Monday, July 17, 2017

Should a higher minimum wage affect how much we tip?

Courtesy Wikihow
San Francisco passed one of the country's most generous minimum-wage laws in 2014. Earlier this month, the minimum wage went up to $14 per hour, and it will rise again next July to $15.

What's particularly generous is that restaurant servers, who can legally be paid less in many states under the assumption that they will make up the difference in tips, must be paid the full minimum wage in San Francisco. We also have a law requiring restaurants (and every other employer) with 20 or more employees to pay for most of their health insurance.

Many people think that restaurant servers share their tips with the kitchen staff, but it's not true. In fact, servers sued a vegan café that attempted to have all tips shared with chefs and other kitchen staff; the successful lawsuit might have helped force it out of business. This is the reason some chefs have tried to create no tipping restaurants: because the people who bring your food often make more money than the people who make your food. But some chefs have backed off the tipless system because prices look higher with tips included, and plus, many diners just love to tip.

Republican white men, in particular, love to tip restaurant servers well, according to a recent survey by CreditCards.com. For them, the standard is 20%, while for women it's 16% and for Democrats it's just 15%.



I thought about this while reading "A Guide to Tipping Etiquette in the Modern Bay Area" last week from my alma mater, San Francisco Chronicle Food. I am personal friends with more than one of the writers who worked on it, and I love them for their generosity, but the article is an echo chamber with no true discussion or dissenting opinions. Chronicle Food thinks you should tip 20 percent on the subtotal. I have to admit, before reading the Chronicle's guide, I never even considered tipping at a food truck. 20%? Really? Who knew it was such a nest of Republican white men over there? Couldn't they have brought in at least one Democrat? 😇

Seriously, though, I'd like to read a real discussion on this, because if Chronicle Food's not going to have it, I'll be happy to bring home its leftovers. Wouldn't be the first time.

For contrast, here's Wikihow's How to Tip Your Server at a Restaurant. Its standard, nationwide, is 15%, even though Wikihow says, "It’s not uncommon for servers to make just over $2 an hour before they receive tips. They often make well under minimum wage." Not here they don't.

So the question is in the headline. Now San Francisco is up to $14 minimum wage, and many hard workers who are not in jobs that get tipped earn only that minimum. I know working as a server is hard, but many minimum wage jobs (some of them in kitchens) are hard. All minimum wage workers need money, but only servers get a nightly bonus that often exceeds their actual pay. San Francisco had the highest paid servers in the nation before the minimum-wage hike.

So that's the question: Should the minimum wage law change the norms of tipping? What should we tip now? What do you think?

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20 comments:

Miquel said...

Tipping just needs to end, period. It's a completely corrupted shit system that hides the actual cost of the meal. I'm back in SF at the end of August and I'm already dreading the awkward nature, racist, sexist nature of tipping. You tip your server but not your chef, the hair stylist but not if they're the owner, the grocery bagger but not the cashier. Car salesman, plumber, fight attendant, what's their going rates?

Kathy Felch said...

Tip the servers based on the quality of service. Look at the cost of living in SF - minimum wage should be much higher than it is. It is inadequate even at the "high" rate in SF to have a real life. Before you ask what "they" should get, we should be asking how much the customers make. Those serving the 1%-ers will say they are the worst tippers - if they tip at all. Honestly, if a regular rich dude or dudette, a millionaire or a billionaire gets restaurant service, why is minimum wage and tipping even something up for discussion. For the rest of us, If you're eating out, you should be willing and able to pay for service.

Scott said...

"If you're eating out, you should be willing and able to pay for service."
Is that really what tipping is? Paying for the cost of service? That makes it sound like the front of house are independent contractors who need to bill/collect separately for their work?

Mark Spivak said...

Don't live in SF but worked in the business (front of house) for many years, so obviously I'll come down on the side of the server. I think someone's salary is beside the point: if a person performs a service for you, you should tip them. The rivalry between cooks and servers has probably been going on ever since food was first cooked and served. In NYC there have been many successful class action lawsuits against famous restaurants (Daniel, 21 Club, Le Bernardin etc) for "redistributing" tips---making servers pay the salaries of other employees because the owners were too cheap to do so. If it's fair to say that you should be able to afford to tip when you go out, it's also fair to ask employers to make their own payrolls.

Andrew Walter said...

A question -- how are servers paid in Europe where there is limited or no tipping?

Jack Everitt said...

Tipping should go away, like it has in Europe.

SF, the cost of living is crazy high, so I'm not seeing some justification in reducing their tips.

Man About Wine said...

Order up from Dominoes pizza. Or tip the guy from UPS who delivers your Grub Hub or Blue Apron. But not Amazon. They're too powerful and they exploit. Wait. Amazon is in a battle with Trump. I can't fight em both. O my head hurts. I need some safe space in my head.

