eli5 How did the US service industry become so reliant on consumer tips to function?
In: 5994
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.
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