Posted on by Brendan Birth

Why We Should Give Tipped Workers Good Tips

Every so often, a family member (usually my mom or me) is out with a friend, and the family member argues with the friend about how much of a tip to give when we’re at a restaurant. My mom and I argue for a high tip, while our friends sometimes argue for a significantly lower tip or no tip at all, regardless of the quality of service.

After seeing what minimum wages are for tipped employees in every state, I feel both vindicated and saddened. I feel vindicated that my stance on this topic is such that the higher tips mean higher wages for workers, but also saddened that these workers earn poor wages without tips.

Actually, the term “poor wages” would be a disgraceful understatement of how some tipped workers are paid before tips. Given that numerous states allow employers to pay their tipped workers little (as little as $2.13 an hour, as long as tips cover the difference between their base wage and the federal minimum wage), it’s the tips of consumers that could have a major impact on the economic well-being of people. So for consumers in Alabama, Georgia, Louisiana, Mississippi, Tennessee, and South Carolina, you all had better give generous tips if you feel that the federal minimum wage of $7.25 is too low of a wage for people to earn.

While I just directed my last sentence at the consumers of six states, consumers from the other U.S. states and territories aren’t off the hook. Not by any stretch of the imagination.

I say this because many tipped workers earn below a living wage. The MIT Living Wage Calculator says that the living wage in the United States is $15.12 per hour for a family of four.[1] Waiters and waitresses (a form of tipped work) could earn a wage around or above the 75th percentile without having a living wage (national living wage is $15.12 per hour while the 75th percentile pay for a waiter/waitress is $13.30 per hour).[2] If we want our tipped workers to earn living wages, we need to give them generous tips.

When I bring up these points, some people say that it’s not fair for us, the consumers, to compensate for the fact that tipped workers are given poor wages. While I agree that it’s not fair, the injustice of giving tipped workers a little extra compensation pales in comparison to the injustice that would happen if we all gave low tips, or no tips at all. Even if certain employers don’t pay the kinds of wages they should, it doesn’t excuse us from paying the kinds of tips we should. The ultimate injustice with tipped workers is that the people who serve us would earn so little money that they couldn’t serve themselves and their families.

It’s our choice. Do we want humane and living wages for our tipped workers? If so, it’s time for us, the consumers, to step up our games. And yes, that means I’m going to continue paying my 20%+ tips.

[1] I should note that this is the national average. The living wage varies widely between states (and even municipalities within states) depending on factors such as cost-of-living. For example, the living wage in New York City for one adult and one child is $30.86 per hour while the living wage for two adults and two children in Boise, Idaho is $15.68 per hour. Source: http://livingwage.mit.edu/articles/19-new-data-calculating-the-living-wage-for-u-s-states-counties-and-metro-areas

[2] Source: https://www.bls.gov/oes/current/oes353031.htm

44 Replies to “Why We Should Give Tipped Workers Good Tips”

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  3. Sadly, the “food (service) industry” will never change until we change the whole tipping mindset. As long as we continue the practice, the employer won’t make up the difference.

    That being said:
    I seldom give less than 18% and sometimes I give as much as 50%. So yeah, I should practice what I preach.

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    1. I get what you’re saying, but I don’t think the solution is to give lower tips or no tip at all (which is my understanding of what you are proposing). In the end, all that does is hurt the workers financially in some cases (Do we want people to really earn less than $3 an hour?). Additionally there are some states that cover the difference between the wage earned and the minimum wage (as I recall…I wrote my original post awhile ago) so giving a lower tip won’t really do anything in those cases.

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      2. Yep! I totally agree that the answer is the employer giving a living wage to the employee. But I don’t think all employers will do that out of the goodness of their hearts. Call me cynical for saying that. There need to be laws mandating such wages, and in order to get the laws, pressure needs to be put on lawmakers.

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      3. By law, if a tipped employee makes less than minimum wage after tips are included, the employer has to pay them the difference so they aren’t making $2.13/hour. I gave a tip if it’s due. People need to read the law.

