Tipping should be illegal but short of that it should NOT be a component of wages factored into minimum wage like this. The proliferation of square and other POS systems has normalized tipping in new sectors and significantly increased the percentage with presets like 18.5, 20 and 25 as default.
If Waffle House can't hire employees at a price point the market demands then it shouldnt operate. The restaurant model makes no sense when customers subsidize the wages of employees directly.
> If Waffle House can't hire employees at a price point the market demands then it shouldnt operate.
If WH can't hire employees at a price point the market demands it *won't* operate - there will be no employees. People are willing to work at those rates so there will be a pool of employees available.
Desperate people will work for desperate wages. That's not ethical, let alone for the richest country in the world. As a Frenchman, I'd suggest American people should get a bit more used to unions and strikes. It's not like the French system is fair, but it's a lot fairer. You can roll your eyes and think "it couldn't happen here, that's not how we do things", but every habit starts somewhen.
The American system requires people to vote with their feet (freedom of choice of employment) and their wallets (freedom of market choice), thereby giving individuals the direct power instead of some bureaucratic entity who may or may not have the individuals' best interests in mind.
If you believe that people who aren't paid half a million to come up with new ways to display ads have meaningful freedom of choice of employment, rather than different flavours of shit sandwiches, I politely suggest you reassess. And if you think consumers, unorganized, have enough information and meaningful alternatives to choose products, and willpower and knowledge to beat professional marketers and a relentlessly hammered in culture, well, I politely suggest you reassess that too. I agree with you in principle - but there is nowhere near power parity between employers and employees, or corporations and consumers, so that's moot until there is.
I fully understand and agree that the assumption of perfect/symmetrical information in an economic system doesn't exist, but it's a lot better than what you seem to suggest, and recently (the past 30 years) has only gotten better.
> If WH can't hire employees at a price point the market demands it won't operate - there will be no employees.
Another way to say this argument is "the USA economy requires a service sector of people inches from poverty in bad working conditions, to survive."
If a country has to stand on the blood of its working class to survive, that country probably shouldn't exist.
> People are willing to work at those rates so there will be a pool of employees available.
The alternative is homelessness. This isn't ethical.
Other countries have fast food restaurants with workers that have housing and healthcare. If the American government and corporate strategists can't organize its economy in a way to deliver this life to its citizens, it should be replaced, no?
It means it sounds like you aren't really interested in paying attention to this issue which means you may be blindsided by a recession or economic collapse.
> Markets work the way they work and will respond accordingly.
This doesn't really mean anything I don't think, I'm not really gleaning information here.
Precisely my point. WH (or any other business for that matter) must learn to adapt to the market or it will fail. Labor pressures in any direction will force changes - in low elasticity domains (like the food industry) they must do this quicker.
FWIW you're going to see a lot of chain restaurants turn to automation to avoid labor in particular, but it also has the benefit of consistency and food safety adherence.
Customers pay restaurant employee wages anyway, so I'm not sure I understand what model "makes no sense" exactly. Tipping is a way to create a direct feedback between customer, and server, and as such it makes a lot of sense. I guess in States it went a bit farther than that because cultural norm makes you feel obliged to tip, but as long as you still can choose how many - it works. Now, if POS doesn't let you choose arbitrary amount it's a problem with POS/cashless society/banks, and not with tipping.
>I'd much rather send feedback to the managers. They control the entire experience.
It's a very naive view not only of restaurant operations, but of the human world as whole.
>Are there any restaurants that pay management $2/hr and let the customers tip them up to living wage levels?
This is an interesting question which has no relation to tipping. It seems that in the US tips make most of what server earns - it's not the rule everywhere. However, I'm not in position to judge which way is better (e.g. where a good server really earns more).
Nevertheless, money paid to servers come from customers, and you have to pay more if you want to make servers earn more. It can be called "tips", and be a choice in a range, or it can be hardcoded into prices (with some administrative overhead, of course). I'm not a fan of administrative overheads, but YMMV.
Is such direct feedback loop needed? In other places we simply stop buying product or using certain business if possible and things sort itself out. Or we could give feedback by internet forms or something else.
