Know that tip you leave for your servers at your favorite restaurant? It’s become the apple of someone’s eye.

Many someones, actually.

There’s been a movement afoot for a number of years to change how workers in traditionally tip-compensated jobs get paid. Before I discuss, lets get some basics out of the way.

Your personal beliefs, attitudes, rationales, etc., aside, it is a plain fact that the food service industry presumes customers will tip their servers, to the tune of 15% or more. Cost structures, cash flows, compensations, and the like are all predicated upon that assumption, as is taxation. Most minimum wage laws establish a lower rate for tipped employees, with a stipulation that, if tips do not bring the overall rate up to the non-tipped minimum wage, the employer must make up the difference.

That last bit never happens. Tipped employees make their money.

Over the years, there have been arrangements where (some of) those who support the tipped employees, such as bartenders for table-served beverages and those who bus the tables, share in the tips received by the servers. Of course, rather than let the market sort out who should get what, regulators have established rules regarding who can receive “bus-out.”

In higher-end establishments, where bills for two can easily run into the hundred or hundreds of dollars, and where price inflation has run high, the tips waiters receive can be quite substantial. So much so that some have attempted to “spread the wealth” a bit more by mandating bus-out to more members of the staff. That didn’t sit well, and the government smacked that all down. Attempts by big-time restauranteur Danny Meyer to work around that by introducing a tipless system, where the bill is “after-gratuity” and the waitstaff gets paid a higher but fixed wage, was massively rejected by his waitstaff, with a 40% attrition rate by one report.

A story in today’s NY Post reinforces the conclusion that servers are quite content, thank you very much, with a system that includes their being tipped by the customers. Nevertheless, the nanny-government busybodies and scolds continue to press for the elimination of the dual minimum wage system, which would cause all sorts of other consequences.

The question that arises is – why? If the rank-and-file don’t want it, why are those who purportedly champion on their behalf continue to call for shifting away from tipped compensation? Assertions about “human dignity” and “not having to beg for a tip” (as if that actually happens) are straw-man in nature, with the reality tipped off (yeah, pun intended) by one quote from the linked Post story:

One of [the Restaurant Opportunities Center]’s organizers explained “you can’t do payroll [union dues] deductions” when employees are earning their income through tips.

It’s well-known that unions in the private sector have been shrinking for decades. The union bigwigs have seen their traditional sectors go increasingly nonunion, and they’ve been looking for new ground to preserve their power and careers. One area they’ve targeted is foodservice, and they’ve been working for a while now to organize labor in the (untapped) fast food industry. After all, what’s a union boss to do if he doesn’t have members whose paychecks are being tapped into for a revenue stream (not coincidentally, this is why unions their lapdog politicians are so freaked out by Right-To-Work laws).

Beyond the union angle, we can contemplate the covetousness of the politicians themselves for Other People’s Money (OPM). While it is a fact that the IRS knows servers get tipped, and figures out their tax withholding based on that reality, the best the government can do is rely on a blend of average tip rate information (often culled from credit card records) and the reporting by the servers themselves as guidelines for how much to tax their income. Let’s be real – does anyone thing that the average server is reporting every nickel of cash tips received? Just as the government is doing its best to reduce people’s use of cash, it certainly wouldn’t be averse to a change in our culture’s tipping system in favor of them getting more revenue.

Now, we can better understand why progressive politicians are pushing for something that the people most affected by it overwhelmingly don’t want. It’s a self-serving pursuit masquerading as “caring” for the working classes.

As with almost everything else government looks to do for our own good, strong skepticism regarding this tipping bit is warranted.

Peter Venetoklis

About Peter Venetoklis

I am twice-retired, a former rocket engineer and a former small business owner. At the very least, it makes for interesting party conversation. I'm also a life-long libertarian, I engage in an expanse of entertainments, and I squabble for sport.

Nowadays, I spend a good bit of my time arguing politics and editing this website.


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