If tipping went away the food shouldn’t be more expensive to the consumer, the restaurant owner should take a pay cut and pay their employees better. Why does everyone always assume that if minimum wage went up or if tipping went away that the customer would absorb the cost?
Why does everyone always assume that if minimum wage went up or if tipping went away that the customer would absorb the cost?
There’s no technical reason for why, just based on current evidence where 100% of the time producers shove any increase in cost to consumers.
You’re correct that there’s nothing technically preventing producers from eating the increase, it’s just that they’ve never done so, at least in the US.
Only real example where that has happen was with Nintendo and the WiiU. I’m sure there’s more but the fact I’m drawing blank past that but could name you over a thousand times when the cost was shoved off to consumers kind of is my point in a nutshell.
So that said, that’s why a lot of people just assume increase in cost of production equals increase in cost to consumers.
You’re right but I guess my point is that we’re already talking about a hypothetical situation so ideally if we’re adjusting wages and tipping culture, then the responsibility would be put on the employer.
Currently servers are currently paid minimum $2.13/hour. If they don’t make enough after tips to equal minimum wage over a pay period ($7.25/hour), then the restaurant is required to pay them up to that minimum wage.
Labor costs for servers, bartenders, and others caught in this legal loophole would have to increase by 7-fold to get up to $15/hour. Many restaurants and bars wouldn’t be able to afford that large of an increase without raising prices, given that many have a profit margin between 3-6% per several sources.
There have been some restaurants that have raised wages closer to $15/hour with varying success, but that hasn’t caught on widely yet.
Well then if a business can’t operate without underpaying their employees or passing the financial burden to the customer then maybe their business doesn’t deserve to stay open.
That’s not really relevant. My reply was in response to statement that food shouldn’t be more expensive to the consumer with tipping removed. Obviously the revenue for the servers to be paid has to come from somewhere, so it’s either coming from the price of food or tips. If we get rid of tipping, the restaurant will have to raise prices to cover that cost.
Huge chains could more easily pay a better wage than family-owned restaurants.
More than half of states have well above those values. And states with higher populations(NY, CA, etc…) tend to have higher values on the DOL chart. The vast majority of servers are NOT paid 2.13/hr from their employer.
I currently live in AZ, where it’s 11.35 pre-tip and 14.35 post-tip. Nobody here needs tips to make minimum wage… A table of 4 that’s in the restaurant and takes 20 minutes of a server’s time can pay literally 1 dollar in tips and the wait staff will be making $15/hr. Wait staff here STILL complain about tips, and there’s STILL pin pads demanding 30%.
23 states with wage at $3/hour or under, 26 states under $4/hour, 29 states under $5/hour, and 38 states with untipped wage less than federal minimum wage ($7.25).
It seems that more than half of the states make up to ~$1.50 more than federal minimum of $2.13 and the vast majority still make less than federal minimum wage. I’m glad that there are 10 states in which servers can make double digit wages before tips, but there are by no means the majority.
The point remains that the majority of servers survive on tips because they are paid so little.
No. And you’re being completely disingenuous. Combined wages+tips is the actual minimum wage not the untipped column as employers are required to pay the difference if tips don’t make it to the actual minimum wage.
I also said that servers earn $2.13/hour at a minimum, as your link shows. I then acknowledged your point that the majority of servers don’t earn $2.13 from their restaurant and adjusted my statement according to the data that you linked.
I don’t understand where the disconnect is for you. Servers, except in very rare pay period make enough earnings/hour to prevent the restaurant to need to pay them more. Thus, servers in the vast majority of states earn less than federal minimum wage and mamy less than $5/hour from their restaurant. Please note that the customer is not part of the restaurant.
So my original point still stands. If restaurants were required to pay $15/hour, restaurants would have to increase their pay up to 7 times the current wage. This increase in labor cost would necessitate a menu price increase given the low profit margin that restaurants run at. Sure they have some money set aside for the rare pay period in which a server makes less than minimum wage after tips, but it wouldn’t be enough to cover such an increase for every server during every shift.