I have seen the proliferation of these POSs, but I never assumed they meant total tips have gone up. How do you know that total tips have gone up across the board?
I don't have any data but it seems logical to assume that shoving a default 18% tip in people's faces on a POS device means that some people tip when they otherwise wouldn't or would just drop some change in a jar.
20% is pretty baseline right? Those presets make sense to me.
And while it is indeed factored into minimum wage like this, don't you mean to say: "Not* tipping should be illegal"?
Like if you agree that this is all just an allocation strategy on the business side, and really it should be factored in from the beginning, it shouldn't be that much of an affront to just follow it through and give them a good tip. Not to deny this is an imperfect state of affairs, but if the complaint amounts to simply having an extra social responsibility to make sure the people who serve you get paid well, I don't see why we as individuals need to feel angry or cheated.
In fact, it used to be something like 15% before taxes as a rule of thumb. It's ooched up to something like 18% minimum (on POS terminals) inclusive of taxes and whatever additional fees are added in some jurisdictions.
> When I added that to my tips it came to a little over $660 — or $12.24 an hour.
Author then deducts all the things that apply to every job - taxes, commuting, etc. and concludes she makes a take-home $9/hour, which is still above federal (and North Carolina where she is working) minimum wage. Of course, living wage is much higher than that in Asheville where I believe she lives [1].
And to those wondering, yes Waffle House does offer insurance and a few other benefits [2].
Commuting is a basically fixed cost from "I'm driving to mcdonalds for my 4 hour shift" to "$500k/yr FAANG dev", so is it not worth pointing out that that's a much higher proportion of low wages? Nor am I charged for my top of the line macbook pro, despite it costing many times more than the work shoes in this low paid jobs.
commuting should definitely be factored in. You don't commute for fun, you only commute for the job. It's an expense that occurs every time you work and, as you said, a fixed cost that becomes more important the lower paying your job is.
In the end, it's what you take home and that's what the article is about.
I've never understood why anyone talks about their pre-tax/cost earnings. We should compare the amount that hits our bank account, not the top line item on paystubs, because that's the amount we actually have available to spend.
Not looking at true take home pay is how gig driving companies are able to get drivers even though the pay is absolutely shit after accounting for taxes plus wear and tear/gas costs.
There are choices we can make that affect the difference between gross and net. How much do you withhold? What level of insurance if you have choices? Retirement contributions? Direct donations? Optional benefits like life insurances, long term disability, AD&D plans. It's much fairer to look at someones gross pay when comparing people. Even if you just deal with tax withholding options, net pay is easily skewed.
It’s funny that people still don’t understand taxes and any time I see someone complaining about “take home” being below minimum wage, I tune out.
There’s no way to legislate minimum take home pay.
I feel empathy for people making this discovery for the first, or tenth time. But waiter jobs in general pay pretty low and the minimum wage for server jobs is harder to compare because of the tips aspect.
Reaction: Author is wearing really tight blinkers, in pursuit of a clicky headline. Multiple mentions of coworkers, but no mention of even asking about their tip income. (Let alone their strategies for encouraging better tipping. After hinting that she has zero experience at tipped serving jobs.) If she doesn't like Waffle House food well enough to eat her $3.15 meal credit every day - if only to know the menu better, and talk the food up to customers - why the heck did she apply for a Waffle House job in a tight labor market? Let alone one that's kinda distant from her home. And trying to depreciate the $28 pair of shoes over "almost 9 shifts" is laughable.
[NO, I am NOT asserting that serving at Waffle House is a good job. But this article smells more like a hatchet job than an attempt at honest reporting.]
I was pretty friendly with the servers at Waffle House - they all told me that their gross wages including tips were ~$25 an hour and they would often go home (of their own choice) if it was sufficiently slow.
The servers who worked first shift at Waffle usually made good money - good enough money to pay for a house or an apartment to rent in DFW, which by my estimation takes around 20 dollars an hour.
None of this is really a defense of the server wage - but seeing other customers and what they'd leave for tip, a 50% tip was not abnormal - in part because food at Waffle House is so cheap.
