Tipping in America

News & Politics

Last Monday at lunch in a Spanish restaurant in New York City, server #228 earned $12. Tuesday at lunch, $14. Thursday night and Friday night: $480 total. On Saturday morning at lunch, she made $75. Last summer, in August, the slowest restaurant month of the year (except in vacation towns), she made less than $500 -- and didn't make rent.

Thanks to tipping, restaurant service is one of the most erratically paid professions in the United States. In some states, tips comprise 100 percent of a server's income, and all but seven have separate, decreased minimum wages for tipped employees. On the federal level, the minimum hourly wage for tipped employees is $2.15. In Kansas, it's $1.59.

With a wage this low, most or all of it is diverted to payroll taxes, leaving servers and often table bussers and food runners to survive on the whims of their wining and dining guests.

So how do servers survive? As it turns out, many of them don't -- servers have a greater turnover rate than virtually any other profession. Tipping is part of the problem, according to Michael Lynn, associate professor of Consumer Behavior at Cornell University's Hotel School and an expert on tipping norms and practices, "Part of it has to do with tipping itself. It's an unsure source of income. If you are a professional server making money on tips, it is difficult to establish credit ratings and to buy a house."

Lynn highlights the effect that high turnover rates have on the profession. "Because there is a high turnover, the practice becomes less efficient," she says. "The service can suffer when an employer says, 'I don't want to invest money in training servers who are not going to be around in a few months.' In this country, we have a generally more poorly trained workforce because of that turnover."

Currently, servers in this country are young, transient and a dime a dozen. In 2004, the U.S. Department of Labor reported a server workforce of 2.25 million. Around one-quarter of all food- and beverage-related workers are 16 to 19 years old -- about six times the proportion of all workers. The job of a server was rated as one of the top five private sector occupations with the highest number of job vacancies, indicating an extremely high turnover.

Anatomy of a tip

So what is average for a tip? The expected rate used to be 15 percent of the total bill, but these days, especially in urban areas, tips are much closer to 20 percent. According to Zagat Survey's 2006 Top Restaurant Survey, the average restaurant tip in the United States is 18.7 percent.

And where do the tips go? Servers invariably have to "tip out" -- pool together and share -- their nightly income with other service staff such as bartenders, bussers and runners, and often a coffee guy and bar back as well. A tip-out can be as much as 40 percent or as little as 10 percent. Each restaurant develops a unique method of division. Generally, but by no means without exception, bartenders are paid the most, then servers and runners, and then everyone else.

A server's income varies to an incredible degree. One server I interviewed said he makes around $45 a night. If that server worked five nights a week and took a month off a year, his annual income before taxes would be $10,800. On the other side of the spectrum, senior servers at top restaurants in New York City can make $100,000 a year -- or more.

Tipping for good weather forecasts and good looks

What is surprising is that, among the factors that determine how much money a server makes, quality of service is fairly insignificant. The Center for Hospitality Research at Cornell University, where Lynn works, found in a 20-year study that level of service explained only a miniscule two percent of the variation between tips. "Literally how sunny it is outside has the same impact on a tip as good service does," says Lynn. "The relationship between tips and service is weak enough that you have to really question the incentive for servers to give good service."

The Center for Hospitality Research lists a number of other factors that affect your tip, many of which are completely out of a server's control. Good weather, good moods and a piece of candy with the check are all important tip boosters. For the server, being attractive improves your tip, being a woman improves your tip, and being an attractive woman exponentially increases it.

In fact, Lynn goes so far as to question the legality of tipping in America. According to Lynn, there is conclusive evidence that being white and/or female has a positive effect on a tip. "Tipping as it is currently practiced is probably unlawful. It is against the law to discriminate on the basis of sex and skin color. The Civil Rights Act states that any time race, sex or age has a dispirited impact on the employee, the job is unlawful. If I was the owner of a large restaurant, I would be afraid of a class action suit."

But there are more subtle factors -- offering your customers a good weather forecast increases a tip. Seating a small party at a big table increases a tip. Wearing unusual ornaments or articles of clothing increases your tip. A busy restaurant increases a tip. And more than we may realize, it is all about making the numbers look nice. "People don't like to leave change. They round numbers," says New York-based restaurant consultant Arlene Spiegel. "People round up from the total -- it might end up being 15 percent or it might end up being 20 percent."

For Holly Binghamton, a server at a small Italian restaurant in the theater district of New York City, who you serve is more important than how you serve. "I think it totally depends on the customer. New Yorkers and groups of men tip me well. Tourists and old people don't. Some people tip 15 percent no matter what. Or else they'll verbal tip you, which is even more annoying." 'Verbal tipping' is the term for profuse complimenting on food or service in the place of leaving a good tip.

The popularity of the restaurant is an enormous factor in server income -- unlike with managers, chefs, line cooks, dishwashers and anyone else in the 'back of the house,' if no one comes in, servers don't get paid. Jessica Scranton, a server at the Border Cafe in Cambridge, Mass., notes how the popularity of her restaurant keeps the tips coming in. "At the last place I worked, I would walk out of there with almost no money on slow days. At the Border Cafe, though it's less expensive, it is always busy, so I always make money."

