Popular Culture  •  June 26, 2002

A Good Tip for Tipping

In the past 10 years or so, I have been noticing a gradual increase in the number of over-the-counter services asking for tips. I first encountered this practice at Katz’s Deli here in New York. It happened to be the first time I had gone there, even though I have been walking by there almost every day for over 10 years. They have a unique system for ordering which involves taking a ticket at the entrance. This confused me a bit, but I eventually managed to get to the counter, behind which there were about 10 guys slicing, grilling, slapping, and wrapping all kinds of meat. I asked for a pastrami sandwich. The guy who took my order said, “I’ll give you the best part. See this? I’ll give you a little extra too. Here, taste this.” I declined to take his offer. After all, I had already ordered it; what would be the point of tasting it? I felt an odd vibe coming from him, and sensed an ulterior motive behind his apparent nicety. Sure enough, after he handed me a wrapped sandwich, he dangled a paper cup in front of me like a cowbell. I completely ignored him. I thought it was ridiculous. Katz’s is already expensive enough (because it is mainly for tourists); asking for any more than that is sheer greed.

Tipping is a pointless custom that does not actually benefit anyone. As with many other forms of tipping, tipping at restaurants originally started as a means to subsidize income, but it is now taken for granted, and is calculated as part of the total income of a waiter. A typical position as a waiter pays a minimum wage, or even less, since you would make most of your money in tips. Some days, like Fridays and Saturdays, you might get paid a lot, but other days, you might not make much. There are also weather and seasonal factors. At the end of the year, you probably would not make any more than the waiters in other countries where tipping is not customary. If you were getting paid the same amount in the end, wouldn’t it be better if there was no fluctuation in your daily income? You are taking financial risks you do not need to take as an employee, for free. Every risk has a price, and most American waiters do not realize that they are giving away something for free to their employers.

There is a minor advantage in the custom of tipping for waiters. If tips are paid in cash, you can get away with not reporting them to the IRS. Unfortunately, for waiters, credit and debit cards are becoming increasingly popular, especially for higher-end restaurants. Most low-end restaurants, like diners, are still on the cash basis, but at these places, a typical tip you get is less than a dollar anyway. On top of it, the IRS is now cracking down on unreported tip incomes.

From the perspective of customers, there is a small benefit in tipping. Unless the service was unarguably horrible, tipping in the US is virtually required by the law, but we can still express our delight or dissatisfaction in the range of 16 to 20 percent. However, this is quite ironic from the perspective of waiters. By asking for tips, they are giving customers more power.

Over-the-counter services should think twice about asking for tips. What at first appears to be an easy way to make some extra money will end up choking them eventually. If tipping at over-the-counter services becomes a well-established custom, employers will take this into account when calculating what they should pay to their employees. In the end, their total income for the year would remain the same, but they would have to shoulder more financial risks (fluctuation in payment depending on the season, economy, and weather), and more work in trying to please the customers. It is a foolish thing to do to themselves.

Tipping is something we should do away with altogether. Despite the sense of instant gratification, in the long run, nobody is getting more from it. Truly great waiters are easy to notice, and they would be promoted accordingly even without tips. Personally, I would be happy if we no longer had to figure out how much tip to leave in order not to offend the waiter.