Do they provide health insurance and other benefits, or is that all on your dime as well? One would think that service operations truly facing a staffing shortage would be a bit more interested in rewarding their workers. Maybe it’s not as bad as they’re saying? Does the author and other people working in such places see customers going unserved and food growing cold? If not, what’s the problem from the businesses point of view?
Huge fractions of the US service industry are catastrophically understaffed right now, to the point where it's driving smaller businesses under. Somehow we seem to have developed a series of industries (from fast food to hotel cleaning to receptionist work) that entail a combination of low prices and labor intensiveness which is completely unsustainable when you pay people living wages. For years the labor market was weak and this worked out. Now it isn't, and many of these businesses don't make sense anymore. Presumably we could rebuild them with a more European model that's more automated and less dependent on replaceable super-cheap labor, but most likely we'll just rely on the Fed to engineer a recession.
>more European model that's more automated and less dependent on replaceable super-cheap labor
You see plenty of fairly obviously immigrants cleaning hotel rooms in Europe.
To some degree, higher labor costs can also drive efficiencies with no real harm to consumers. I'm perfectly fine with (and may even prefer) a weekly "serviced apartment" sort of hotel model rather than daily room cleanings which invariably happen when I'm on a call or something.
I had no level of price increase in mind. (Obviously any increase has some harm at the margin.) Rather, I'm saying that certain services that cost money to provide--especially given higher labor costs--like daily room cleaning don't deliver much value, if any, to many consumers. Pre-pandemic some chains would even let you opt out in exchange for some points.
At the end of the day, staffing shortages (outside of professions requiring unique scarce skills) are always about pay. But I know I'm not--and I assume most people won't be--paying arbitrarily large amounts for the privilege of eating out, especially at some local waffle house. Which is fine. There are lots of services I would like that I'm not willing to routinely pay what it would cost me to get.
My wife bought lunch for our son and his friend yesterday. $32 for a 6" sandwich, chips, a cookie, and bottled water at Subway (x2). $32 for barely better quality than a fucking Lunchable. Oh, and the POS system automatically presented a 15% tip in the payment screen.
Casual dining in America is not going to survive the next five years IMO. I know we will be doing our part to no longer support the system (we already quit McD's because it is almost $40 for our family of three to eat a meal there.)
Subway takes the cake of mass market chains that seem like they ought to be a lot better than they are.
I directionally agree with you. There are already a lot of relatively labor-intensive things in the West that even upper middle class people don't routinely have like personal drivers, chefs, and even housekeepers, or lawn care. Given demographic shifts, it wouldn't shock me if thoughtlessly eating out at fast food restaurants joined the list for a fair number of people. (More automation too though you can only do so much. Eating at home is generally going to be cheaper.)
The Western appetite for convenience is at all time highs. QSR growth is in the double digits YoY largely driven by app prevalence w.r.t. rewards and loyalty and delivery services. There was a slight downturn after re-opening from COVID, but it is back up to nominal levels.
You can’t print trillions of dollars and not expect prices to rise.
My casual take is prices of fast food has roughly doubled since this whole inflation thing took off. And they all have universally decided in the last month that a “large” drink is what was formerly the medium drink so double the price for less meal — not sure if that’s a “healthy choice” thing or they’re just being weasels though.
I’ve never once had subway try to get a tip out of me and I eat there fairly regularly, not even the “tip cup” that employees like to put out to guilt you into tipping for things like watching you use the automatic checkout robots.
—edit—
Oh, and McDonald’s is still semi-reasonable if you use their app (to get free stuff)
and pay attention to whatever their current loss leaders are.
If you build an online order at the Subway website, you will see a line item for "Sandwich artist tip". In-person ordering has the same thing on the POS during checkout (like so many places do these days)
They paid $16/ea because a meal includes only a single “side” such as a cookie or chips with a fountain drink cup. Choosing bottled waters and additional sides probably added $5-6 each.
Subway, McDonald’s, whatever get you when you do add-ons.
Yet the queue at McDonalds and other fast food places here in Ontario are full. People adapt to what their situation presents. Perhaps there will be a messy transition in the US when jobs have or wish to reset their compensation?
