eli5 How did the US service industry become so reliant on consumer tips to function?
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I have no idea where some of these other explanations are coming from but the truth is that during the Great Depression, Congress carved out certain service industries, like the restaurant industry, from minimum wage laws in order to mitigate massive unemployment. Restaurants didn’t have to pay wait staff as much and customers were encouraged to tip for good service, essentially morphing the wage structure from fixed to variable (if restaurant gets more customers, employees do better. Not ideal but better than the alternative of the restaurant shutting down or laying off half its staff.
From there, it mutated into a life of its own, but that’s where it permanently became the norm in the service industry.
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