How Harmful are Tipping Practices in the United States?

Is tipping in the service sector a harmful practice? Most restaurants expect customers to tip 10-20 percent to the staff for their service. Many believe that tipping in the U.S. improves the service quality, while others argue that the practice disregards the wellbeing of workers who do not interact directly with customers. Flaws with tipping practices in the United States have become ever more apparent since the start of the COVID-19 pandemic. As over 100,000 restaurants reportedly shut down, over 5,000,000 jobs evaporated from the restaurant industry. The lower demand for in-door dining has reduced the amount of tips received, creating widespread panic about financial instability among tipped workers. Moreover, stories of  “maskual harassment” have come out; many workers feel pressured to take off their masks in order to receive higher tips beyond their base salary of $7.25 an hour. A raise in minimum wage for tipped workers or abolishing the tipping practice may help workers who are not earning above $7.25 an hour make ends meet.

In fact, many make less than $7.25 an hour—tipped workers in the United States do not qualify for the same $7.25 an hour federal minimum wage that other workers have. In fact, 43 states have a $2.13 an hour wage, with federal law requiring employers to give tipped workers at least the minimum wage if the workers don’t receive enough tips. Even so, a report conducted from 2010-2012 revealed that around 84 percent of full-service restaurants violated paycheck requirements. The $2.13 system is an unstable policy and has had effects on the poverty rate in the United States. A study conducted by the Economic Policy Institute revealed that “the poverty rate of waiters and bartenders is much lower in the seven states that require restaurants to pay waitstaff and bartenders the regular minimum wage regardless of tips.” Instead of using the $2.13 hourly rate system that is often abused, states should extend the federal minimum wage to tipped workers as well.

The most pernicious of such social effects serve to further disadvantage systemically underprivileged workers. The $2.13 hourly rate system has the most detrimental consequences for women—specifically, women of color—in the United States. A survey conducted from 2010-2016 revealed that women encounter more harassment from customers and face more objectification than their male counterparts; furthermore, Asian and Black servers received $2.00 less tips on average per hour than their white colleagues. With the COVID-19 pandemic reinforcing certain health practices, masks are a required precaution. Shelly Ortiz, a restaurant waitress, reported that she was asked to take off her mask to see “if the bottom half of [her] face was as cute as the top.” Not only does the pandemic reduce the amount of customers going to restaurants, but it also compels employees to violate health guidelines to make a living.

Tipping can lead to harassment in the service industry, but shifting to a complete no-tipping policy might not be the best solution for the stability of restaurants. Many restaurants have practiced no-tipping policies with little to no success. A no-tipping policy means that employers need to spend more money on their employees, thus raising the prices of their menu items. In a competitive industry where the majority of other restaurants still use tipping practices, it’s hard to drive new customers to a more expensive menu. 

The complicated tipping system in the service sector cannot be easily solved by applying a no tipping policy. A removal of the tipping system might not be necessary—alternatively, Congress could decide to increase minimum wage for all tipped workers. Raising minimum wage for tipped workers will guarantee workers steady income, prevent harassment in the service industry, and improve job satisfaction in the long run.

By: Amber Chou