Although there was an article from the Wall Street Journal just yesterday with data showing the sales at a lot of chains are still somewhat down. I do suspect that there are a lot of people with at least midrange incomes who will continue to eat out, even if only fast food, before they'll more seriously contemplate preparing meals at home.
>Perhaps there will be a messy transition in the US when jobs have or wish to reset their compensation?
I'd bet on more automation where practical and people just doing without--or doing without as often--certain things that have a large labor component.
About six months ago, Starbucks opened their THIRD store in our medium size town (~60k pop). It's a rare moment to not see a car in the drive thru line, and typically four or five cars. Crazy.
I'm saying crazy high. I don't know though - I don't really have a feel for it because of inflation but I have a teenage child making $20 an hour at a summer job and while they (because teenager) complain about being underpaid it seems to me like they're doing pretty OK.
Almost certainly not. Only a tiny number of similar jobs offer health care benefits. Waffle House is not a high profit place, I used to go there, they serve the blue collar crowd on a budget.
Frankly one of my most enjoyed jobs was working as a waiter once I got used to it. I was working at a high end restaurant where some wait staff were making $45K+ a year so not perhaps the same situation.
There was definitely a sense of satisfaction not just from serving but also taking a moment to rest after moving your body for a four hour shift. Believe it or not it was a bit of a workout.
I worked at a crap restaurant when I was in H.S. and ... I actually really liked it. The people (who were all over the map - crazy, sane, fun, boring, good, bad - just everything ), the work (which was that tedious physicality that you can just do totally spaced out) and everything that went with it. It didn't have the same kind of sanctification as the work I do now but it also lacked the level of frustration I get now.
Note that unlike flippinburgers I was working in the back - way back.
> I consider this an abhorrent system, that should not be supported.
I agree it’s abhorrent. But we must support it by tipping. If you don’t tip, you’re not fighting the system you are harming the workers.
My approach is to tip and also advocate/vote for/support businesses that don’t allow tipping and instead just pay a higher wage and they factor that wage into the food price.
This is pretty rare though and even the restaurants that say “we pay our servers a wage so please don’t tip” still allow tipping so that’s not good.
I’m not sure how you break this in the US unless you pass some strict law disallowing tipping. Maybe something where the advertised price is all inclusive and no add-ons are allowed, so it must include tip, taxes, service charge, whatever. I don’t see that passing.
The most confusing part for me is not the restaurants, where I agree there is currently no choice but to tip unless you want to rip off the workers, but all these other places in-between that try to guilt you into tipping but the workers get paid a regular wage.
it's a weird cultural thing, i'm not sure when it started. No, you're not required to tip at all but it's frowned upon to not tip. How much to tip is another art form itself. Many people gauge how much to tip based on quality of service and others tip a flat rate. My tip algo is:
1. get the check
2. shift the decimal point to the left by one digit ( 10% )
3. double the amount from step 2 ( 20% )
4. round down to the nearest whole number ( makes it easier to add )
Of course you don’t understand it because neither do we Americans. You HAVE to tip or you feel horrible screwing someone out of their wage, even when they do a shit job. I’ve literally have waiters that take my order and disappear until food service time, then disappear again and needing to find another waiter or waitress to bring me the check. I’ve even seen managers step in when service is bad and they can’t get the tip money due to labor laws.
Tipping should be for exceptional service. I tip at my local sub shop because they know me and they know how I like my food made. I’d rather pay more per plate to cover an overall wage, and I think most Americans agree with me.
Not legally required, but in practice your decision to not tip is a decision that the staff should earn under minimum wage. It's just the current status quo. And in some cases you may end up in a confrontation with someone who assumed you knew you should've tipped. (Not tipping in a taxi may lead to uncomfortable situations)
> Why do restaurants not pay their staff enough to live?
> Not legally required, but in practice your decision to not tip is a decision that the staff should earn under minimum wage.
Not quite. The law is that for tipped workers the employer has to pay the "tipped minimum wage" ($2.13/hr) but if that plus tips is below the regular minimum wage ($7.25/hr) the employer has to pay the difference.
In effect it is equivalent to the minimum wage being $7.25 an hour for tipped works, same as for everyone else, but the employer gets the first $5.25 of your tips.
