December 5th, 2006

Tipping

tip

I dislike tipping. I have never understood its necessity, nor comprehended why some industries implement (and encourage) it, and others do not.

When I arrived in Las Vegas and boarded a shuttle at the airport, the driver was visibly upset with me, because rather than allowing him to put my bag in the back of the truck, I carried it into the shuttle with me and put it in front of my seat, not blocking anybody. The bag is a small sports bag with a few pairs of clothes, so I didn’t need to load it in the back. The driver was upset, of course, because by not allowing him to put my bag in the back, this meant that he didn’t need to unload anything for me upon arriving at the hotel, and therefore would have no opportunity to expect a tip.

According to the wikipedia page for tipping, the federal minimum wage for a tipped employee is $2.13. Companies save money by paying employees this lower rate, hoping (and expecting) that the rest of their paycheck is earned by friendly service to their customers, thus bringing them in nice, hefty tips.

Why is it this way? I am a web designer by trade, and I don’t expect my clients to tip me. They pay me for my services, and there is a fair exchange. They pay me, I create their web site. End of story. When I go to a restaurant and pay a high price for their food, there is another exchange taking place. I pay $25 to the restaurant, for example, and receive a meal in return. Why do I need to pay even more money for a tip? You’d have a hard time convincing me that the restaurants could not easily afford to pay a standard wage to their workers, when they’re making high profits on the food I am purchasing.

All that being said, I will note that at restaurants I do tip (usually), simply because it isn’t the server’s fault that the system is broken. But I am much, much less willing to tip somebody when the tip becomes not a reward for good service, but an expectation. If I’m going to pay anything more out of pocket than I already am in exchange for the service or goods, then it will be out of the goodness of my heart. When such an action becomes an outright expectation in exchange for friendly service, then I refuse. This is not what tipping is for.

For example, last night I went to a hotel’s buffet for dinner. The meal was paid for beforehand, and as part of the payment, the receipt had a section for the tip. Why in the world would somebody pay a tip before the service is even rendered? This seems completely backwards to me. What’s worse is that once the receipt was filled out and a tip specified, the cashier stamped the receipt with the word “TIP”, and that receipt was showed to our server. Does this mean, perhaps, that our server was just a little more friendly, since she knew we had pre-tipped her? Had a tip not been given, would my drink have been filled a little less often?

Why do some industries encourage (and nearly demand) tipping, and others do not? Shall I start expecting a tip every time I design a logo for a company? Hey, I responded promptly to emails and was extra courteous! C’mon! If classy restaurants with sky-high prices implement tipping, why doesn’t the fast-food industry? Does anybody have an argument for tipping being a good thing? To me, there is an exchange taking place whenever I am paying for an item or a service, and I see no reason to fork out extra money for somebody to be nice and provide a service to me for which I have already paid.

Am I misguided?

23 Responses to “Tipping”

  1. December 5, 2006 at 11:26 am #

    Hmmm… An interesting post Connor. Obviously the purpoose and intent of tipping is in question here. Simply put, a tip is an incentive. Restaurants pay employees a base wage and keep costs lower. This, in turn keeps labor costs lower as many restaraunts have to employ a lot of servers. Food is purchased, cooks are paid well, and overhead is covered. This makes it profitable to own and run such a business. In turn, low base wages motivate servers to give their best service, and generally speaking, better service means better tips. Yes, the base wages could be increased, bu this would increase the cost of food. You could look at a restaraunt as having two services: the actual meal(which you pay for), and the service. Servers are often treated badly and often work as hard as they can. I am certain that servers wouldn’t work as hard if a “normal” hourly wage was put into place. This system is very similar to commision. Imagine what would happen if car salesmen were paid good money whether they sold or not. They would probobly slack off and not sale any cars. Let’s face it if people have no motivation, performance suffers. I guess in a perfect society everyone would do their best no matter what. But this aint no perfect society, it is capitalism. Money talks….And pays the bills! I guess we’ll just have to wait untill the law of consecration is put into place.

  2. December 5, 2006 at 11:29 am #

    PS If you don’t like the way things work, eat at home!
    There will be no revolution or negotiation here buddy!

  3. Connor
    December 5, 2006 at 4:21 pm #

    Simply put, a tip is an incentive.

    An incentive to do the job they were hired to do? Shouldn’t I, then, merit an “incentive” from each client I work with for dealing with them in a friendly, courteous manner?

    Let’s face it if people have no motivation, performance suffers.

