There's a push to raise the federal minimum wage to $25 an hour, and a new study estimates that doing so could eliminate millions of jobs, with lower-wage Sun Belt states getting hit particularly hard. That's a huge debate by itself, but combine the push for dramatically higher minimum wages with the movement to phase out the tipped minimum wage...
For decades, Americans have been told that restaurant workers depend on tips because their employers can legally pay them only a few dollars an hour (even with tip credits applied, servers still make the federal minimum wage and not $2+/hour). That's a big part of the social contract behind tipping. It's why 15% became 18%...then 20%...and now payment screens routinely suggest 20%, 25% or even 30%.
But imagine where these policies could eventually lead. If restaurants are required to pay servers the full minimum wage before tips and minimum wages continue moving substantially higher, customers are eventually going to ask "Why am I still expected to add another 20-25% to the bill if I'm already paying higher menu prices to fund much higher wages?"
The economics don't disappear. Restaurants will raise prices, automate, reduce staffing or find savings elsewhere. But customer behavior can change too. Ironically, the combination of higher mandated wages and eliminating the tipped minimum wage could finally undermine the argument that has sustained America's tipping culture for decades and maybe we eventually end up closer to much of the rest of the world...pay workers through the price of the product, tell customers what things actually cost, and make a tip an actual tip again...not a second payroll system at the bottom of the receipt.
Somehow a show of gratuity (gratus, ”thankful”) and abundance has been turned into gaslighting and a perverse kind of social security.
Hard to remove that culture now. Maybe if waiters refused to work for $2/hour and found temporary work for a moment instead (babysitting, dog walking, or ask their LLM for more ideas), the employers would eventually have to raise wages to where supply and demand meet. People still want to eat out (and if they don’t, at least tourists will).
An employment contract between waiters and restaurants should be voluntary after all.
That's the interesting part for me, the "$2/hour waiter" is an illusion created by the tip-credit system. Federally, an employer can pay $2.13/hour in direct wages, but only because they're allowed to count the employee's tips toward the $7.25 minimum wage. If the tips don't get them there, the employer is legally required to make up the difference.
So the worker isn't actually working for $2.13/hour because they're guaranteed at least minimum wage. The tip credit just shifts part of the wage onto customers. That's another reason I think eliminating the tip credit could change the psychology around tipping. Once the full wage is visibly coming from the employer, the idea that "you have to tip because the waiter only makes $2/hour" disappears with it. Then restaurants may have to pay the same as Walmart stockers or cashiers...and we don't tip them.
Raise minimum wage + ban tipping is a policy platform i can get behind
No... Lower the minwage and subsidize (= tax-exempt) tipping.
that's more like it
Tax exempt everything = good
Tax exempt tipping, specifically = dumb (#985728)
(I hereby classify all my income as tips)
Suuuure, lesscall it that
I'd be happy with tax-exemptiin for tipping!!! Unfortunately, if "no tax on tips" struggles to pass, then tax-exempt tipping has a negative 100% chance of passing.
You could argue minimum wage should be about $50-$60 if it followed historical norms.
In 1964 minimum wage was $1.25/hr, that was 5 x US Quarters... so about 0.9 oz of silver.
Current silver price is $65/oz
Economist will push back and say that you can't compare the two because current silver demand is driven by IT / electronics / solar / industrial and that is true, however remember the incredible structural demand that coins represented in 1964.
There were no credit cards, electronic money, etc. Everything you did day-to-day required coins. Meals, drinks, pay phones, bus fares, parking meters, etc etc. Even if you paid with paper dollars you still got metal coins in change. Moreover the actual quantities of silver were huge....meaning that yes your iPhone may have silver in but, it has like 0.3gram of silver.. whereas a single 1964 US Quarter would supply maybe 20 phones.
I doubt tipping will go away. What we might see is more of a bifurcation of high-end services with tipping and economy automated services without tipping.
I mean, yes... But why should it? Tipping is remarkably efficient