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Tip Pooling To Threaten Servers?
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Tip Pooling To Threaten Servers?

By: Darrin Duber-Smith

 

Tipping for food service isn't unique to the United States, but overall, the practice of shifting most of the cost of labor onto the customer in the form of a "gratuity" (expected, but not mandatory) is something that most people around the world don't quite understand. Why not just pay servers and bartenders a "living wage" or at least a realistic market price for their services rather than an artificially low "tipped wage" that relies on gratuity to round out the compensation package? But if you ask almost any server in America he/she will tell you that they like it that way. They like to earn tips. And many servers make more money than many people with college degrees. Is this all about to change?

 

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The U.S. Labor Department has proposed a "tip-pooling" rule which requires that employees who receive tips share them with those not fortunate, skilled or legal enough to work at the point of purchase. It certainly seems fair that all of those workers involved in delivering the service should share in its spoils, but servers and bartenders have long enjoyed far better wages than cooks, bussing staff, greeters, etc. Do they really add that much more value? More than the people actually making the product?Servers do commonly "tip out" staff, but the allocations aren't exactly what most folks would consider "equitable".

 

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The proposed rule is something that restaurant owners generally support because the staff who don't interact with customers will get an immediate raise across the board from the shared tips (but yet so will servers who will have to make the minimum wage rather than the lower "tipped wage"). Since there are far more support staff than front-line staff in the typical format, the regulation will remove some wage pressure on the business. And of course for the severs and bartenders themselves, the proposed rule does have much larger implications for those among them who believe that waiting tables and serving drinks should be a viable, long-term middle-class career. I have met these people. In short, serving and bartending, excepting the few high-end positions at the swankiest of locales, will no longer seem as attractive or be as lucrative as it once was.

 

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And huzzah for that! It's a thankless job, for the most part, even for the young and patient, but as these semi-skilled and unskilled workers age into their 30's and 40's, gainful employment at high tipping places becomes increasingly difficult to find. Some young people don't want to hear this because the lure of accessing quick, relatively easy and abundant cash is difficult to pass up, and young folks can make good money while working relatively few hours. But a short shelf life is the nature of food and beverage service and everyone over 40 in "the industry" knows it. So if this regulatory action, iterations of which already exist in some states, does occur on a federal level, what are the long-term implications for customers?

 

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While the net effect on the quality of customer service is likely to be nil (expected tips don't affect the level of service provided by staff very much), owners would have to pay higher wages to servers, but could probably afford to pay lower wages to support staff since these folks would be getting shared tips from the servers and bartenders. The threat that many might overlook, however, looms in the fact that the practice of tipping might eventually begin to wane and, if that happens, restaurants might have to pay higher wages over the long run to compensate for the lack of tipping. Or perhaps labor-reducing, cost-saving automation will be ushered in at a faster pace. If there is less tipping, a possible result might be higher menu prices for consumers, but with less tipping, the net effect on prices would also be nil. Of course this is all educated speculation, but the Law of Unintended Consequences (not really a law) always comes into play. One thing is for sure. This is a massive industry with tens of millions of employees, and any regulation is likely to have all kinds of effects, some positive and some negative. But first, let's see if this regulation becomes a reality.

 

Discussion:

 

  • What effects do you think this regulation will have?
  • As a customer, would you rather tip or pay higher menu prices? Does it matter to you?
  • As a server or a more skilled bartender (almost half of whom are college graduates), would such a regulation make the industry less attractive to you as a career?