    My motivation to do my job is to fulfill my employer’s expectations as well as those of my clients, and provide a service that both sides are happy with. I shouldn’t need my clients to foot the bill for my own motivation…

  4. December 5, 2006 at 6:11 pm #

    “But I am much, much less willing to tip somebody when the tip becomes not a reward for good service, but an expectation.”

    “Is it ever proper to help another man? No, if he demands it as his right or as a duty that you owe him. Yes, if it’s your own free choice based on your judgment of the value of that person and his struggle. -Atlas Shrugged-”

    I agree that a tip should not be an expectation and should not be a motivation either. The only motivation should be that they are getting paid for the work they do, if they want higher wages then they should fairly ask for them, because I do believe that most waiters deserve it, but it’s the duty of the employer to pay for them, not the client.

  5. Connor
    December 5, 2006 at 6:21 pm #

    Lucia,

    Great quote from Atlas Shrugged! I think I’m coming up in a few pages on Galt’s speech where he says this…

    …it’s the duty of the employer to pay for them, not the client.

    AMEN!

  6. December 5, 2006 at 7:32 pm #

    Conner, I agree with you 100%.

  7. fontor
    December 5, 2006 at 7:34 pm #

    You should come over to Australia — no tipping here! Instead, they pay people properly.

    Ayn Rand was a lousy tipper, unless you were appropriately humble and groveling and you didn’t act like she owed you. And she used to extinguish cigarettes on her plate.

  8. Connor
    December 5, 2006 at 7:40 pm #

    Ayn Rand was a lousy tipper, unless you were appropriately humble and groveling and you didn’t act like she owed you. And she used to extinguish cigarettes on her plate.

    So? This just means she was a snobby woman who could have been more nice and friendly herself.

    The only problem I have with Ayn Rand is her exclusion of Christ-centric principles in her philosophy. She’s spot on in much of her paradigm of the world as well as economic and political philosophy—but lacking the values and teachings that Christ taught, it all comes up a bit short.

  9. December 6, 2006 at 1:52 am #

    “The only problem I have with Ayn Rand is her exclusion of Christ-centric principles in her philosophy. She’s spot on in much of her paradigm of the world as well as economic and political philosophy—but lacking the values and teachings that Christ taught, it all comes up a bit short. ”

    I agree with you, but many of the principles she came up with are applicable to a Christian life, which for me, gives me the perfect moral balance of my existence.

  10. fontor
    December 6, 2006 at 9:55 am #

    Perhaps of interest: from the Playboy interview

    PLAYBOY: You have said you are opposed to faith. Do you believe in God?

    RAND: Certainly not.

    I’ve read Atlas Shrugged, twice. I must have been into it to get through it the second time. Ugh. Then I turned twenty and grew out of it.

  11. fontor
    December 6, 2006 at 9:57 am #

    Oops, hit Submit too early. I liked this quote.

    PLAYBOY: Has no religion, in your estimation, ever offered anything of constructive value to human life?

    RAND: Qua religion, no — in the sense of blind belief, belief unsupported by, or contrary to, the facts of reality and the conclusions of reason. Faith, as such, is extremely detrimental to human life: it is the negation of reason. But you must remember that religion is an early form of philosophy, that the first attempts to explain the universe, to give a coherent frame of reference to man’s life and a code of moral values, were made by religion, before men graduated or developed enough to have philosophy. And, as philosophies, some religions have very valuable moral points. They may have a good influence or proper principles to inculcate, but in a very contradictory context and, on a very — how should I say it? — dangerous or malevolent base: on the ground of faith.

  12. December 6, 2006 at 10:59 am #

    I find it interesting that you are so enthralled by Atlas Shrugged. The nature, and philosophy of Rand is to objectify everything. The act of objectifying is in contrast with Christianity. What is the point of objectifying the word of God, except as an exercise in faith, for which ultimately, you better ignore your objections, and do as God says, lest ye be damned. Ironically, Atlas Shrugged is held almost to the level of “religious text” by atheists and agnostics, because her philosophy encourages you to rationalize and objectify everything, including the existence and influence of God and religion.

    But, certainly, I hope you won’t let this statement keep you from finishing the book.

  13. Connor
    December 6, 2006 at 11:11 am #

    Coworker,

    My being enthralled with the book has little to do with Rand’s objectivism. Sure, such a philosophy at time pervades her writing, but does that make 100% of it incorrect and misguided? Pearls of wisdom and truth can be found even in a Godless philosophy, as Brother Brigham indicates:

    Our religion embraces all truth and every fact in existence, no matter whether in heaven, earth, or hell. A fact is a fact, all truth issues forth from the Fountain of truth… (Brigham Young, Journal of Discourses 14:117)

    Atlas Shrugged is not the de facto standard for anything, yet it raises several key issues and clarifies them convincingly well. Far from being a “religious text”, I do find value in it because of the parallels it draws to our society (both political and economic) today, and the hinted solution it offers (as far as I’ve read, anyway…).

