Tips for tipping: What is fair?


Want to engage in a little experiment illustrating the extremes in economic philo sophies, sundry views on what constitutes fair labor practices, plus basic math skills?

Go to dinner with five friends. Eat and drink. When the bill comes, pass it around and let everyone kick in their share, plus a tip. Nine times out of 10, you'll fall short of the 20 percent tip that is the industry standard. Sometimes well short.

And the next question will be the same one asked at a poker table between the ante and the deal: OK, who's light?

Tipping is one of those subjects that can spur controversy and consternation among service-industry workers and we, the served. Some diners -- and for most of us, restaurants are where we do the bulk of our tipping -- are loath to leave less than 20 percent. For a few, setting down even a 10 percent tip is like extracting blood from a turnip.

Helpful hint for those who didn't pay attention in math class: To calculate a 20 percent tip, move the decimal point one digit to the left. That's 10 percent. Then double it. Example: A $52 tab becomes $5.20, which doubles into $10.40. Round as you see fit.

Industry experts say about $40 billion in tips are given each year. In May 2012, the U.S. Bureau of Labor Statistics showed the median hourly wage for restaurant servers was $8.92, including tips. And a 2012 PayScale survey found waiters made 58 percent of their income from tips.

Tipping may be an outmoded and unfair way of paying someone -- and there is a small amount of industry buzz about whether restaurant workers should be salaried, or tips built into the check -- but the bottom line is this system won't change any time soon, not in this country.

For many service workers, tips are a lifeline. No tips, no rent, no groceries.

"Tips are everything to a server or bartender," says Shannon Smith, a hospitality-industry veteran who recently left the Avenue Grill in Denver for a job as a wine rep. "They make a lower minimum wage, which usually works out to about $5 an hour. That money barely covers taxes. Then take into account the vast majority of these benefits offer no benefits."

In some circles, notably Cornell University professor Michael Lyon, there has been talk about discontinuing the practice of restaurant tipping and adopting the European model, where waitstaff are considered professionals supported by salaries and benefits.

On a Freakonomics podcast in late spring, host Stephen Dubner asked Lyon, who has written dozens of academic papers on tipping, about what he would change about the practice.

"You know," Lynn replied. "I think I would outlaw it."

According to Lynn, there is enough race and gender disparity in how much servers get tipped (blond women more, blacks less) that it's an ethically dubious way of rewarding workers.

But moving from a tipping to a salaried model of compensation in the restaurant business isn't likely to happen any time soon.

The general guideline is 20 percent for excellent service, 15 percent for good service, 10 percent for bad service. If you feel the need to stiff someone, you should at least file a complaint with the manager about what happened.

"One of my biggest pet peeves was junky tips on discounted tabs," Smith says. "If you got happy hour, depending on where, you probably saved 30 or 50 percent off your total bill. I think it is appropriate to tip on the full amount. If you think about it, happy hour is usually very busy, so that bartender is working harder to make those discounted drinks."


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