Bob Rossi said...

Thanks for including a mention and link to the Chronicle article. I read part of it; what a dreadful piece, although I guess SF has become different from most of the US. One of the quotes that really struck me was this: "18 percent if the service was bad". Really?? And when did 20% become the norm, as opposed to what you'd give for really exceptional service? I agree with those who like the European no-tip policy. When we're in France and go out for a meal, I'll often note the price on the menu (usually prixe fixe), and my first thought is often: "That's kind of high." My next thought is: "Wait a minute, unlike at home I don't have to add meals tax plus 15-20% tip." Then it doesn't look so bad.

Brian Lancaster said...

Blake,
Servers do not tip the cooks but they tip out the rest of the front of the house staff. The tip out structure is based on their sales,
I'm a restaurant manager and can provide you a breakdown that's accurate ( it varies in the percentages but it's roughly the same all over)

Host: 1.5 % of Sales
Bar : 2 % of Sales
Runners : 1.5 % of Sales
Busses : 2.5 % of Sales

It's about 7.5 % . If servers average 15 % tips, they are tipicallg taking home half of that amount.
I think the discussion is valid, but if you are looking for a well groomed, educated server to help you, that can answer questions about nuances, then there it is. Not one person on my staff would keep on serving tables for $ 15 an hour. I wouldn't do it either.

slwinenewb said...

I visited San Fran with my family (wife and 3 college age kids) last summer. So 5 adults with 4 at legal age to drink, dinners out could obviously be pricey.

I wasn't sure on the San Fran wage laws so I tipped as I would at home in Houston area, which is usually about 20% for food/cocktail service and maybe a bit less for the wine costs.

However, if I lived in San Fran where I knew the servers were making a high minimum wage, I would never tip above %10 for a meal out unless service was extraordinary. By the same token, if the staff of busses, runners and Hosts are making $14 per hour, not sure servers should be required to "tip out" to them, but that is not my business.

Brian Lancaster said...

But they are required. It is mandatory. Based on sales, so If you leave 10 % the server will be left out with almost nothing. When servers get stiffed on a table and receive no tip, they are also required to tip out ( this can be discussed on case by case with the managers but usually they lose money). Also the IRS assumes an income of 8% on their sales and If they don't declare at least that amount and the restaurant gets audited, they could be in trouble.
Guys, $15 an hour in a place like the Bay Area is an awful wage. How much is the rent for an one bedroom in Houston? The costs of living is SF are insane. That's why most of service people are leaving the Bay Area, moving to LA, to Oregon, wherever they can.
If you think servers are a non skilled line of work where they are there just to take your order and that's it, fast food style. Fair enough.
But these guys study, many have sommelier diplomas, many are trying to better themselves in their skill. They are required to know the wine list, how to pair wines with the dishes, where all the produce comes from, where the protein comes from, liquor knowledge. It takes a certain level of skill. For $15 an hour in a place where to rent a room in an apartment with shared bathroom and kitchen costs over a thousand dollars a month?
Either you respect the work they do or you don't.

W. Blake Gray said...

Brian: In my dreams I would have let this discussion go without stepping in, but there is a point I want to make, and maybe should have made in the blog post. And it's something where we might agree; we'll see.

You are talking about servers who provide good service. You mentioned being able to explain nuances. Know the wine list. Where the produce comes from. Etc.

Should we distinguish between good servers and bad servers with the amount we tip?

The Chronicle piece I linked to largely concludes that we should not. I don't agree with that, but it does seem to be a popular position.

Brian Lancaster said...

Yes, Blake, I agree with that.

The level of service should be reflected on the tip. I do not think that one should tip well for poor service, I actually think the feeling of entitlement by some servers is a problem in the industry. I absolutely agree your tip should vary according to the level of service.

I just think it's important to note to stress that the servers do tip out the support staff. It's significant, almost half of their tips and it's not an option for them.

Bob Henry said...

Blake,

Let me wade in here with a related subject: wine bottle tipping.

If the dining patron selects unassisted the bottle after perusing the wine list, and the wait person (not a sommelier) uncorks and pours the bottle for the diner . . . what is that service "worth"?

(The "wikiHow to Tip Your Server at a Restaurant" suggests: "if you received the benefit of a wine steward, it’s customary to also tip 15 percent the cost of the bottle of wine.")

The skill level and time commitment on opening and pouring a wine is the same whether the bottle sells for $100 or $500 on the wine list. But at 20%, that same effort garners the wait person either a $20 tip or a $100 tip.

We know that restaurants mark-up their wines at two-and-a-half to three times their acquisition cost (aka "wholesale.")

(See Grethen Roberts's Wine Enthusiast article dated May 7, 2010 titled "The Lowdown on Restaurant Markups.")