  14. fontor
    December 6, 2006 at 5:08 pm #

    Possibly the most irritating thing about reading it is that you read some weird point she makes, and you disagree, but it’s difficult to explain where she’s wrong. Or at least, it was for me at the time. I might do better now.

    I’m thinking about the monologue of the tramp on the train who lived in the socialist utopia that ate itself.

    I hope this discussion isn’t encouraging anyone to actually go out and read the book.

  15. December 6, 2006 at 5:42 pm #

    I thought this was about tipping…..Okay, down with commissions too!!! Same concept.

  16. December 6, 2006 at 5:47 pm #

    Oh yeah, several jobs I’ve had have offered incentives, but this is down right evil!! I should just do my job out of the goodness of my heart, I guess. Selfish old me….

  17. December 6, 2006 at 7:32 pm #

    “Oh yeah, several jobs I’ve had have offered incentives, but this is down right evil!! I should just do my job out of the goodness of my heart, I guess. Selfish old me…. ”

    You should do your job because you gave your word that you would do it for the specified amount of money that they offered to pay you. You should never do your job for free, that’s stupid, but do it out of the principle of your word and your beliefs.

  18. December 6, 2006 at 11:08 pm #

    The specified terms of payment are hourly wage plus tip! They specify that when you get the job…. How about commission and other workplace incentives? I want some comments on that! Or is no one willing to tackle that?

  19. December 7, 2006 at 12:43 am #

    Commission and other workplace incentives come from the employer, not the client. The client has already paid for the service to the company, from there the company pays the comission.

    THere is a big difference.

  20. December 7, 2006 at 8:20 am #

    Lucia: “Commission and other workplace incentives come from the employer, not the client. The client has already paid for the service to the company, from there the company pays the comission.”

    In the system of tipping service, as has already been pointed out, the cost of the service the client has already paid for is less. If we abandon the tip, you will begin to see it up front in the cost of your food and services, just as the commission is built in to the cost of doing business for the sales organization.

    One way or the other, the client will pay. When it comes to travel, it’s easier just to expect the tip as part of the cost of the service, especially when those services make it convenient. The skycap, rather than lugging the bags inside and waiting in line. The shuttle or cab driver, rather than the expense and navigation of a rental car. The concierge, ensuring a good experience in a restaurant. I don’t begrudge these individuals a reasonable tip for the service they provide me or my family.

    To be honest, I actually like tipping. It allows me to offer a standard tip for standard service, and a generous tip for exceptional service. It feels good to share my means with others in this way.

    So as we come to year end, do you tip your service providers? Individuals such as hairstylists, personal trainers, etc., that generally do not work for companies but rather themselves. There is no year end bonus, many times no benefits. A simple year end tip of roughly the cost of one service is a nice gesture of thanks.

    Ah, what would Jesus do? CTR, and all that…

  21. December 7, 2006 at 9:04 am #

    Amen!

  22. March 25, 2008 at 5:15 pm #

    I recently heard of an Objectivist’s campaign to end the practice of tipping. This is patently ridiculous as it violates justice, and betrays a gross ignorance of social custom as a constituent of contract theory, and the economics of cartels.

    First off, not all contracts are fully explicated nor are they complete in their stated agreed expectations. The terms of a contract only form a summary of the fullness and spirit of the underlying agreement. Thus, any contract contains both explicit and tacit aspects. The contract itself may even be “tacit-in-the-whole,” (or what some might call it a “quasi-contract”). An example of such a tacit-in-the-whole contract is the arrangement suggested by a buyer in entering a restaurant, taking a seat and being served a meal. In this situation, no one ever writes or says, “here’s my side of the deal, and I agree, or not, to your terms.” Nevertheless, the actions of both parties do suggest the existence of a contract and it would be unjust to rob any of these agreeing parties of their consideration. Custom provides all of the elements necessary to suggest that a contract in fact exists in this case—and what the terms of that contract are. Among the rules in this case is the expectation that a tip will be paid and that that the amount of that tip will be a function of both the level and the adequacy of service. It is also understood that any tip left will be shared in some fashion among most, if not all of the persons actually providing the service. These facts are tacit and hold true for the more personalized venues, such as “sit-down-and-be-served” restaurants. (I do not include “fast food” restaurants here as it is not the custom to tip in such establishments.) To violate this custom of tipping is rob some of one’s contractual counterparts. The only way in which this contract is any different from any other tacit-in-the-whole contract, is that two component contracts have been entered into with respect to exchanged consideration: a legally enforceable promise to pay the restaurant and a customary non-enforceable promise to tip the staff. The consideration tendered by the diner is the price paid for BOTH the dinner AND the tip. Their combined price is the market price of the meal and its service. As it is customary to tip, not doing so is a violation of a tacit agreement that is understood before the contract is even entered into.

