eli5 How did the US service industry become so reliant on consumer tips to function?
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There’s a combination of two things.
One is: capitalism taken to an extreme. Tip wages embody the idea of “working for your money”. The restaurant owner only has to pay a small pittance for the employee, and customers are expected to fill in the rest IF the employee works hard enough.
This doesn’t really work well because tips are *customary* and not *mandatory*. Some people don’t tip no matter what service they get. So it’s not really a carrot on a stick, and the staff often have no incentive to offer good or even passable service to some people. It also creates a weird scenario where I could potentially tip my waiter *in advance* to make them stop paying attention to other tables. Fair’s fair, right?
But it’s also based on the racism angle brought up in another post. The custom itself started becoming popular in Europe in the 1800s. Some Americans adopted the practice because they wanted to seem like aristocrats. Most Americans didn’t like it because it made everything more expensive. After a bit, Europeans thought about the problems above and decided to stop using tip wages as part of some larger-scale labor reforms.
What else happened in the 1800s that was a big deal? The American Civil War. In the aftermath, lots of slaves were freed. That didn’t mean people wanted to employ or pay them. It was illegal to make a person work without paying them. However, many government officials were sympathetic to people who still wanted slaves. So they worked out a deal: if it was agreed “employees are paid by tips”, then TECHNICALLY they were paid and the business owner could be justified offering no wages. Over time we figured out people of ALL skin colors make good slaves. The only progress that’s been made is you can’t pay an employee *nothing*, but the minimum for an employee who gets tips is very low.
It sticks around because there’s a kind of standoff situation. It’s true that for business owners to switch to normal wages, their costs of employment would go up. In theory it should only go up by as much as they think customers were tipping. So business owners use that as a hammer on their customers, suggesting that “if you want a $10 big mac then do away with tip wages, not my fault”.
That’s dumb for a lot of reasons. One: McDonald’s employees don’t typically get tips and aren’t paid tip wages. Two: if I’m already paying cost + 10-20% with tip wages it doesn’t change anything when that becomes actually part of the price. Three: it’s not the employee’s fault for wanting to be paid enough to survive in return for labor.
But not a lot of people think that much, and just hear “higher prices BAD”. It doesn’t help that some service workers are lucky enough to have clientele that consistently tips them well, so they see losing tip wages as a bad thing and fight against it. This is just another form of “got mine, screw you” and there are examples of it in every labor dispute in the US.
(**late edit** Also you can see in my replies something I’m surprised I didn’t put in this post. A lot of people who are servers make good money off tips. They tend to work in decent places that don’t abuse workers, which tends to lead to better service and attracts better clientele. They don’t want tip wages to change because they make more with tips than it is likely any restaurant would ever pay for a server. But this ignores a lot of people who don’t work in decent places that don’t abuse workers, or that simply don’t attract good clientele. In big cities employees can learn to steer clear of these places, but in smaller towns a person can hit a triple whammy of bad bosses, bad customers, and having nowhere better to go. We can still say, “They should find a better job then!” but in small towns there’s often not a better job to go to, or the places that don’t mistreat workers are already staffed and not looking for more workers. There’s not a job fairy that rewards hard workers with a magic train ride to a better employer. The right thing to do is a decision we have to make that ties into my next paragraph, which was also the original last paragraph of this post:)
TL;DR: It’s an adult problem. Adult problems are hard to solve because every solution (including “do nothing”) hurts somebody. Adults have to make decisions about who it is “right” to hurt, and that never makes the people who get hurt happy. Sometimes to make things “fair” we try to flatten a hierarchy so instead of having big winners and big losers, we make a system where there are only “small winners” and “small losers”. That makes the big losers happier, but it upsets the big winners.
Is it the entire service industry though? I sure as hell am not tipping my plumber or electrician that makes over $100/hr.
The **only** people that get tips from me, is people who are legally forced to work for less than minimum wage. Which rules out everyone but food service.
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because consumers are ok with it and its become an expectation over the years. it only works because everyone always tips
While I am sympathetic to the needs of workers, there is an insidious side to tipping that explains perfectly why the US in particular is so reliant about it and why it seems that the standard tip increases at regular intervals (10% when I was a kid, 12%, then 15%, then 18% and now 20%).
When you tip, you are covering that worker’s wages. A tip is a direct subsidy from the consumer to the business. You pay more with each passing cycle because the wages the restaurants pay hasn’t increased since 2009. Now even places like subway and Chipotle have tip jars. They didn’t ask for tips years ago.
By capitulating, the tipper ensures that there will always be more workers willing to take such a shit deal and nothing will ever change, because tipping enables the entire thing.
I’m not advocating that nobody tips, but if everyone stopped tipping, these workers would demand higher wages and leave if they didn’t get them. Then the restaurants would have to raise wages or go out of business.
Now if the price of the food increased as a result, then the price is clearly stated and, in the end, you pay the same amount. The difference is the pay is more steady and it puts an end to the entire practice.
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I think part of the reason why it has accelerated so rapidly lately is because of merchants using new software like Square. I don’t know much about Square, but it seems like it is just set up for almost any generic business, so what you see with it when you’re making a purchase, is that regardless of whatever kind of transaction it is, you have the option (as the merchant) to have it ask the customer if they want to include a tip. You could be buying meats at a deli and the software will still ask this.
As a result, consumers start asking themselves “*well, I’ve never tipped for this before… should I tip? Is this the sort of transaction other people normally tip for?*” and so lately we’ve been seeing people tip for all sorts of things that we don’t normally and shouldn’t normally tip for. On top of that, some merchants/software provide the math for the consumer to take the guesswork out “*Tip? 10% would be X$, 15% would be Y$, 20% would be Z$*” except lately we’re seeing a lot more of those texts starting at 20% and going upwards instead of 10% or 15%.
Bottom line: have a standard metric for yourself about what kind of transaction you think are tippable, and how you determine how you tip. Standard has always been 15% for standard service. Don’t let merchants sway the culture towards higher tipping amounts, as this will continue to mask the bigger issue of poor wages for working people.
**Edit because of some of the comments**:
Anyone tipping 25% for substandard service, ask yourself this: *is the service so good that I’d be willing to pay 5 meals’ worth to give one back?* Because that’s essentially what you’re doing. If you buy the same Starbucks drink everyday, then when you’ve bought your 4th drink, you’ve actually paid for 5. Is the act of making your coffee and then putting it on the counter worth that much?
If you find people giving you shit for not tipping 20% for standard or even substandard service (not good service), then you need to turn the tables on them; give them shit. Ask them if they support people who work in services that traditionally have been tipped. They will certainly respond “*yes I do, that’s why I tip 20-25%!*” at which point you can point out to them that by tipping so much, they perpetuate the culture of paying those employees substandard wages, so that the consumer has to subsidize the employers wages so that they can get away with not paying those employees livable wages. Sure, the short fix for underpaid employees is for us to tip more, but you’re just going to make it worse for the next generation of tipped workers, as well as the consumers. Both will become ever more reliant on each other, while companies get to walk away with the profits saved by grossly underpaying their employees.
My biggest complaint is that I am expected to tip based on a dinner price with no difference in service provided.
I dislike going out to eat as an American. It’s sad to force tips onto the customer when prices are already out of control. Oh, and one more thing to prove how behind WE Americans are compared to the rest of the world; Why can’t prices just be exactly what needs to be paid. Instead, there’s always taxes and possibly gratuity. If my Steak says $30 it shouldn’t be $43 after taxes etc. But again, WE are Americans — hard to change stupid.
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