Not tipping is saying that you think the staff should earn exactly minimum wage.
I've heard though that in some states they are lax about enforcing this, so employers can get away with not making up the difference.
Basically we'd need laws enforcing a minimum wage for waitstaff, otherwise restaurants that allow tipping will always have an advantage over more expensive ones that don't. And no, you're not required to tip, but that only ends up hurting the waitstaff, not the restaurant.
It has a complex history but a lot of it started with the Prohibition historically, when alcohol sales ended some restaurants started allowing tips and it became more commonplace.
Some restaurants have also tried eliminating tips. The details of how tipping pools are distributed varies a bit but, in general, the servers (especially the young good looking women who research has shown get higher tips) revolt and go work something else if you disallow tips.
I'm not particularly a fan of tipping culture in the US but I would note that "optional" (but not really) 10% service charges for table service is pretty common in the UK these days as well.
It doesn't feel that endless any more though, does it? It's sort of like Amazon doing the math and realizing they're going to burn through all the "human capital" or whatever euphemism they might use for "humans" in the labor market in certain regions because of their labor practices.
Not directly related to the article, but I've never understood why tipping is a % of the meal price. Like yes, the service you get is loosely related to the price—I'm getting much better service at 3 star michelin than some local shop. But assuming 20% these days, is the service at a $300 vs $100 place really that much better to warrant a $40 extra in tip alone? (of course I'm using the extreme upper end example here)
It should not exist at all, but even if it does, it should be based on the staff's actual service, not the all the other things that go into the price of a plate like ingredient, chef's name value, etc
Tips are also effectively less valuable than they were when they were mostly cash. It was VERY common to not report them (or under-report them) as income back then. Credit card tips, though, flow through to your paycheck reported income automatically.
Whenever an older person mentions the “labour shortage” I always make a point of telling them it’s really a *pay shortage*. Older people don’t realise that wages haven’t truly increased for a long time. Our buying power is incredibly small now. Why the hell would people want to work for peanuts? It’s very simple, but I guess others need to feel good by putting people down.
That’s the whole point: the cost of commuting to the job plus taxes plus mandatory meal credit makes the entire job barely profitable. On top of that you’re always just one car breakdown away, or one illness away, or one gas price increase away from going broke.
Yes, and they are fixed regardless of your wage. As a FAANG employee, they are negligible in the grand scheme of things; but as a minimum wage worker, they will meaningfully eat into your earned income.
The question asked in the article is: is it worth taking this as a side job? If you include the EITC you'd have to factor in the income limits associated with the credit, i.e., that earning more money could actually cost you by making you ineligible. So that's probably more confusing than it's worth.
They’re also adding in a one time cost for shoes in their calculations on 8.5 (IIRC) shifts to come up with their low number. Shoes which should last a few hundred shifts minimum. And are tax deductible if you itemize.
Also the food credit is only a loss if you don’t use it, it’s a net gain if you get the maximum amount of food because I highly doubt it’s capped at $3.whatever.
Yah but you choose a job and its commute time etc. Those are individual choices that arent the responsibility of a commuter. Its like saying i make 100k in new york but i commute to new york by airplane and thus k only make 2k a year
I think it's fair to do this. If the employer takes the perspective of a business (providing a good or service, their labor, in exchange for cash, or a paycheck) it's part of the cost of doing business and can be seen as a fixed cost.
"I make about $75 in tips, on average, during a seven-hour shift as a server at Waffle House"
That headline is technically correct, but also really misleading. Also, she only pulls in about $10 an hour in tips? Does that sound really low to anyone else?
She doesn't mention what shifts she's working. Waffle House is open 24/7 in many locations. Given this is a "side gig" for her, there's a good chance she's working slow shifts.
That sounds extremely low. During the Great Recession I worked at Chili’s bar and grill and made similar amounts on a 4-5 hour weeknight shift.
I know people who worked at Waffle House and made decent money for a 20 year old server. A lot of them switched to normal hour restaurants due to Waffle House hours. $75 a shift sounds very low, it must be a slow Waffle House.
