bout half-way through this past summer, two of my high school friends and I went to a local BBQ restaurant in Memphis, TN. After a short wait, we were seated, and the disaster began. Over the course of an hour and a half long meal, our waiter refilled my water once. When he took our order, he was pushy, brusque, and flat-out rude. When my order arrived, it was a beef BBQ sandwich instead of a pork one—a mistake made even more offensive since no self-respecting Memphian would ask for a BBQ sandwich made with beef. At the end of the meal I paid in cash, specifically requesting exact change. After my friends had gotten their credit cards back and signed their checks, I reached into my pocket and pulled out a shiny nickel for my server’s tip. Now before you dismiss me as some miserly schmuck a-la Mr. Pink from Reservoir Dogs, let me explain my own tipping philosophy.
From a purely economic perspective, a tip is a financial incentive for the server to do his or her job well. It is a tangible and immediate response on behalf of the consumer which both informs the server and reassures the served. After all, simply not returning to a restaurant really doesn’t do too much to the server. and in the long-term, may also hurt the server. But in all honesty, like most people, when I a’m upset I want to have an immediate say in the matter, and when I am pleased with the service, I want to return the favor.
But economics, however, cannot fully explain tipping. The ubiquitous law of unintended consequences also alters the face of the game. In his book Freakonomics, Steven Levitt cites a study about Israeli day-care systems that charge a fee (incentive) for late parents. The study found, however, that simply paying the “late fee” replaced the moral incentive of shame with a simple penalty parents could pay and then move on. In this case, the price of being late was equated at a price the parents were willing to pay. Something similar seems to have occurred with tipping. The moral and social consequence of not tipping seems to have been deemed more significant than the financial cost of the tip. People who don’t tip are considered rude, ignorant and brutish. It takes truly awful service for it to be deemed socially acceptable to leave no tip. So, in this case too, there is a social incentive to tip. Tippers are seen as charitable, kind, and forgiving.
The most common argument for tipping seems to be the idea of providing a server with a “living wage.” Because waiters and waitresses are exempt from federal minimum-wage laws, tips are the way in which waiters and waitresses make most of their money. It is not surprising that this argument often comes from people who were servers once themselves.
Another argument for tipping a certain “appropriate amount”, which typically falls in the 15%-25% range, is that food quality and timely service are in large part out of the server’s control, depending instead on cooks who are not exempt from minimum wage laws.
It is with these two points in particular that I take issue. As for the first, which seems to be a much more humanitarian response, it seems preposterous to mete out handouts, in the form of tips, to servers who don’t earn them. This situation is similar to another of Levitt’s studies, this one concerning real-estate agents. Real-estate agents take a percentage of the value of homes they sell or buy as a commission. The problem with this system is a conflict of interest stemming from decreasing marginal returns to time invested trying to sell a property. That is to say that for each additional unit of time that the real-estate agent spends trying to negotiate a higher price for the home, they get less and less additional sale value. Hence, it is more profitable for them to give up trying to raise the price of the home too much when they can sell two homes for lower prices in the same amount of time. This relates to the food service industry in that each additional unit of time the server spends on one table produces a decreasing marginal return for the server in the form of tips. If the servers want to earn more money, as is reasonable to assume they do, then the smart money is in doing an average job with more clients at more tables. This strategy holds, however, only as long as people are sluggish in adjusting their tips when they receive average or below average service. Currently, the servers simply have almost no incentive to be good servers in order to eek out another 5% of tip. After all, for a $40 meal, each 5% increase in the tip is a mere $2. On the other hand, if they can run two tables poorly with the same amount of effort necessary to run one table very well, then as long as the “normal” or “socially accepted” tip is above 5%, then there is absolutely no reason for the server to attempt to give above average service.
Furthermore, the idea that all of these people deserve a “living wage” may not truly reflect reality.The idea that everyone, whether or not he or she is willing to work hard, deserves a living wage, is a stretch. An integral part of food service is courtesy, so if you can’t do that part of the job, then why should I pay you for work you aren’t doing?
That said, I do believe there are two situations in particular when servers should get a little lagniappe. As any server will tell you, on busy nights, the money is in flipping tables in order to serve the highest number of meals possible. This is true whether they are good servers earning big tips or poor servers earning lower tips. Unfortunately for servers, busy nights are often nights when people have more time to spend at the restaurant and sometimes stay seated talking for hours after they have paid their bill. I always tip a little extra if I do this, because regardless of whether the service was good or bad, after I have paid my bill I am taking money out of the server’s pocket by hanging around.
Another situation is when I order an unusual variation on a menu item. For example, if I were on a date with a vegetarian and the server made a special effort to accommodate such a dietary need, then I would certainly tip a little extra. In this situation, the server has made an extra effort to do his or her job, and that should be rewarded so that this the behavior is reinforced and continued. However, if I were on a date with a vegetarian and the server simply said (as was once the case), “No, I’m not the chef. I can’t take the bacon bits off the house salad”, then I would tip accordingly. The concept of tipping seems to have diverged from its original purpose and taken on various social stigmas that have greatly reduced the patron’s ability to insist on good service for fear of being considered greedy and uncouth. But I hope that after reading this, you will be less afraid of pulling out a bright shiny nickel the next time when the situation calls for it. Tipping was an effective tool once, and if more patrons would use it to reinforce good service once more, we might find ourselves in having noticeably improved restaurant experiences sometime soon in the not-too-distant future.