Some restaurants purportedly mark-up their wines at four times acquisition cost (aka "wholesale.")

Should the diner tip on the wine using the same percentage as the food?

Tip on the wine at a progressively lower percentage as the selling price goes up?

Alternately, tip on the corkage fee for a bottle brought into the restaurant? (Or is that redundant?)

Outside of Frank Bruni's February 1, 2008 New York Times "The Answer Man" advice column titled "Tipping on Wine" (https://dinersjournal.blogs.nytimes.com/2008/02/01/the-answer-man-tipping-on-wine/), I cannot recall any wine industry trade media or consumer press fostering a full-throated debate on this subject.

~~ Bob

slwinenewb said...

Brian,

I understand your point, but in Houston a waiter's "wage" is something like $4/hr. They are counting on the tips to make up the bulk of their earnings. I, thus, usually stick to 20% unless something great or awful moves me up or down. I do not think I should be forced to pay significantly higher food costs so that a restaurant can pay their employees a high, locally mandated, wage and still be expected to tip the same percentage on top of those inflated costs. Do you follow my logic? If all quality servers flee SF, then surely the restaurants will figure out to pay higher than the minimum or change the tip-put policy you outlined.

Bob,

Agree with you. I don't tip my "wine" bill the same as the food or cocktails. As you say, if I order a "recommended bottle" for $38 (say a chianti) or if I order a fancy Oregon Pinto for $120, the waiter does the exact same amount of work. It makes no sense, to me, to tip 20% of that bottles value.

Brian Lancaster said...

slwinenewb,
You are not being forced to tip. Tipping is still not mandatory in the Bay Area, Just like Houston or anywhere else in the country. I understand you point of view but again I ask you to simpatize with the notion that $ 15 in San Francisco is nothing. You can rent a studio for $700 In Houston. In Daly City ( forget SF - nobody can live there unless you're in rent control) it's at least $ 1500, if you're lucky.

I just don't see the correlation betweeen the value of the minimum wage and the tip percentage. It's irrelevant in my opinion. Yes, your tip should vary according to the service ( and if the service was terrible, don't leave anything as they didn't do their job) but if you agree that service is a job you are receiving and it has a value of 15 to 20% depending on the quality, why should you get a discount because the owner is being obligated to pay a higher rate per hour? I just don't see the correlation .

What's happening in the Bay Area is very serious, if things keep going like this, San Francisco will not have a middle class in 10 years. Already, besides homeless, there's not a lower class in the City. It used to be that you could look in Daly City, Peninsula, East Bay for a cheaper rent, but nowadays not even that.

The worst thing that happened to servers was this minimum wage increase. Because tips get taxed, they probably see a $ 200 net increase on their pay checks. Also, restaurant owners are suffereing . Some people say " we have to tip só restaurant owners can profit by paying less to their employees" . Most restaurant close within 2 years from opening in the Bay Area, a vey well ran restaurant profits 10 % of their gross sales, it's a hard industry with insane overhead.

I don't know how they do it in Europe to be profitable. My guess is they don't pay them as well as we think but because health care, schools, etc... are free in Europe, their wages go a long way.

Bob Henry said...

Citing Rent Jungle:

"Rent Trend Data in San Francisco, California"

"As of June 2017 . . . One bedroom apartments in San Francisco rent for $3500 a month on average and two bedroom apartment rents average $4637."

Link: https://www.rentjungle.com/average-rent-in-san-francisco-rent-trends/

The general recommendation is to spend about 30% of your gross monthly income (before taxes) on rent.

By the math, a San Francisco single renting a one bedroom apartment for $3,500 a month should earn $11,667 a month. Annualized, that represents a gross income of $140,000.

Bob Henry said...

Down here in Los Angeles, the New York Times (September 27, 2016) looked at our apartment rent situation . . .

"California Today: ‘Sticker Shock’ in Los Angeles Housing"

Link: https://www.nytimes.com/2016/09/27/us/california-today-los-angeles-housing-costs.html

. . . and concluded:

"What does it take to be middle class in Los Angeles?

"That was the question Ross DeVol [a researcher with the Milken Institute, a Santa Monica-based think tank] started out asking himself when he began calculating how much a resident would need to make to spend 30 percent of earned after-tax income on rent for a two-bedroom apartment in Los Angeles County.

"The answer: a whopping $145,000."

Bob Henry said...

(As you can see from the above, the jury is still out on whether you calculate the 30% before or after taxes.)

Brian Lancaster said...

Thanks Bob,
The housing situation in the Bay Area is a crisis, in my opinion. It used to be that one could look for Oakland or the Peninsula for cheaper housing but now it's all the same. Everything within 150 miles is prohibitive. I don't know what will happen.