Eliminating tips won’t make things fairer for workers

I’m a big fan of Danny Meyer’s. The CEO of the Union Square Hospitality Group, the founder of Shake Shack and an all-around nice guy, he is a pioneer of some excellent trends in the restaurant industry, including the local sourcing of food, patronage of farmers’ markets, a strong commitment to revitalizing the surrounding community and the seamless melding of high and low culture in cuisine.

He’s also committed to treating staff well and prioritizing their needs above those of more powerful stakeholders such as investors, suppliers and customers. I have known several of his employees, and all speak of him in glowing terms. Every fall I take a contingent of students at the Fashion Institute of Technology to meet with a manager at the original Shake Shack in Madison Square Park. Most of my students will end up in the garment industry, which is notorious for condoning some of the worst working conditions in the world, and I hope that Meyer’s egalitarian business philosophy will rub off on them. 

But his latest plan to replace tipping with a “hospitality included” policy at his restaurant empire is a false step. His motives are just — improving wages and wage security for waiters, decreasing the gap in wages between waiters and other restaurant employees such as cooks and dishwashers, creating fairer systems for recognizing and rewarding excellent work and eliminating the discomfort that some patrons feel with tipping. He is also motivated by some other factors that are self-interested but not selfish — a shortage of good chefs in the industry, the need to stay ahead of the coming wage hike for fast-food workers, perhaps the spate of tip-theft lawsuits that has exploded over the past decade. Other high-end restaurateurs such as Thomas Keller have also instituted no-tip policies in recent years, though Meyer’s plan to eliminate the tip line on credit card slips is more radical. But if he hopes to make restaurants better for workers and customers, his method is wrong. 

Tips mean good money for waiters, especially at expensive restaurants. And in restaurants where tips are divvied up at the end of the shift and distributed immediately, waiters get to walk home with cash. (Less nobly, some waiters like the perk of being able to avoid declaring the income in their taxes.) Yes, the income gap between waiters and cooks is unfair — many waiters at top-end restaurants make twice as much as their colleagues in the kitchen — but the solution is to raise cooks’ salaries, not lower waiters’ incomes. Meyer claims that a wage increase and profit-sharing plan will offset waiters’ lost tip income, but he has not detailed all the elements of his profit-sharing plan, and it seems he has not figured it all out yet. 

It’s not just about money. Eliminating gratuities will take away one of the things that waiters like most about their job: the game of working for tips can actually be fun. Tips encourage waiters to become students of human psychology, and many (though by no means all) enjoy guessing who will tip well and what kinds of performance will increase those tips. Remembering regulars’ names or favorite dishes becomes a show of skill (though managers of high-end restaurants like Meyer’s help waiters cheat at this game by keeping detailed dossiers on regular customers). When patrons are demeaning, waiters’ attempts to work them for tips can recast the attendant psychological damage as an interesting challenge, decreasing feelings of subordination. Notoriously poor tippers can be overwhelmed with a secretly sarcastic kind of service, an overly unctuous tone and constant replenishment of water and wine in the glass. In an often demeaning occupation, the rituals and games surrounding tipping can actually bring dignity to the work — or at least reframe bad customers as suckers. 

Sociologists Rachel Sherman and Fred Davis have shown that hotel bellhops and cab drivers use tips in similar ways and derive a similar sense of satisfaction from them. As Sherman writes, tips help workers “pass the time, reduce fatigue and establish skill.”

Customers get a psychological and cultural boost from giving tips. True, some use tips as an excuse to make unreasonable demands and treat servers badly. But others see it as an important ritual in a social contract mandating that worker and customer show each other kindness and consideration. 

And many customers use tips to prop up their sense of self-worth. Rich people do this, as F. Scott Fitzgerald showed in his 1931 story “Babylon Revisited”:

He remembered thousand-franc notes given to an orchestra for playing a single number, hundred-franc notes tossed to a doorman for calling a cab. But it hadn’t been given for nothing. It had been given, even the most wildly squandered sum, as an offering to destiny that he might not remember the things most worth remembering, the things that now he would always remember — his child taken from his control, his wife escaped to a grave in Vermont.

So do poor people, as Betty Smith showed in the novel “A Tree Grows in Brooklyn,” a story about Francie Nolan, an adolescent living in the borough's Williamsburg neighborhood, and her family. When Francie’s mother, who cleans apartments for a living, overtips a waiter at an ice cream parlor, “Francie had all she could do not to stand up on her chair and cheer. ‘Mama is somebody,’ she kept saying to herself.”

For more than a hundred years, critics have argued that tips are undemocratic, immoral, inefficient and unwise. In Thursday’s New York Times, an op-ed by Saru Jayaraman repeats the common claims that tipping encourages poverty, sexism and racism. Each of these claims is questionable. The subminimum wage for tipped workers causes poverty, not the tips themselves; we could easily give all workers the standard minimum wage and allow customers to decide whether they still want to tip. Historically, labor leaders such as A. Philip Randolph and Samuel Gompers have fought tipping under the weak assumption that if it were only abandoned, wages would rise; rank-and-file workers with experience in tipped jobs have wisely revolted against this position. Jayaraman also argues that tipping forces women to put up with sexual harassment, but there are two problems with this argument. First, what she really means is that dependence on tips, absent a real minimum wage, forces women to accept harassment. Again, giving tipped workers the same minimum wage as everyone else would address this problem. 

Second, women in nontipped professions — flight attendants and nurses, for instance — also experience harassment. One might even argue that tips allow women to monetize harassment that would exist either way. It allows choices, albeit bad choices, in a world that will countenance sexism one way or another. The evidence that tipping causes or increases sexist behavior or that banning tips will decrease sexism is tenuous. 

The same goes for claims of racism. In his autobiography “Black Boy,” novelist Richard Wright described an elevator operator named Shorty who was militantly anti-racist when among other African-Americans but allowed a white passenger to kick him in the behind for a tip. Wright was appalled, but he faced terrible discrimination in his nontipped job in an optical shop and had no way to turn it into a quarter. For the past hundred years, intellectuals and advocates like Jayaraman, Randolph, Gompers and Wright have been far more anti-tip on behalf of workers than tipped workers themselves have been. Poverty, sexism and racism exist in society; tipping does not necessarily exacerbate these terrible problems and actually gives workers ways of managing them. 

Throughout the early 20th century, state legislatures passed a wave of laws banning tips, and all were ignored, repealed or struck down by the courts as an unconstitutional limit on consumers’ rights.

Meyer is riding a new anti-tip wave, and it is likely to end as past ones did — exactly where it started, with tips an integral piece of the dining experience. Like past anti-tip crusaders, he ignores the important benefits tipping brings to workers and customers and overstates its downside. Maybe he will succeed in his new plan, or maybe he will learn better.