Culture of tipping is the problem
Tipping servers is deeply ingrained in American dining culture, and it certainly won't disappear overnight.
The Labor Department in the United States has proposed a policy change that, if implemented, would designate restaurant employers as ‘‘owners’’ of tips paid by patrons.
The proposal claims to give employers the freedom to distribute tips more equitably among workers but doesn’t require that distribution, or any distribution at all – meaning employers could legally keep tips for themselves.
Why would you bother leaving a tip in the first place if you have no idea in whose pocket it might or might not end up?
It is heartening to see that the Labor Department has shown some willingness to rethink the arcane restrictions around tip distribution. Under current regulation, tips can be shared only with ‘‘guest-facing’’ service staff, which means cooks and dishwashers take home considerably less. That has created a troubling wage disparity.
But dictating tip distribution is not the way to solve this. Tips themselves are the problem, and we need to stop relying on them.
Two years ago, my company, Union Square Hospitality Group, decided to do just that. We began eliminating tips in our New York restaurants and built the full cost of compensating our entire staff into our menu prices. We did it to decrease the pay gap between servers and cooks and to provide transparency into the true cost of operating a restaurant. More significantly, we did it to provide our employees with the professionalism that is standard in most other industries – consistent and predictable wages.
Removing tips means the responsibility to compensate is fully our own, and we can determine what the path for career growth looks like.
In tip-free restaurants, workers’ wages are more consistent shift to shift.
It has been documented that tipping increases the incidences of discrimination and guest-driven sexual harassment. For the servers who bring hospitality from their hearts, it is liberating to eliminate any sense that they must put up with unwelcome behaviour.
Forswearing tips hasn’t been easy for many of our stakeholders – especially when the policy was first put in place. While cooks and entry-level managers got an immediate raise, some longtime dining-room servers, who had worked their way to lucrative weekend dinner shifts, took an initial pay cut.
Some guests were taken aback by escalated menu prices, now that the cost of compensating service employees is built in.
And given that menu prices haven’t been raised quite high enough to cover all of our costs associated with eliminating tipping, investors are rightly concerned about near-term profit margins. But this is a long-term strategy to do the right thing, which almost always ends up being better for the bottom line.
Tipping servers is deeply ingrained in American dining culture, and it certainly won’t disappear overnight. But the Labor Department’s proposal does nothing to advance the sustainability and professionalism of working in our industry, and it might make things far worse.
The department should rescind this proposal and continue its legacy of protecting restaurant workers and their wages. Tipping comes with more than enough systemic problems. But until the day they’ve been eliminated everywhere, tips must remain rightfully in the pockets of the people who earn them and not surreptitiously in the hands of management.