September 3, 2018

LEE | The Tipping Point: How Gratuities Perpetuate Abuse in the Restaurant Industry

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Many aspects of American culture are admirable, but there are also quite a few things that I find odd. For instance, why does the United States use Fahrenheit or miles instead of Celsius or kilometers like almost every other country around the world? Why are there such huge gaps in between toilet stalls? Why do Americans expect waiters to constantly stop by asking if they need anything? More importantly, why are customers obligated to leave an additional tip on top of the cost of the meal itself — one that constitutes a hefty 15 to 20 percent of their bill? Don’t get me wrong here — I’m not advocating for service workers to be paid even less than what they are being paid now. But there are countless problems with the custom of tipping, and so many wrongs in the restaurant industry that could be made right, if the 15 to 20 percent were to be added to the original price of the meal instead.

The federal minimum wage for tipped workers is $2.13, a figure that has remained stagnant since 1991. Although the tipped minimum wage is $7.85 or more in New York State, many other states around the country adhere to federal wage standards. Naturally, food service workers such as waiters or waitresses, bussers and runners rely on the gratuities that customers pay in addition to the set price of their meal. As long as tips make up for the difference between $2.13 and the general minimum wage of $7.25, there is nothing unlawful about this practice in states which have not established higher wage standards. But it is virtually impossible for government authorities to be able to keep track of the wage of every worker in every restaurant to ensure they are receiving just payment. In a 2010 wage data survey conducted by the Bureau of Labor Statistics, workers in the “food preparation and serving related occupations” category received both the lowest mean and median hourly wages across the nation.

Tips are often pooled, meaning that the tip you think will go to the waiter who served you is likely to be distributed among all the different staff at the front and back end of the restaurant. So even if you give a large tip to the waiter who provided exceptional service to make your date memorable, that is likely to be divided up among staff who weren’t directly involved with your dining experience. When pooled, the tips are only meant to be divided among non-managerial staff, yet managers often take advantage of such a scheme and wage theft becomes rampant. According to a 2014 report by the Economic Policy Institute, the U.S. Department of Labor found that 1,170 of the 9,000 investigated employers had committed tip credit infractions.

Tipping also often warrants undue discrimination and harassment for both waitresses and waiters. A study by our very own Cornell professors demonstrates that racial discrimination is evident as black servers receive fewer tips in comparison to their white counterparts. In a New York Times report, servers account the need to put up with uncomfortable or deriding comments all because they rely on customers’ tips as their main source of income. In the story, a waitress recounts a customer asking for her number in exchange for his tip. Another was forced to laugh off inappropriate comments about her body. Servers are often coerced to ignore sexual harassment since their livelihood depends on these tips, which lie at the fingertips of customers who could easily add or subtract a digit based on whether they feel they were served to their liking.

As The Economist puts it, this system perpetuates a dreadful cycle in which “low pay justifies tips and tips justify low pay.” The customer should not feel burdened to pay workers their due wage through their tips; employers should be paying employees their full wages. Even if I had received mediocre service, I feel obliged to leave a 15 percent gratuity knowing that restaurant workers survive on tips. In countries like the Netherlands, gratuity is included in the menu price. In South Korea or Japan, diners are not expected to leave tips because service workers are merely seen as doing their job of serving customers. This makes the wage payment process much more transparent. The United States should also include service fees in the bill and have tips serve their intended purpose — as an additional sign of appreciation — rather than a means for justifying low base pay. An equal minimum wage for all workers is needed now more than ever for the ever-growing restaurant industry to seek just and sustainable practices.

DongYeon (Margaret) Lee is a junior in the School of Industrial and Labor Relations. Here, There and Everywhere appears alternate Tuesdays this semester. She can be reached at margaretlee@cornellsun.com.