It's not just some quirky viewpoint in America, it's built into our labor laws. The $2.92/hour is the rate that Waffle House pays her provided she makes (and reports) enough tips to exceed or equal either the higher of the federal/state minimum or a higher agreed rate. At the moment I can't recall whether this calculation is per pay period or per shift though.
Requisite disclaimer: I'm do not support tipping as a primary means of paying for labor. I'd love to outlaw the practice, not the least of which because it's highly discriminatory.
Maybe naive question, but I haven't seen anything about the taxation on tips.
From the little I understand of the US taxation, tips are in theory subject to taxes but in practice many (most?) low wage workers omit to declare them?
There’s some sort of formula the IRS has for a percentage of income you need to claim in tips to keep them happy. Probably isn’t as important anymore than in the 90s when I was living with a waitress who I learned this stuff from who got almost all her tip money in cash, credit card tips get reported on the payslips.
As an aside, I used to watch in pure wonderment when she would do laundry or need money for something and go through her dirty clothes easily pulling a couple hundred dollars out of pockets.
I hadn't thought of tips with credit/debit cards or other electronic payments, so they go to the bar/restaurant that then (when the actual money arrives in the bank) gives them back to the waiter(s), it must be some serious complication in accounting.
Taxis/"ride share" it's probably about the same semi-mandatory that wait staff is. Barber. Dollar bills here and there for luggage storage or other things at hotels.
Sometimes a thank you gift around Christmas, e.g. for housekeeper.
Drivers and hotel staff yes. Domestic workers and usps deliverer(my city's post is fucked and I consistently didn't receive mail before tipping) for christmas. Grocery store no.
Many people "tip" their police department for the cop license plate or windshield sticker.
Waffle House charges you a meal credit even if you do not use it. Someone who works 5 days a week and 'brings' their lunch still gets charged a $100 a month for nothing? That's straight up bull shit.
The (american) thing of paying pittance to waiters because they get tips is weird. Why do people think this is OK? (Apart from the obvious justifications of people who pay virtually nothing for labour)
Those Americans who think this is ok and therefore allow the practice to continue have the following justifications:
1. It's been this way for a while, and change is bad
2. If restaurants were forced to increase wages, prices of food would go up
3. Service workers like waiters are less-than, and don't deserve to make that much money
4. There are restaurants that pay well on top of tips: all the servers who don't like working at the bad paying restaurants can just leave their jobs and go work there
5. The only way to motivate good service is to extract it at the threat of poverty. American tipping culture thus extracts excellent service.
6. If the restaurants have to pay more, they'll instead fire workers, and make the remainders worker harder and more hours
These are points I've been told in person by actual Americans, so I don't think "strawman" is a valid accusation here. I have my personal feelings about each one:
1. changing bad things to good, is good
2. Price of food may go up, but that's ok if it means workers get paid fair wages. If the prices go too high presumably people won't go to those restaurants, and the restaurant will bring prices back down. I do personally believe though that many restaurant owners will be willing to stick to too-high prices to the death of the restaurant rather than cut their own personal profits of the place. That's also ok with me though.
3. Every person deserve a living wage.
4. There aren't enough of the magical good-paying jobs, especially not local to current ones.
5. Money is actually a poor motivator, as any sales team lead would tell you. Also, it's unethical to try to extract labor at the knife-point of poverty. Also, people are nice to me in countries that don't have tipping culture, probably because I'm nice to them, so it's not a truism that people only work hard if you dangle the carrot of a tip in front of them.
6. This is almost certainly true, but it's not a reason to not force restaurants to pay more. Other labor protections should also be implemented.
It's not pittance - it's a thank you. No one is required to tip.
Personally I enjoy tipping, especially if the service is really good, and especially at places like Waffle House where my tip will often exceed the bill because the food is so inexpensive.
Seriously just make it a federal law that each states minimum wage be a living wage for the living costs of the area, and disallow employers from counting tips towards wages. US workers need to stop waffling (pun intended) and demand things workers in the developed world all successfully demanded over the last century.
If Waffle House can't hire employees at a price point the market demands then it shouldnt operate. The restaurant model makes no sense when customers subsidize the wages of employees directly.