Tip Credit

[Bugfatty300]

Tip Credit, i.e. where an employer can pay sub-minimum wage if the employee is expected to make a certain amount of tips and gratuities.

So what do you guys think? Is this just a way for businesses to take more money from customers and employees to reduce their operating expenses and in turn put more cash in their pockets?

Or is there another more benign reason that this wage scheme exists?

 

[squadbroken]

Is this just a way for businesses to take more money from customers and employees to reduce their operating expenses and in turn put more cash in their pockets?

of course it is

 

[warpus]

Tip Credit, i.e. where an employer can pay sub-minimum wage if the employee is expected to make a certain amount of tips and gratuities.

So what do you guys think? Is this just a way for businesses to take more money from customers and employees to reduce their operating expenses and in turn put more cash in their pockets?

Or is there another more benign reason that this wage scheme exists?

Tipping emerged as a practice in England and was adopted in North America.. It exists for historical reasons mainly.. but also because.. well.. if you run a business, you want to minimize costs, right? If there is an accepted practice out there that allows you to pay your employees less, then you'd adopt it.. especially if your competition was doing the same thing. It makes business sense to do so.

Tipping is basically an establishment's excuse to pay their employees $2 an hour, shifting the burden to pay their employees a living wage onto the customer.

Which isn't fair to the customer OR the employees.. but.. that's the way we do things in North America, what can you do?

If a restaurant made a point of paying their employees a good wage, I would frequent that restaurant over one that doesn't, out of principle. But nobody does this.

 

[Bugfatty300]

Which isn't fair to the customer OR the employees.. but.. that's the way we do things in North America, what can you do?

Get rid of the tip credit system?

 

[Old Hippy]

with cash fast being replaced with credit/debit cards...

its also blatant tax evasion by employers where people pay on the bill with their credit card, because the money goes to their business first and the business then passes on these wages to its employees.... it then becomes, not away of avoiding paying fair wages ... it becomes a way of paying substandard wages

of course the bussiness could become a Co-OP and share all the blessings of providing the service which the customer pays his fee/fees for

 

[illram]

In CA you can't do that, i.e. all employees must make at least minimum wage.

 

[Integral]

It's a great way to expand employment at the margin.

 

[Valka D'Ur]

I expect employees to at least make minimum wage. That's why it's called MINIMUM wage - the minimum the employer, by law, is required to pay them. If I tip (I don't always, or even often) - the service has to be better than just average. Same goes for delivery drivers. I normally tip them (because they have stairs to climb and I do feel sorry for them having to slog through awful weather) - but not the last time, because the driver was lost, wouldn't admit he was lost, and actually ARGUED with me over where I lived! No tip for him!

 

[SeekTruthFromFacts]

Pizza Express tried this argument in the UK when the National Minimum Wage came in, and earned the distinction of being pretty much the only company to get convicted under the new law.

If you expect people to do the work, then pay them properly. Tipping is obnoxious.

 

[stormerne]

Tipping is not universal. For example, in Japan you don't tip. In fact I'm told that many Japanese people would be insulted if you offered a tip, the implication being that your job was somehow substandard. If not tipping works well for businesses in other countries, why not the US?

 

[GoodSarmatian]

Tipping is supposed to be optional, not something you have to count on to make a living.

 

[Maniacal]

I really like the new min wage law that was put into effect this year here in BC. Min wage was $8 or $8.25 (I don't remember exactly, my old job started me at $10 instead of giving me a raise for 2 years). Since November 1st

General minimum wage
November 1, 2011 – $9.50 per hour;
May 1, 2012 – $10.25 per hour.

Liquor servers
November 1, 2011 - $8.75 per hour;
May 1, 2012 - $9.00 per hour.

http://www.labour.gov.bc.ca/esb/facshts/min-wage.htm

It also set min wages for live-in support workers, camp leaders, resident caretakers and various hand-picked crops and they scrapped the $6 training wage entirely. Liquor servers are expected to get tipped which is why their wage is slightly lower and they should easily be able to make up the difference just from a few tips.

 

[Azale]

It's a great way to expand employment at the margin.

Yea, so are a bunch of other regressive labor policies. To me it just seems like a way to weasel out of minimum wage laws and the circumvention of basic worker protections always rubs me the wrong way.

 

[illram]

It's a great way to expand employment at the margin.

Letting employers screw employees is a great way to expand employment at the margin?

 

[Perfection]

Let's say that an employee earns $20/hr on tips. Why should the employer be forced to bump the wage up and increase the companies expenses? Remember we're talking restaurants here, many of these aren't owned by giant corporate fatcats.

 

[downtown]

Ideally, I believe the employer is still supposed to make up the wage difference if wages + tips are less than the min wage per hour.

It does suck, because your income as a waiter depends on so many factors outside of your control, but I think this system is really the only reason people do the job in the US. If you are a good waiter, (or more accurately, work at a place with lots of traffic) you can make FAR more than your employer could ever afford to pay you, since profit margins in the food industry are TINY.

Under this system, a good waiter not only takes home 20/hr, but also leaves each shift with actual cash in his pocket. That's not so bad.

If protections are in place to make sure that real income never dips below the actual min wage, then I don't think it's a bad system, except for maybe the consumer.

 

[Old Hippy]

Let's say that an employee earns $20/hr on tips. Why should the employer be forced to bump the wage up and increase the companies expenses? Remember we're talking restaurants here, many of these aren't owned by giant corporate fatcats.

but there would be no increase in expenses, the customer pays the same and the waitress gets the same, it just means that all aspects of the business have to be run properly which most parts of Europe and Australia managage to do

at present get a new cook who dosn't do his job properly and the wait staff get no tips and work for $2 an hour.... does the boss make up for his bad decissions ...No he takes his profit, as the meal was paid for and makes the serving staff cover his bad choice, even if they provided excellent service and it was this that might bring back a disappointed customer... for another try of his restaurant

 

[Perfection]

but there would be no increase in expenses, the customer pays the same and the waitress gets the same, it just means that all aspects of the business have to be run properly which most parts of Europe and Australia managage to do

If you pay the waitstaff more they make more.

at present get a new cook who dosn't do his job properly and the wait staff get no tips and work for $2 an hour....

Cooks get paid a full wage.

does the boss make up for his bad decissions ...No he takes his profit, as the meal was paid for and makes the serving staff cover his bad choice, even if they provided excellent service and it was this that might bring back a disappointed customer... for another try of his restaurant

I'm not understanding what you're trying to say here.

 

[MagisterCultuum]

I don't like how it places an expectation of the customer to give a good tip for anything less than exceptional service. (I am firmly of the opinion that tips should be be based only on the quality and quantity of work the servers performed, never related to how much the restaurant charges for the food.)

On the other hand, I reject minimum wage laws in principle. They only hurt those who need jobs the most and have the least work experience to help get them. (They are especially bad for minorities, and seem to be the reason why black unemployment is now so high when it used to be much lower than white unemployment.) Employers and employees should be able to negotiate for mutually acceptable payment system.

It would be much better for the working poor to receive a citizen dividend/basic income which they could supplement with whatever wages the free market can provide.

 

[Bugfatty300]

Even if the difference has to be paid to cover minimum wage, you're still taking an unfair hit in income.

When I delivered pizza, my store was the last in town that still paid it's drivers full minimum wage. The rest had gone to tip credit or some kind of alternating half-pay scheme. (Either one is just a slimy way for corporate fat cats to profit on OPTIONAL customer tips and take them away from the employee)

Since my employer was hardly covering my gas expenses and not paying anything at all for my car's maintenance, I would have found it downright despicable if they also decided to cut my income by legally stealing my tips from me.