If tipping went away the food shouldn’t be more expensive to the consumer, the restaurant owner should take a pay cut and pay their employees better. Why does everyone always assume that if minimum wage went up or if tipping went away that the customer would absorb the cost?
There’s no technical reason for why, just based on current evidence where 100% of the time producers shove any increase in cost to consumers.
You’re correct that there’s nothing technically preventing producers from eating the increase, it’s just that they’ve never done so, at least in the US.
Only real example where that has happen was with Nintendo and the WiiU. I’m sure there’s more but the fact I’m drawing blank past that but could name you over a thousand times when the cost was shoved off to consumers kind of is my point in a nutshell.
So that said, that’s why a lot of people just assume increase in cost of production equals increase in cost to consumers.
You’re right but I guess my point is that we’re already talking about a hypothetical situation so ideally if we’re adjusting wages and tipping culture, then the responsibility would be put on the employer.
Oh okay, fair enough. Yeah ideally that’s the direction it preferably should go in.
Currently servers are currently paid minimum $2.13/hour. If they don’t make enough after tips to equal minimum wage over a pay period ($7.25/hour), then the restaurant is required to pay them up to that minimum wage.
Labor costs for servers, bartenders, and others caught in this legal loophole would have to increase by 7-fold to get up to $15/hour. Many restaurants and bars wouldn’t be able to afford that large of an increase without raising prices, given that many have a profit margin between 3-6% per several sources.
There have been some restaurants that have raised wages closer to $15/hour with varying success, but that hasn’t caught on widely yet.
Well then if a business can’t operate without underpaying their employees or passing the financial burden to the customer then maybe their business doesn’t deserve to stay open.
That’s not really relevant. My reply was in response to statement that food shouldn’t be more expensive to the consumer with tipping removed. Obviously the revenue for the servers to be paid has to come from somewhere, so it’s either coming from the price of food or tips. If we get rid of tipping, the restaurant will have to raise prices to cover that cost.
Huge chains could more easily pay a better wage than family-owned restaurants.
No they are not.
https://www.dol.gov/agencies/whd/state/minimum-wage/tipped
More than half of states have well above those values. And states with higher populations(NY, CA, etc…) tend to have higher values on the DOL chart. The vast majority of servers are NOT paid 2.13/hr from their employer.
I currently live in AZ, where it’s 11.35 pre-tip and 14.35 post-tip. Nobody here needs tips to make minimum wage… A table of 4 that’s in the restaurant and takes 20 minutes of a server’s time can pay literally 1 dollar in tips and the wait staff will be making $15/hr. Wait staff here STILL complain about tips, and there’s STILL pin pads demanding 30%.
23 states with wage at $3/hour or under, 26 states under $4/hour, 29 states under $5/hour, and 38 states with untipped wage less than federal minimum wage ($7.25).
It seems that more than half of the states make up to ~$1.50 more than federal minimum of $2.13 and the vast majority still make less than federal minimum wage. I’m glad that there are 10 states in which servers can make double digit wages before tips, but there are by no means the majority.
The point remains that the majority of servers survive on tips because they are paid so little.
No. And you’re being completely disingenuous. Combined wages+tips is the actual minimum wage not the untipped column as employers are required to pay the difference if tips don’t make it to the actual minimum wage.
That’s exactly what I said before.
I also said that servers earn $2.13/hour at a minimum, as your link shows. I then acknowledged your point that the majority of servers don’t earn $2.13 from their restaurant and adjusted my statement according to the data that you linked.
I don’t understand where the disconnect is for you. Servers, except in very rare pay period make enough earnings/hour to prevent the restaurant to need to pay them more. Thus, servers in the vast majority of states earn less than federal minimum wage and mamy less than $5/hour from their restaurant. Please note that the customer is not part of the restaurant.
So my original point still stands. If restaurants were required to pay $15/hour, restaurants would have to increase their pay up to 7 times the current wage. This increase in labor cost would necessitate a menu price increase given the low profit margin that restaurants run at. Sure they have some money set aside for the rare pay period in which a server makes less than minimum wage after tips, but it wouldn’t be enough to cover such an increase for every server during every shift.