handing people money for something they are already being paid to do? It may seem like a good idea to pay extra for extraordinary service, but mediocre service is what gets obtained. Typical service. And the whim of the tipper is usually influenced by less extravagant concepts than what they imagined: of all of the numerous factors, what did the server do to deserve that tip? How did they contribute to the quality of the experience?

The ideas behind tipping may seem harmless, but it is overused to the point of being adverse. It defies the most prominent rationales of tipping. It stifles the potential of tax dollars towards national progress by promoting tax evasion, an illegal activity. It leads to discrimination in attitude and service. Every unearned tip propagates these behaviors, essentially funding them.

The tip has become an impulse. There is a point in time when something is done so often it is no longer worth it—where the costs heavily outweigh the benefits. That time came long ago.


WORKS CITED

  • “Employment and Wages of the Largest Occupations, May 2009.” U.S. Bureau of Labor Statistics. Web. 26 Nov. 2010. <http://www.bls.gov/oes/current/largest_occs.htm>

  • “IDOL.” Illinois Department of Labor. Web. 18 Nov. 2010. <http://www.state.il.us/agency/idol/Facts/mw.htm>

  • Anderson, J. E. and Bodvarsson, O. B. “Tax Evasion on Gratuities.” Public Finance Review 33.4 (2005): 466-87. Print.

  • Brewster, Zachary W. and Christine Mallinson. “Racial differences in restaurant tipping: A labour process perspective.” The Service Industries Journal 29.8 (Aug. 2009): 1053-1075.

  • Conlin, Michael, Michael Lynn, and Ted O’Donoghue. “The Norm of Restaurant Tipping.” Journal of Economic Behavior & Organization 52.3 (2003): 297-321. Print.

  • Dirks, Danielle and Stephen K. Rice. “ ‘Dining while black’: tipping as a social artifact.” Cornell Hotel & Restaurant Administration Quarterly 45.1 (Feb. 2004): 30-49. Print.

  • Erard, Brian, and Chih-Chin Ho. “Explaining the U.S. tax compliance continuum.” eJournal of Tax Research 1 (2) (2003): 93-109.

  • Feinberg, R. A. “Credit cards as spending facilitating stimuli: A conditioning interpretation.” Journal of Consumer Research 13 (1986): 348-356.

  • Noll, Emily D. and Susan Arnold. “Racial differences in restaurant tipping: evidence from the field.” Cornell Hotel & Restaurant Administration Quarterly 45.1 (Feb. 2004): 23-31.

  • Sax, David. “Hey, Waiter! Just How Much Extra Do You Really Expect?” New York Times, February 26, 2010.

  • Scott, William Rufus. The Itching Palm; A Study of the Habit of Tipping in America,. Philadelphia, Penn Pub., 1916. Print.

  • Segrave, Kerry. Tipping: an American Social History of Gratuities. Jefferson, NC: McFarland & Company, Inc., Pubishers, 2009. Print.

  • Rind, Bruce. “Effects or Beliefs About Weather Conditions on Tipping.” Journal of Applied Social Psychology 26.2 (1996): 137-147. Print.




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