Have Gratuities Reached A Tipping Point?

For the two plus years my daughter worked at the coffee shop, I would greet her after a shift saying,"How was work today?"

She could have chosen to tell me about a funny/crabby/unreasonable/nice customer.She could have chosen to talk about her co-workers. She could have said she made a perfect three shot dry cap with hazelnut flavoring.

There was a lot she could have said. What my daughter did share was how much money she got in tips.

A good day at work meant she got great tips. When she did, the funny/crabby/unreasonable/nice customers didn't matter so much.

When she got great tips she could deal with the co-workers who she deemed lazy/rude/stupid/unreasonable.

When the tips were not so great she would rail against her manager.She would rail against her base salary. She would just rail.

A lot of gratuity-dependent employees were railing last Wednesday as NPR's Talk of the Nation discussed whether it was okay to cut back on tips during the recession.
Talk of the Nation discussed whether it was okay to cut back on tips during the recession.

Kimberly Palmer who writes Alpha Consumer was a guest on the program where the majority of callers said their tips/income are down substantially this year.

At one point on the show she said, " I tend to think that if you can't afford to tip, then you shouldn't go out to the restaurant."

Needless to say those particular words of wisdom created quite a response. Palmer found herself doing the backstroke on her blog,

I did not mean to imply that anyone who can't afford a 20 percent tip should stay home. While 20 percent tip on the pre-tax amount of a restaurant meal has become standard, it is also generous, and not in any way obligatory. Tipping 15 percent is still acceptable. While I believe consumers should consider tips part of the cost of going out -- after all, those waiters and bussers are working hard -- I don't think you need to stay home if you can only swing a 15 percent tip. I'm sure the restaurant owners will still appreciate your business.

If wait staff simply saw a 5% decline in their earnings, you probably wouldn't be hearing very much from them. But their drop in income isn't just based on a smaller percentage of gratuity.Their income is dropping because the food bills are shrinking.

People may still be going to restaurants but they are spending less - skipping the appetizer, choosing the more modestly priced bottle of wine, sharing a meal, and saying no to dessert. Add a smaller bill with less of a tip and people in the restaurant industry are seeing a huge decline in income.

New York Magazine just did a poll of people who rely on gratuities for the livelihood. They compared earnings pre- financial crisis with  tip earnings today.

Waiters
Nightly tips on a weekend, precrisis: $250
Now: $180

Bellhop
Daily tips, precrisis: $70
Now: $45 to $50

Shoeshine Guy( the magazine's description not mine)
Daily tips, precrisis: $80 to $100
Now: $55 to $60

It did strike me that this list is very testosterone driven. What about the housekeeping staff in the hotel,or the manicurist, or hair stylist? Surely their incomes are also affected.It's curious that none of those workers was included in this survey.

Earlier this month PayScale,which bills itself as the world's largest ongoing salary survey, released its third annual Year-End Tipping Study.

Waiters and waitresses, for example, receive $9.90, or 68 percent of their total hourly income, in tips; restaurant managers get $7.90, or 51 percent of their total hourly income, as a result of gratuities; and bell captains obtain $4.50, or 32 percent of their total hourly income, from tips.

Consumer Reports conducted its own survey on tipping with a slightly different twist --  they looked at what people said their intentions were regarding holiday tipping.

According to that survey, Americans say they still plan to tip their housecleaners, daycare providers and hair stylists the same amount they did last year. Just a hunch here but I think it's easier to say you are going to tip the same then actually tipping the same.

I would be interested in a followup survey with those housecleaners, daycare workers and hairstylists to see how 2008 compares to past year.

I don't have to worry about a daycare provider-- when I did-- I did give gifts, not cash. My house cleaner and hairstylist will not be getting cash tips from me either.Thinking of giving them a tip brings out the rawest ambivalence that I have around the custom of giving gratuities for services.

Both my house cleaner and hairstylist are in business for themselves.
I pay my house cleaner around $85 for a 2 hour visit. I am embarrassed to say how much I pay my hair stylist. Let's just say he definitely earns in the six figure category.

It seems antiquated and inappropriate for me to be tipping them. I'd rather use that money to give tips to people who are earning below the minimum wage.That no-tip policy has less to do with the recession than just a personal philosophy.

On the issue of restaurants,I am still leaving a 20% tip but I am trending with the rest of the country: I'm cutting back on appetizers, going to more modestly priced restaurants and taking advantage of 2 for 1 coupons to cut the overall price of the meal.

Even when the economy is strong, it is not easy to work for tips. People in the service industry have to take a daily dose of arrogance/rudeness/cruelty/indifference -- as described by Kristy, who blogs at Master Your Card.

I have a friend who I won’t eat out with anymore because I don’t approve of his method. I think it’s patronizing. He’ll set out a stack of 20 $1 bills, and upon being introduced to the wait person he will inform them that the stack of money is their tip. They’ll get all of it if they’re good, but if they’re not, he’ll keep subtracting the bills as the meal progresses. It usually goes one of two ways. Either we get really good service - though I’ve yet to experience anyone get all $20 - or we’ll get really bad service. I think this tactic promotes the ‘F You’ attitude, and I can’t say as I blame them. I also fear that my food has been spit in.

May this man never have my daughter or son wait on him. I am told by both that the spit rumor --definitely true.

Elana blogs about business culture at FunnyBusiness.