Perhaps you’ve noticed. We have reached a tipping point in the country over tipping.
To tip or not to tip has led to Shakespearean soliloquies by customers explaining why they refuse to tip for certain things.
During the height of the COVID-19 pandemic, customers were grateful for those who seemingly risked their safety so we could get groceries, order dinner or anything that made our lives feel normal. A nice tip was the least we could do to show gratitude.
But now that we are out about and back to normal, the custom of tipping for just about everything has somehow remained; and customers are upset.
A new study from Pew Research shows most American adults say tipping is expected in more places than it was five years ago, and there’s no real consensus about how tipping should work.
It’s the waiters who are pushing back on this. I know restaurant owners enjoy this situation, but even when they try to change it, waiters would require quite oversized paychecks to make up for this lack of tips. At a very nice restaurant near me, before covid, waiters typically were making $100k. This is not the norm for most restaurants, but even now I talk to waiters making $60-$70k. A lot of those tips are unreported so untaxed. This is unskilled labor (I’m not knocking it… I’ve been a waiter before and it’s tough work!), and if restaurants had to pay these wages I don’t know how high the food costs would have to be.
If you set the minimum wage to, say, $20 per hour but no tips allowed, you would likely have a lot of waiters leave the profession.
Though I guess others would take their place and, since that’s still a decent wage, things would level out eventually.
I don’t think any of this matters. It’s the customers that are not happy. Raise the prices of food to include the extra costs. Waiters in nice restaurants would obviously make more than minimum wage. Waiter in not so nice places probably as well. If waiters make more money because they’re avoiding taxes then that ends, sorry. I don’t think any one will argue that the only way to have restaurants is to let waiters avoid taxes.
Waiters leave > shortage of waiters > wages rise to attract waiters > something something invisible hand > everybody wins
If the employee is making that much then that amount is already added onto the price of the meal - whether it’s officially or unofficially. Setting a real wage would just ensure that people get a consistent wage.
Op mentioned this is currently untaxed. I can’t comment on where that’s valid as I’m not from the us, but the tax part of that going into the government coffins instead of the waiter’s pocket could make a large difference. Not a good reason not to do as I believe everyone should pay taxes, but that would explain while some waiters would be against it
I wonder if untaxed tips are still significant factor now that electronic payment is so popular.
I haven’t worked in a restaurant in a while but as I remember it: A waiter/waitress is expected to report tips at 8% of the value of the checks they serve - the government assumes they get tips up to that amount. So they have to report tips, but they try to stick juuuust over that 8%. If the customer puts the tip on the credit card, then it’s reported. if it’s a cash tip, it only gets reported if it’s needed to get up to that 8%. Everything else the IRS doesn’t hear about. Waitresses at my restaurant would claim their tips at the end of a shift so it was a daily calculation.
That said, wait staff got $2.14/hr and the restaurant was responsible for making up the difference to minimum wage if there wasn’t enough business. That never happened. Also, this info is about 30 years old and in Florida, so your mileage may vary. Some wait staff make crazy tips (depending on venue) and if they have to claim it, they pay a little more in tax but if they lose tips altogether they lose most of their income.
Untaxed =/= taxfree. The waiters should report it as income, failure to do so is tax evasion.
So if the system is beneficial to them thanks to opening easy avenues to fraud, then it should be addressed right away.