        Plus, if you want employees to pay a living wage expect prices to go up and more people to be laid off to offset the minimum wage increase. We are already seeing that in areas where $15 is the minimum wage. Sadly, many major news outlets aren’t reporting it. I was surprised that Forbes raised the issue a few months ago.

        That’s not counting the risk of paid employees being replaced by robots. McDonalds can easily convert from employees to mostly robots with a handful of technicians to keep the robots running. I saw a similar scenario in my Master’s program back ten years ago when robotics was a lot younger. We had to play a game online as part of one course. The smart move was to fire all your employees, replace them with robots, a handful of technicians. In the short-term such a solution impacted your company as customers and local communities didn’t appreciate it. In the long run, customers and the community got over it and profits soared.

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      4. So I read the laws again after reading your comment, and you were correct regarding the law on tips (and I was wrong). Thanks for bringing this to my attention, and I think my post should now reflect what the law actually is.

        In terms of the narrative that more people get laid off with wage increases, I really question that narrative. If that’s really the case, why is unemployment so low in many of the major cities in which the minimum wage is higher than elsewhere? Why is unemployment 2.3% in San Francisco County and 3.3% in Seattle–places that have such high minimum wages? We’ll see if these trends continue (as well as what happens with costs long-term), but in the short-term, it doesn’t seem like the doomsday scenario of people being laid off en masse is happening.

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      5. And you believe those numbers? The government loves to play fast and loose with unemployment stats. If you check the BLS website, the percentage of working age Americans employed last month was 61%, a stat that tends to be around 58 – 61% and has remained in that range for a long time. That means that 39% of Americans who could be working are not. I have seen plenty of pre $15 minimum studies that claim otherwise, but I have also seen plenty of studies done by impartial groups that dispute the claims.

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      6. Unemployment numbers do not include in its ranks those who are underemployed or those who have given up on searching for work. So, in a way, they give an incomplete picture. In spite of the incomplete picture, I do think that there is something of value to be gained by comparing unemployment rates from month to month, or comparing unemployment rates in different cities or states. And, when you compare the unemployment rates of different places, you’ll see that the wheels haven’t fallen off in places where the minimum wage has increased significantly, contrary to what fears were.

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      7. I disagree. The amount of people not working is more important than the fake numbers Ds and Rs like to tout as fact. When 31% of Americans are not working, that should be a sign of how bad it will get.

        In the short-term, which you are looking at, the numbers aren’t that bad yet. But according to a UW study given to Seattle 2 years ago, the picture was dire. Yet, Seattle seems to care more about a more rosy picture from UCB that supports your position.

        Here’s what going to happen, Americans companies are going to wind up doing 2 things. Moving jobs overseas, even with tariffs, the cost of having China, India, Africa, etc. do the work is far cheaper than what $15/hour will cost here. Two, automation. Imagine a scenario where you go to a restaurant and your server is a robot, your cook is a robot. A company has already shown that automation can be used to cook food and provide it to customers. Imagine you are a CEO and your stockholders and board breathing down your neck because profits are taking a beating due to doubling minimum wage.

        My Master’s Humanities professor made an excellent point 10 years ago. He said America wasn’t going to raise minimum wage around the world to our level. Instead, we would wind up lowering our minimum wage to match what the world is paying. It hasn’t happened yet, but it’s only a matter of time.

        You aren’t talking about a small increase; you are talking about a very large increase in a short period of time. As much as you think, it won’t blow up in Seattle, San Francisco, and other places, give it time and it will.

        The UW survey showed Seattle that many employees were seeing smaller paychecks due to cut hours. You can keep your hand in the sand, but that won’t stop what’s going to happen if the pro $15 hour crowd gets its way.

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      8. And what does that percentage of Americans not working consist of? It includes Americans who are retired, Americans in school, Americans who are on disability, Americans who count towards unemployment, and Americans who have given up on looking for work. When you consider the multitude of factors that leads to someone not working, the number you cited is actually not as alarming as it looks at first glance. (It’s also a number that may increase in coming years because of baby boomers retiring.)

