A few weeks ago, I took my 13-year-old daughter on a trip to New York for her birthday. Wherever we stopped to buy anything—a snack or even flowers—I was asked how much I wanted to tip. And even though I run a national organization focused on organizing tipped workers for better pay and working conditions, I was flustered. Do I really need to tip on a purchase at a florist? If so, how much? And will these workers even get this money if I do?
The United States is reaching a tipping point. Everywhere we turn, we're being asked—usually by a screen—to leave a tip. Which would be great if it just meant more opportunities to give an extra little bit on top to thank service workers. The problem is that we don't have any idea who's getting that money we tip. The seemingly benign increase in tip requests is tied to policies that systemically underpay tipped workers and the ugly desire of corporations to pay more and more workers less and less.
Tipping began innocently enough. In the Middle Ages, feudal lords—who, admittedly, would not otherwise be described as innocent—made tipping the fashion in Europe as a way to show a little extra thanks to the serfs and vassals under their rule. When the United States abolished slavery in 1863, some business owners perverted the idea to not pay newly freed Black workers—by making customers pay their workers through tips. Fast forward to 1938, when the United States first established a nationwide minimum wage, the restaurant industry—which built their whole business model on the idea of tips as a substitute for wages—got exempted from having to pay the minimum wage because their workers earned tips. That's why today, there is still a subminimum wage under federal law and in 43 states, where restaurant workers who receive tips can be paid far less than the full, fair minimum wage.
Whether we're ordering takeout on an app or buying a drink at a bar, most of us don't realize that our tips don't necessarily go to those delivery drivers or bartenders. Employers who pay the subminimum wage get to skim off the top of tips to decrease the amount of wages they have to pay their workers. That's right, our tips subsidize corporate restaurant chains and other owners. After they make up the difference with minimum wage, then our tips go to the workers, right? Not so fast. First, with app-based tipping, the tips go directly to the manager and workers have little insight into how much they're supposed to be given. But in addition, employers cheating workers out of their tips is rampant. A study by the Department of Labor in 2012 found that more than four out of five full-service restaurants violated labor laws—with most of those violations having to do with tips.
The sad reality is that as long as restaurants are exempted from paying the full minimum wage due to tips, other industries are going to want the same exemption or at least try to find similar loopholes. In fact, we've seen companies introduce tipping to justify only paying their workers a subminimum wage instead of the full, fair minimum wage. Tech startups like GrubHub, Postmates and Doordash spread the model of "gig" workers to avoid traditional worker protections and expand reliance on subminimum wages. In 2019, shortly after the Trump administration repealed a regulation that restricted which workers could legally be paid a subminimum wage, Frontier airlines introduced tipping for flight attendants. The union argued it was a pretext for justifying lower pay and shifting more costs to customers.
The good news is that millions of tipped workers across the country are refusing to work for subminimum wages in restaurants for the first time since Emancipation. With the pandemic, millions of workers have left or are leaving the industry due to low wages, and thousands of restaurants are raising wages to recruit staff. But many of these restaurants are telling us that it's not enough—that changes in government policy are needed to signal to millions of workers that wages are going up and it's worth coming back to work in restaurants.
So, what should we do as customers? When prompted, for delivery app workers, restaurant workers, nail salon attendants, and others doing a service for you, tip as generously as you can—20% is always a good baseline. For everything else, if that person who sold you the flowers really was helpful and friendly, go ahead and tip a few dollars if you want. But as much as possible, tip in cash. And either way, ask the workers whether they get those tips at the end of their shift. If they don't, voice your concern to the manager.
The biggest change must come from changing public policy. If there's a subminimum wage for tipped workers, we will continue to see more environments in which we are asked to tip, and we will have no way of knowing if our tips are generous bonuses on top or subsidies to corporations that pay poverty wages. The end of the subminimum wage will come only when more and more consumers voice their frustration to state legislatures and Congress and demand everyone be paid a full, fair minimum wage with tips on top.
Saru Jayaraman is president of One Fair Wage and director of the Food Labor Research Center at UC-Berkeley.
The views expressed in this article are the writer's own.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
