Arkansas Democrat-Gazette

Raiders of the tip jar

- BLOOMBERG VIEW

This is the time of year when workers expect even the stingiest boss to show a little heart. A proposal by the U.S. Labor Department, however, would make it easier for restaurant owners to indulge their inner Scrooge.

This month the department served notice that it intends to once again allow tip-pooling, prohibited since 2011. That’s fine so long as the change is accompanie­d by a ban on management taking a cut. Diners tip for food and service, not to help owners defray costs.

There are 4.3 million tipped workers in the U.S., 60 percent of whom are in the restaurant sector, and one estimate is that their employers would keep nearly $6 billion of the $36.4 billion in tips they earn each year. The government hasn’t provided its own analysis of the effect of the change.

The case for changing the rule is that tip-pooling can help close the wage gap between “front of the house” workers, such as waiters and bartenders, and “back of the house” employees, such as cooks and dishwasher­s, who earn far less. Under this new proposal, employers would be allowed to collect and redistribu­te tips.

This argument works only if managers actually redistribu­te. Restaurant owners say that if they had access to tip revenues, they could use more easily expand their businesses and hire more workers. But it’s hard to argue that the existing ban on tip-pooling has crimped growth in the restaurant industry.

There’s another option: eliminate tipping. More than 200 restaurant­s in the U.S. have started building service costs into the prices they charge, giving owners more control over revenues, which helps offset higher labor costs.

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