Do You Want Tippa?

In junior high, boys of a certain maturity would come up to you and ask, "Do you want tippa?" When you answered, "What does that mean?" they would respond, "Just say yes or no!" (Hint: when a junior high school boy demands you answer a question you don't understand, ribaldry will ensue.)

But I'm not here to teach junior high school boys new jokes. I'm here to say I hate tipping.

Specifically, I hate that the acceptable tip as measured in percent of the bill has grown. When I was a boy, tipping was 10 percent. When I got to high school, it was 15 percent. Now most people will say 20 percent is the appropriate tip. I cannot understand why tips are increasing.

Some would argue it's because servers' wages haven't kept pace with inflation, so in real terms their income has gone down. Why is it my responsibility to make up the shortfall? As the cost of living goes up, wages should increase with it. If not, that means the servers' share of real output has decreased, or that servers lack the negotiating platform to ensure they receive wages equal to their share of output. However, market competition for good servers would be all that is necessary to get servers their earned wages, so only falling efficiency accounts for servers' real-wage cut. Now you come to me and tell me, "Servers are less productive than they used to be, so you need to pay them more money." That makes no sense.

Some would argue I should tip more because inflation makes the old tip smaller. But because I'm tipping a percentage of the bill, my tip (as measured in absolute dollars) increases as the price of food increases. Three percent inflation makes my $10 meal become a $10.30 meal. My 10-percent tip increases from $1 to $1.03. The server has not been harmed by the inflation. In fact, tips have cost-of-living adjustments built right in.

Some might argue that the share of output created the servers has in fact increased, so servers should receive a larger portion of my overall meal expense. Not only does this again suppose the presence in the server labor market of a fatal flaw not present in any other labor market (and one which economic theory says would not persist), it flies in the face of experience. Servers are not becoming more important to the restaurant experience. As evidence that servers are not responsible for a greater share of the restaurant experience, no restaurant advertises on the strength of its waitstaff. No one says, "Let's eat there; I heard the waiters are really good." Servers can lose you customers, but they rarely win them for you.

I once ate a restaurant where the menu had a notice that state law allowed the restaurant to pay the servers half of minimum wage with the expectation that the rest of their pay came from tips. This was supposed to guilt me into tipping well. However, why are these workers taking positions with such low pay? If this restaurant experienced a labor shortage, it would have to increase the wages it paid. If not, the workers are signalling the value of their human capital, so why would I be expected to pay them more than that?

So none of these arguments is sufficient for me to increase my tip. If 10 percent used to be acceptable, there is no scenario where 10 percent would no longer be at least as acceptable. Perhaps there is one remaining argument, that servers don't make much money. That's because what they do isn't very valuable. We can discuss how servers can increase their human capital, whether serving is an entry-level position or a career, and whether those with means in excess of their needs should give some of those means to others without calculating the contributions of the less-fortunate to overall output, but that's a large and thorny discussion that is just bypassed when you say, "You should tip more." You have yet to demonstrate this imperative. No one has a responsibility to respond to anyone's harebrained demands for more money. If you disagree, you should pay me $50 a month for writing this blog.

via oneofthebest

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