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Keep your change. Against the abolition of tipping


So, the owner of upscale restaurants in New York pledges to abolish tipping in his properties and we hear of a revolution in the offing.Moreover, it’s a progressive revolution, to judge by the editorials of countless pundits – most of them either economists who consider tipping irrational or people who go to restaurants frequently, but as customers rather than as workers.

Danny Meyer recently said he’ll eliminate tipping as his Manhattan establishments, including The Modern, located in the Museum of Modern Art and where diners can gaze at Picasso and Matisse sculptures as they savour warm watermelon and caviar served with cream and herbs.
Meyer is considered a trendsetter so his decision – in fact the latest in a series, but somehow a crescendo – is supposed to trigger a chain reaction. Tipping, the unpredictable and to-some annoying practice, will end up in history’s trash can, like the American bison.
Some think that’s great, as it will dismantle “a two-tiered wage system with deep social and economic consequences for millions,” as articulately put by Saru Jayaraman [http://laborcenter.berkeley.edu/author/saru-jayaraman/ ] in a New York Times editorial, who sees tipping as a vestige of feudal European aristocrats. Jayaraman studied at Yale and Harvard and is now a labor activist in Berkeley, home of Chez Panisse, Alice Waters’ uber-progressive restaurant where tips were abolished before the Berlin Wall fell in 1989.
Is all this a good thing?
For the European tourist, presumably so. Many are so confused by the local custom that restaurants and bars, whose staff have tired of chasing customers into the streets, conveniently build a gratuity into their bill.
And that’s what will de facto happen if Meyer’s initiative goes viral. Tips will be abolished, prices will rise – Meyer openly said so – and “service charges” will become automatic, as they have been at Chez Panisse for the past 25 years.
For residents, it’s a bit more complex. But many have grown exasperated by the steady creep of presumed tipping rates – once 10 to 12 percent, while now anything below 20 percent is considered rude or a form of critique – and the proliferation of tipping venues – one at point of order and one at the pickup aisle at many Starbucks coffee shops – that often effectively demand payment before the service being rewarded has been rendered.
That said, tipping early is a standard tactic. Tips apparently meant “to insure promptitude.” A nice tip after a first drink is meant to get better and more copious service from a barman – who, however, knows all about this rookie maneuver.
People who live on tips routinely note that the most generous clientele are others who have done the same job and Texans, while the stingiest – perhaps those with the weakest grasp of the labor theory of value and money – are Wall Street Journal readers, rich kids and ladies who lunch.
There’s basic economics to consider, too. First, many states are introducing higher minimum wages – $15 an hour is the new gold standard, and that’s 50% more than what Jayaraman says is the average income of tipped workers across New York state – which will already have an impact on prices.
Many things are being jumbled into this debate. On the production side, many advocate higher wages as a key policy goal in the U.S. economy. Still, it remains to be seen whether abolishing tips leads to higher wages. As for higher final newt prices, they are almost assured – replacing the usually cash tip with a service charge incorporated into a bill to be paid with a plastic card silently doubled the value of tips for taxis.
On the customer side, it’s a bit strange, as while many regular clients – even, amazingly, those on expense accounts – don’t like the unpredictability of the tipping dynamic, they are essentially making an unusual forfeiture of power by relinquishing one of the few niches where customers explicitly set prices. This New York City-born reporter was always nervous when he saw European friends with receipts indicating a built-in tip –almost always at the highest end of the prevailing range.
To be sure, the quaint claim that tips are voluntary and discretionary is rubbish. After all, not paying the price for a good or service is typically known as stealing.
The special trait of a tip is that it is a “poorly-specified” price, one determined by social norms with a smidgen of individual conscience. No wonder economists, who without models of rational expectations and dynamic stochastic general equilibrium might find themselves waiting tables themselves, hate tips!
And this may offer insight into why the American elite is turning against tips. At a time of maximal inequality, those at the top may understandably have lower tolerance for uncertainty and risk – when you’re on a yacht, don’t rock the boat.
At the same time, the ownership class’s belief in the customer-is-king ideology could be waning and they may not like the way tips weaken workers’ commitment to their employers. After all, the tip has been explicitly recognized by the Supreme Court as a direct payment to the server, not the establishment. This of course is somewhat ironic given the size of bonuses – which may be masked commissions – in some elite industries.
The roots of tipping are disputed. A custom in Tudor England where visitors would pay their hosts’ servants for the extra work their visit created sounds like a potential precedent. Or better, perhaps the “aristocratic Europe” thesis really refers to the practice of feudal lords tossing handfuls of coins to beggars on the road, a munificent ritual serving to buy a trip without being jostled out of their carriage…
The anti-tipping campaign is often cast as part of a battle against inequality, sexism, racism and other evils. But patriotism has long been the refuge of scoundrels, and one wonders how the math really stacks up.
For example, service fees rather than tips may play out differently in a high-income, high-cost ecosystem such as Manhattan – the tasting menu for two involves a sequence of eight servers and goes for $328 if the cheapest bottle of red is ordered and that’s before tips – than it does a scrappy diner in a small Nebraska town or a pizzeria in New Jersey.
There are other ecosystem facts to consider. Waiters share their tips with busboys and prep cooks, who may not be frontline servers but can certainly wreak tactical havoc on a meal. The formulas behind this sharing is complex and variable and has to do with team building and reputation. Scotching this behind-the-scenes social dynamic could lead to unexpected outcomes – and likely reflects intensifying segregation and the “feudalism” the anti-tippers purport to oppose.
On top of that, tippable jobs have always been seen differently in American culture than career jobs. That, after all, is why one does not tip one’s doctor or tax accountant, who otherwise would seem logical targets to shower with incentives for special treatment. Many citizens have held tippable jobs, and even those who didn’t benefited from their existence as a potential stopgap measure. That’s even why people like to tip – to send a message of hope and support.
Replacing that with a higher but bureaucratic and visible-so-taxable wage that secretly suppresses risk, danger and unpredictability in the name of paternalistic solidarity might even be blasphemy, and would certainly constitute another chapter in Max Weber’s open and unending book on the routinization of charisma.





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