    The nature of some markets requires that direct incentives to labor be provided in the form of tips and commissions. Nature has hashed these out through a Darwinian cultural process of causing such markets to profit better when tips and/or commissions are paid. These are usually markets that depend on a combination of capital infrastructure and individualized personal service, (e.g., hotels, taxis, airport bellhop services, restaurants, etc.). In such markets, nature has proved through the development of custom that ALL supply-side parties, (infrastructure providing investors and personal service staff), must be incented on a per transaction basis.

    The price of the food (menu price), and service (tip), are the total incentive to provide the “package” to the diner. If any part of that price is reduced, such a reduction becomes a reduction in part of the overall incentive to provide that package. To the extent that the supply side’s, (the restaurant and its servers), strategic response is elastic, such a reduction will result in a reduction of either the quality of the food and/or that of the service. As the service staff is more transient than the restaurant itself, and hence possesses more strategic elasticity; it is the restaurant’s investors that will have to give up a greater share of their margin to the resulting needed salary increases, or offset them with higher tabs.

    The obvious rebuttal is that the restaurant owners will find it in their interest to better remunerate their service staff, and so restore the package price–So, if everyone refused to tip, this would be the predictable outcome. So, what happens if 99 out of 100 people refuse to tip and the other 1 percent tips? They will have cheated the rest of the non-tipper cartel, (albeit at a premium), and have received premium service as a result. Our tacit knowledge that others would cheat makes it a strategically sub-dominant strategy to not tip where the quality of service is of value.

    So given these sound reasons for supporting the custom of tipping, why and how would someone still not tip? The “why” is obvious: to save money—or perhaps to make some (thinly hypocritical) “moral statement.” How would someone get away with not tipping and still get the same level of service? He would do this by NOT announcing his intentions NOT TO tip BEFOREHAND. A truly moral person, who wanted to make such a “principled stand,” should announce his intentions BEFOREHAND and so offer a revision to the otherwise custom-based agreement UP FRONT. (If one expects one thing and gets something less, we call it a “nasty surprise”–and know that an injustice has been committed—at least in the non-rarified world of operant “objectivist principles.”) The announcement not to tip should be made each step of the way to the table: first to the person who seats you; then, to the servers and busboys. That way everyone knows that you wish to proffer you counteroffer of not tipping for good service. If you can’t display this level of honesty, you’re no John Galt. Instead, you have committed robbery by a bait-and –switch tactic.

    Copywrite @ Bill Churchill March 25, 2008

  23. Justin
    November 27, 2008 at 9:03 am #

    I don’t know how far the chain spreads, but Sonic drive-ins expect tips for their carhops to bring your food to you. Typically, I give the coins of my change to them — more if it was raining.
    Sonics also have drive-thrus like traditional fast-food places too. Once going through the drive-thru I had a semi-argument with the worker who was expecting a tip. I guess she thought that b/c she works at a place that provides tips to girls who take your food to your car on roller skates — that she should be given one for handing me a bag through a window.

    Also, when I was 18, I was at a Night club on a Saturday night. I went to the bathroom and while washing my hands, sprayed some cologne on me. The gentleman who works there in the bathroom distributing the towels and I got into a little more than a semi-argument with him about tipping.
    He insisted that I had to tip him for using the cologne. I told him that isn’t a tip if I have to do it, and with a poor attitude like that I wouldn’t be tipping him. He was more insistent that I HAD to tip him for using the cologne. I again said that if using his cologne costs $2, then even though I wasn’t aware of that when I used it, I would pay the price for using it. He insisted that it doesn’t cost anything, but that I did have to tip him for it. I told him if that was the case then I wouldn’t be tipping b/c his service was horrible. He told me not to come into the bathroom again that night.

    I too face the same dilemma that you do with tipping Connor. I just wish I could pay the price it says I should be for my service without the awkward stare from the employee expecting an extra to be given to them.

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