Fewer people using cash means fewer tips and poorer workers
Miami Herald
MIAMI — Julio Valdez, a valet at a major hotel chain on South Beach, has parked cars for more than a decade. But in recent years, a crucial part of his income has changed: fewer drivers are tipping him.
“Before, if you worked valet, you earned good tips. It didn’t really matter that companies paid little,” he said.
The culprit: Cash — and lack of it. It seems fewer and fewer customers are carrying bills in their wallets, he said.
As a tourist and hospitality destination, South Florida is home to an army of doormen, waiters, valets, hotel housekeepers, tour guides and drivers. Like Valdez, they rely on cash tips to help make ends meet.
But for these workers, getting by is getting harder as more people ditch cash for cards and apps.
Mr. Valdez said his current employer has not upped his pay, despite the fact that he and his coworkers can no longer count on tips to boost their hourly wage of around $9. (The employer declined to comment.)
Like many valets, he said, he now must work two jobs to make ends meet. His second valet job is in Fort Lauderdale.
“Sometimes I get out of here at 3 p.m. and I have to be in Fort Lauderdale by 4 so I can work until 11 at night,” he said.
Fontainebleau hotel housekeeper Gerdine Verssagne says she once got a few hundred dollars a year in tips — a significant amount for someone earning around $14 an hour. Now, the hotel management no longer puts tip envelopes in guest rooms, so she has to hope guests are conscientious enough to leave a tip on their checkout receipt.
It’s a roll of the dice. Often, she says, “They don’t give you anything,” she said.
Evidence of cash’s disappearance goes beyond anecdotes. According to the Federal Reserve, only about 7 billion cash notes were printed in the U.S. in 2017. That was the lowest volume in four years and well below the 20-year high of 11 billion reached in 1999.
Last year, publicly traded U.S. Bank found that 50 percent of respondents to a survey said they now carry cash “less than half of the time.” When they do carry cash, nearly half of respondents said they keep less than $20 on hand. And 46 percent said they use cash fewer than eight days each month.
Publicly traded Total System Services, a payments processor, also found cash now ranks a distant third behind credit cards and debit cards as users’ preferred forms of payment. Those findings came from a 2016 survey.
In South Florida, tableservice restaurants have long faced issues with tipping. Because many tourists come from countries where tipping is not customary, some restaurants now include automatic service fees on the bill. Many establishments make a point of letting customers know when tips are not included, and nearly all sitdown restaurants include a “tip line” on credit-card receipts — although it doesn’t always help.
But the cashless quandary is new for the more than 200,000 leisure and hospitality workers in Miami-Dade and Broward accustomed to quick cash that plugs financial holes and — let’s be honest — isn’t always traceable by tax authorities. Most are paid by employers on the assumption that tips will subsidize their wages. In Florida, the minimum wage for tipped workers is only $5.23 per hour rather than the regular minimum of $8.25. By law, it’s up to employers to make up the difference if the $8.25 threshold is not being met through tips.
That doesn’t always happen.
“An employee needs to know enough, if they’re not represented by a union, to go the Department of Labor, file a charge, and then the Department, through the Fair Labor Standards Act, would investigate and prosecute to get the back wages for that employee,” said Wendi Walsh, SecretaryTreasurer of UNITE HERE Local 355, which represents 7,000 workers in South Florida, about a quarter of whom receive tips.
“You can imagine how rare that is,” she said.
Employers have no obligation to make up for tips that once may have far exceeded the minimum with higher wages.
Mr. Valdez, the valet, says his predicament has been further compounded by Uber and Lyft, which means fewer guests are renting their own cars.
And those very appbased services are accelerating the transition to a cashless economy.
“Uber has … ingrained a culture of no tipping,” Harry Campbell, an Uber driver and author who blogs about ride-share services on The Rideshare Guy blog, said in an email. “So even though they now have the in-app tip option for passengers, it’s rare that I’ll get a tip on Uber, where as taxi drivers are still tipped on most of their rides.”
Some local unions have been proactive in addressing the tipping shortfall. Last month, Miami-Dade approved applying a living wage to all concession workers at MIA Airport, including tipped workers. Thanks to bargaining, that group will now earn $16.15 minus the state tip credit of $3.02, meaning a tipped worker will make $13.13 per hour (or $9.97 if they have qualifying health insurance).
The union also successfully lobbied some employers to move tip jars from the pickup counter to the cash register — a small change that can make a huge difference.
Still, tips continue to dwindle, even at restaurants with table service. During recent negotiations at Miami International airport, the union produced dozens of restaurant receipts with the tip line left blank.
Carlos Caballero, a server at Miami airport’s Jose Cuervo tequilera, said the drop-off he has seen in cash tips has been “incredible” since he started working there four years ago. He’ll see some relief when the new airport wage minimums go into effect. But that won’t happen until his employer’s lease is renewed. There is no current timetable for when that will happen.
In the meantime, he tries to take on extra hours. “Just having 18 percent makes an incredible difference in our lives,” he said.