        Could you provide me a link to the UW study? I would be interested to read it.

        Another thing to consider with the minimum wage is that the value of the minimum wage nationally, relative to inflation, was most in the late 60s–a time when unemployment was under 4%.

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  4. So, I agree but disagree. First of all – I think it’s absolutely SHAMEFUL that the minimum wage for tipped workers is so low!!! Wowzers. In Canada, at least we don’t have to worry about that. But an employees salary should never be DEPENDENT on other people’s generosity. At that point, why not just sit out in the street and beg for money?

    That makes me angry. Instead the companies pass on their expenses to their customers, most who probably don’t have a lot of money to begin with because they’re also servers and common people who also get shit on in the economy. There needs to be some major reforms here.

    I always try to tip, but I generally stick around 10%, and my tips do change based on the quality of the service. In Europe and abroad tips work as they should – dependent on quality of service. Man that makes me angry about that minimum wage for tipped employees. WOW.

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    1. I agree that it is shameful that the minimum wage for tipped workers is so low. Anyone who’s worked in food service as a waiter or waitress, for example, can affirm that the work they do is NOT easy at all! You should be angry.

      I anticipated that there would be some division about the attitude that we, as consumers, take towards these low wages that tipped workers earn. Obviously, the first and foremost solution is to raise the minimum wage for tipped workers to a living wage, and then let tips determine how much else they earn beyond that base living wage. In the absence of a living wage for tipped workers, my suggestion is to tip generously. But, the burden is then on consumers, some of whom don’t have tons of money either. Thankfully, you all abroad don’t have to worry about those choices.

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  5. 🙂 Without our gracious tips, those restaurant workers would be unable to pay their rent or meet their basic needs of living.

    It is quite unfortunate that a lot of people do not understand the woes of living off of a minimum wage salary.

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    1. Absolutely, Renard. And that’s what tugs at me. Even with tips, it’s difficult to make ends meet. Without them, it’s impossible.

      You’re right about the woes of living off a minimum wage salary. I don’t think it would be possible to live in New York City (where I am) or many other places with a minimum wage salary. Many in government would probably be too scared by special interests to address this, so this consumer, at least, feels a responsibility to tip generously.

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    1. I would agree with that overall, though I’m concerned that the minimum wage in many places (as it stands) isn’t enough to be a living wage, even once you add tips. I doubt that $7.25 plus tips in the DC suburbs of Virginia is enough to make ends meet there, unfortunately.

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      2. For some reason this comment landed in spam…

        But you’re right. And it’s even more atrocious where the minimum wage for tipped workers is lower than the regular minimum wage. I don’t see how someone can be expected to pay bills with wages that low.

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  10. I am like you. I tip 20% or more if I really liked the service. My daughter works in the serving industry and has told me stories of her working her ass off for a group of 15 because they were running her ragged, and they don’t leave more of a tip based on the fact that there’s a percentage of a tip charged with the bill. This group was her only table for the night, and she lost whatever tips she could’ve made from other tables. It’s ridiculous.

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    1. Paula-Thank you so much for adding your insights through your daughter, who was in the service industry. Stories like your daughter’s show why it really is important to give good tips. Yes, we need employers to pay more to our tipped workers. But we also need to tip our tipped workers quite nicely for a job well done.

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  11. What an awesome article! I love this. Even though in Asia, it is not a requirement to tip but I do so anyways especially to good service! May I reblog this and link it back to your blog?

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    1. Thanks Kally! Feel free to reblog this and link it back to my blog. One of the little-known things (at least in the states) is how little our servers are paid and how much their livelihoods can rely on our tips.

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  14. Last I heard, the IRS made an assumption that people who work for tips would get tipped, so it demands that they pay taxes not on the tips they report but on the tips it assumes they get. So anyone who tips less than what the IRS expects is doing worse than stiffing them.

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