"It also depends on when you work," points out Toby Hargrove, a former server who worked in restaurants in Philadelphia for ten years. "If you only work Friday and Saturday nights, you will make more money. People tip more on weekends, for sure."

Increasingly, the grumblings about the restaurant industry and how-tos on increasing servers' tips are happening online. One website, BitterWaitress.com, receives somewhere in the range of 50,000 hits a week, and there are more. At WaiterRant.net and ShamelessRestaurants.com, and on the discussion boards at FoodServiceLiberationFront.com, servers, diners and everyone in between spar over tipping etiquette and expectation.

Despite the bevy of online discontents about the job and research showing that in most cases the level of service does not increase tips, the overall message about the tipping system on these sites is positive -- your tip is in your control, and it can work to your advantage. As BitterWaitress.com proprietor Chris Fehlinger asserts, "The current tipping system is imperfect, but it can work if you work it."

I'm an actor -- serving just pays the bills

Most servers are not in it for the long term -- Binghamton's true calling is dance, Scranton is a photographer and Hargrove currently works for an environmental consulting firm.

Health insurance, benefits and job security for servers tend to be dismal. Fully half of all servers in this country work on a part-time basis, which changes what is expected of management in terms of health care and benefits.

At B R Guest Restaurants, a New York-based restaurant corporation that owns restaurants and hotels around the country, servers get health insurance after working for the company for six months. While this may sound horrific, it is actually a good deal compared to most other restaurants. In general, insurance and benefits are a gray area -- there is often a way to qualify, but only if you work a certain number of hours per week, and since servers don't take home a paycheck, clocking in and out is not a priority.

"It is a trade-off," says Binghamton. "Serving is a good job because you can leave and come back fairly easily, but you don't get any of the benefits of a contracted position." Hargrove has worked in four different restaurants, and not a single one offered health insurance or any other benefits. "I was never anywhere for more than three years, so I didn't even ask if benefits were an option."

In some ways, the unpredictability of a server's income and benefits fits right into the culture of the industry, where more than half of all restaurants fail in their first year, and 73 percent fail in their first five years. Restaurant success is an uncertain thing, and very few have the winning formula. As Carol King, a consultant to the hospitality industry, writes in Professional Dining Room Management, "Payroll is by far the largest cost in the operation of a dining room. It includes not only direct hourly wages of service staff but also a number of related costs, sometimes referred to as fringes." Apparently, health insurance and benefits are 'fringes' in the restaurant industry

How to tip in Belgrade

The system in this country differs from other countries in that servers don't get a base salary, which is something not everyone realizes. "What the guests don't know is that servers are not making any money during the time they aren't taking tables, when they are setting up," says Spiegel. "That is where I think that guests are misled."

And If American guests don't understand the pay structure at restaurants, forget about tourists. "Foreigners don't tip," says Travis Raye, a server at Mex & Co in New York. "Europeans should get a memo at the border: 'You need to tip 20 percent,'" jokes Binghamton.

In virtually every other country in the world, the system is completely different -- servers are paid a living wage and tips are supplementary. In Australia, New Zealand and most of Europe, tips come in the range of 5 percent to 10 percent. In South Africa, the average tip is 10 percent. In Vietnam, tipping is illegal. Apart from the United States, big tippers can be found in Canada, the Cayman Islands, Mexico, Ireland, Scotland, Israel, Russia and Saudi Arabia, where servers expect somewhere between 10 percent and 15 percent.

So why is the United States the exception? Lynn has researched tipping customs around the world, and found that countries with the most extroverted and neurotic citizens tip the most, inside and out of the restaurant industry; the United States leads in both categories. Writes Lynn, "These findings suggest that consumers value tipping as a way of getting attention and royal treatment from servers," which explains the high incidence of extroverts in the good-tipper pool. As for the neurotics, Lynn believes people further see tipping "as a way of reducing anxiety or discomfort about having another human being serve them."

Most servers like the prospect of being able to control how much money they make, but many seem disillusioned and would like to see the States behave more like the rest of the world. At Per Se, chef Thomas Keller's New York creation and perhaps the city's top restaurant, gratuity was worked into the cost of the meal last September amid a flurry of publicity and debate. Keller was rebuked for being "un-American," and studies were dug up that claimed 80 percent of diners prefer to decide how much they would like to tip.

How servers feel remains unstudied, but a round of questioning found a variety of opinions. "They should get a bigger wage," says Hargrove, "That's part of the reason I left." Scranton, however, thinks even the idea of pooling tips is "horrible." "Some people really work really hard and others are lazy, and you should make the money you deserve to make!" Binghamton, on the other hand, says she would like to see more consistency in her income referring to lunch shifts and slow nights, "I am sick of working for free. We should get a wage."

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