Liz Pulliam Weston had an article today on the new tip-jar economy (article link broken as of 10/2014) — that new business practice of putting out the tip jar, raising the “customary” tipping percentage, and adding other tip-like fees that are no longer discretionary, but mandatory.
Her take regarding the tip jars was, in essence: Ignore the tip jars at businesses where the employees shouldn't be tipped as a matter of custom, unless you have a good reason to tip, such as really superior service.
I have a few more thoughts on why they're coming out in force:
- Tip jars and “mandatory gratuities” are a way of raising prices without looking like they're raising prices. The massage parlor can still advertise prices of $35 for a massage, but tack on a mandatory $10 tip to raise the actual cost of the massage to $45.
- Tip jars are ways of paying employees more without actually paying them more. Employers have fixed costs for labor, including wages and mandatory taxes for Social Security, Medicare, and unemployment. By setting out a tip jar they are relieving themselves of the burden of providing a raise to their employees. (All other things being equal of course: They could very well lose business because customers feel put upon.) Dishonest employers that just tell the employees to divide up the tip jar at the end of the shift without counting it themselves are also getting out of paying these taxes on the tip income (which they are obligated to pay under most circumstances). Oh, and it leaves the employees on the hook for keeping track of it themselves, as they are obligated to pay tax on those tips.
- Tip jars are a gentle form of social conditioning. People used to pump gas for us. Now it's rare when they do (unless you live in New Jersey). Just like “20% is the new 15%” pretty soon tip jars will be acceptable just about everywhere — and employees will give you a disapproving look if you don't chip in.
Ultimately, though, I have to support a business's freedom to do this kind of thing. If the business were my livelihood, I'd do whatever I needed to (within the spirit of law) in order to keep things going. A tip jar buys a little bit of time for a business owner. It isn't quite as noticeable an affront as raising prices, but it's not unnoticeable either. It's more a sign of the times: The costs of doing business are going up, and business volume is going down, so do what you can.
I stopped eating out so I don’t have to worry about this. However, anyway you slice it the burden of increased prices ultimately falls on us as consumers.
If tip jars were not used, employers would simply have to increase wages, which would mean increased prices, which would also fall on consumers.
Inflation is the problem – and that is caused by our gov’t continuing to be the largest counterfeiting operation in the history of the world. Oh… we need more money? Ha ha… just print it!!
I have serious reservations about criticising the business owners for these practices without examining why they adopt them.
If the owners are doing this to pass on increases in the cost of running their business, then it is fair and reasonable that the consumer ultimately pays for those costs. If the consumers don’t like it, don’t use the service.
Business owners also exist in a (usually) highly competitive environment. Anything which they can (legally) do to make their business more attractive to potential customers, they should do. If they don’t their competitors will and they will eventually end up out of business.
In my neck of the woods the worst of these “tip jars” can be found in the new tip line they have added to credit card receipts requiring your signature at virtually every place possible! I have even seen them in mall food courts where they expect to be tipped for handing you a piece of pizza without a smile. Now I have nothing against giving a good tip (I used to be a waitress after all), but I agree that many of these places have gone too far!
I see there are two sides of the coin – I understand why the business owners introduce these practices. But on the other hand, if I’m supposed to give a tip, I expect that to get something in return – a perfect service, a smile or something like that. It wouldn’t cost them anything either. So, I only give a tip if I’m 100% satisfied and I believe it’s fair enough.
I think another consequence is that as tip jars become more common, and people use them more often, the business owners may very well start lowering wages of the employees until all of these other jobs are basically run like wait staff jobs. The waiter/waitress gets below minimum wage and the norm is for the customer to pay the waiter/waitress.
As a note Oregon is another state where you do not pump your own gas. And is enforced by law actually. ORS 480.330, 480.990.
I’m not a fan of the tip jars everywhere or as jennifer888 mentioned the tip line on receipts everywhere!
The whole process gets very confusing and uncomfortable. I tip well at restaurants. But when I go to Starbucks is it necessary to tip the barista? Isn’t that the main function of their job. Or my favorite bakery where they hand me the pastry?
I’d rather see a living wage at these types of places, and I understand it would transfer that cost to the consumers. At least the cost of frequenting that establishment would be very clear.
The reason there are more and more tip jars showing up is, our government passed a law which allows employers to pay tipped employees $2.13 an hour, rather than the normal minimum wage of $7.25 an hour.
What the tip credit law amounts to is, an employer can steal up to $5.13 an hour in tips from an employee who receives at least $5.13 in tips. Rather than stealing the money directly, employers simply deduct up to $5.13 an hour from the employee’s hourly wages.
Now that our government has passed a law allowing employers to steal a portion of their worker’s tips, businesses across our country are both soliciting tips and suggesting that customers should tip more. Just look at how the expectation of tips in restaurants has risen from what used to be 10% for good service to what is now 20-25% for good service.
The reason business want customers to tip and tip more is because our government is allowing them to steal the tips.
employers are and should be prohibited from collecting tips as they do in tip jars. California labor laws clearly explain that no employer shall collect or receive any part of the gratuities paid, given or left for an employee by a patron. Likewise, federal laws explain that all moneys presented by customers as tips are to be retained by the employee who receieved the tip, not collected by the employer in a jar with no one’s name on it.
It is a scam. This is WELFARE for the working. No sugarcoating about it. I wont leave one cent in those tip jars. They are not going to intimidate me. Chains like Starbucks or Dunkin Donuts, ought be ashamed to have those things. Starbucks especially is a high end business. You will not see tip jars in high end, classy establishments. Starbucks is losing their mystique by allowing those things. It is shameful. What next tip jars at Weddings? Oh thats right, I already saw that once. ABSOULTELY DISGUSTING!