27 July 2011

The Duty to Tip: Five Theories

Stephen Kershnar
Waitresses and Tips: Why Should We Tip Them?
Dunkirk-Fredonia Observer
July 11, 2011

In my travels this year, I’ve eaten at a lot of restaurants. I’ve noticed that despite the widespread practice of tipping waitresses and waiters (servers), there is little agreement on why we should do so.

Tipping varies across time and place. In the U.S., the customary tip is currently 15-20% of the pre-tax price of a meal. While some restaurants are moving away from tipping and instead instituting mandatory service charges, it is not clear this has really caught on.

Historically, tipping in the U.S. was controversial. Tipping didn’t appear until after the Civil War. When it did, it was strongly opposed by people who considered it demeaning to servers. They viewed it as a leftover from the class-divided Old World, with its master-and-servant relationships. There were anti-tipping associations and newspapers denounced it (for example, New York Times). Six states banned the practice.

Tipping varies across countries. Tipping in Canada is similar to the U.S. In some countries, customers don’t tip (Japan, South Korea, Australia, New Zealand, Turkey, and Brazil). In others, tips are more moderate, 10% or less (Germany, France, England, Italy, China, and Argentina).

There is variation in who gets tipped. In the U.S., people tip waiters and waitresses, bartenders, taxi drivers, barbers, food deliverers, and airport skycaps. They don’t tip fast-food attendants, flight attendants, headwaiters, and doormen (when merely opening doors). For handymen and gas-station attendants, it’s optional.

There are even racial differences in tipping. Professor Michael Lynn of Cornell University found that in the U.S., white customers tip about 16.5% of the bill, whereas black customers tip 13%. He found that this is likely not due to worse service.

It is not clear whether there is a moral duty to tip. First, it might be argued that the duty to tip comes from the fact that it is customary to do so. This is unconvincing because the fact that a practice is customary does by itself not show that it is morally required. Some customs are outmoded or offensive. In the U.S., it used to be customary not to tip servers. Also, a custom-related duty depends on another factor such as charity, gratitude, rights, and so on and these other factors are what explain any related duties. A similar problem accompanies a view of the duty as resting on etiquette.

Second, the duty might be thought to rest on the fact that servers need the money and would otherwise be underpaid. This was the argument famously given to Mr. Pink in Quentin Tarantino’s Reservoir Dogs. The problem is that lots of people need money and are underpaid and it’s unclear why servers are singled out for our charity, particularly when others are even worse off, for example, the starving and homeless. Even if servers were owed charity, it is not clear why this should be done via tips rather than through gifts or government welfare.

Under the current system, servers get paid an hourly wage. In the U.S., servers must be paid the minimum wage ($7.25 per hour), although employers may subtract tips from that amount and must pay at least $2.13 an hour. If people don’t tip, the law requires employers fill the gap. If they don’t do so, this is between the servers and restaurant owners. It’s unclear why it’s the business of a restaurant patron to make up for an owner’s failure to follow the law or the state’s failure to enforce it.

On a side note, tipping is big business. In the aggregate, restaurant workers make more than $26 billion per year in tips. Also, according to a Bureau of Labor Statistics 2010 study, waiters and waitresses are about 0.5% of U.S. employees. They earn an average of $9.99 per hour and $20,790 per year. In some areas and states, the average is higher. For example, in the District of Columbia, waiters and waitresses average $14.30 per hour and $28,750 per year in wages.

A third argument is that tips are owed as a matter of gratitude. When restaurant patrons are asked why they tip, this is one of the main reasons they cite. But it is unclear why U.S. patrons should be more grateful than patrons in England, France, Australia, and Japan. It is also unclear why customers should show gratitude toward some workers (for example, servers and taxi drivers), but not others (for example, fast-food attendants, flight attendants, and headwaiters). Lastly, it is unclear why gratitude isn’t expressed in the portion of the restaurant bill that goes toward the server’s minimum-wage salary. It apparently is for the low-paid workers who don’t get tips.

A fourth argument is that customers have a duty to tip because it provides the incentives for good service. This is sometimes tied to the historically mistaken notion that the word “tip” means “to insure prompt service.” The idea is that tipping is the best way for restaurants to monitor and control the quality of service given that it would be inefficient for the owner to spend his time watching the servers. One problem with this argument is that it rests on a duty to provide efficient incentives and there is no such duty. By analogy, even if it provides an efficient incentive for a society to pay starting teachers $65,000 rather than what they currently receive, $39,000 (a New York Times article recently argued for such a pay raise), it hardly follows that any parent has a duty to supplement a teacher’s salary. Also, at least one study found that in countries that don’t have tipping, service is as good as in countries that do. Hence, the notion that tipping is necessary for good service is not obvious.

If there is a duty to tip, it is because the restaurant patron forms a contract with the server to tip her. This is a little mysterious because neither party mentions the contract and it is not written down anywhere. It is even more mysterious because this assumes that the average restaurant patron knows that he is entering into two contracts: one with the restaurant to pay for the food and a second with the server to pay for the service. And for those who think that contracts have to be explicitly stated or enforceable by law, this explanation is a non-starter. Still, if there is a duty to tip, this is where it comes from. I suspect this is correct, but it has an odd feel to it.

1 comment:

Res Ipsa said...

Perhaps the solution isn't to stop tipping servers but rather to start tipping everyone else.

Using your example of the teacher, we could assume they would be paid min wage plus tips. Now if the teacher did a great job and taught the kids things like how to read and do math, that teacher could expect better pay. If the teacher focused their time on subjects like wymyms studies or techniques for meaningful butt sex, the parents might not tip as enthusiastically. This would be a much better system compared to the one we have now, where teachers draw $39,000/year for 8 months work and move up until they retire with a taxpayer funded pension that is better than they could get in the private sector.