"There are always conflicts of interest when money is involved."
That wisdom, courtesy of Northeastern University Professor of Finance Robert Mooradian, pretty nicely sums up why tipping and the incentives they represent are such a point of tension.
But while minimum wages are a hotly contested issue--among business groups as well as economists, to say nothing of lobbyists and politicians--the problematic nature of tipping deserves its own conversation.
The two are related, but distinct issues.
Perhaps the most noteworthy distinction is the fact that all employers are free to elevate base wages at or above the minimum; it is harder to enforce tipping across all customers. There are social norms, certainly, but no real protections for staff who miss out on a core component of their compensation due to stingy, ignorant, or unreasonable patrons.
There is also the ambiguity surrounding gratuity outside of food service. The annual parade of advice, articles, and expert insights is testimony to the fact that consumers just don't understand when, where, and how much to tip.
Restaurants treat tips as an assumption, but our culture treats tips as a bonus for good service, attractiveness of the wait staff, or informal feedback on any other element of the overall dining experience. The latter trend is particularly troubling, as restaurateurs increasingly turn to social media or industrial surveys for customer insights, while customers express themselves through the size (or absence) of their supplement to the bill.
It simply is not uniform, even if theminimum wage for tipped positions pretends it is.
That is part of the reason why recent news that Joe's Crab Shack, a national seafood chain restaurant implementing a No Tipping policy, is so hugely significant.
The move, piloted in about 18 stores so far but set to be expanded to its 130 locations nationwide, saw employees get a base wage increase to $12-$14 an hour, with opportunities for performance-based adjustments. The menus have also been updated to reflect price increases of around 15%.
Restaurants across the country have experimented with eliminating tipping, but only as an elective and largely regional or concentrated local shift toward steady, consistent wages for all staff. With Joe's, that pattern has national scalability.
Frankly, rewarding performance is uncommon in any industry; mostly, wage workers are paid for their time. And in the foodservice industry in particular, customers are historically poor judges of what constitutes proper dining etiquette, much less appropriate gratuity. They are particularly prone to punishing wait staff for problems with the food itself, or other elements beyond the direct control of those subject to tip fluctuations.
And for that matter, the standardization of state or federal tipped minimum wages doesn't spell out how restaurants are to divvy up tips:individual company policies vary wildly from pooling, to sharing tips with kitchen staff (who aren't subject to the same minimum wage), to de facto "don't ask, don't tell" avoidance of the entire issue.
We have had inklings of how a tip-free universe might function, but Joe's Crab Shack's initiative takes the model to a much more significant scale, particularly because, as a franchise, the experiment will eventually take place in a wide variety of demographics. In a sense, that makes the move as ground-breaking as if it had been legislated: it is national, it is controversial, and so it is going to be analyzed and evaluated by every stakeholder with an interest in policy, economics, business, or even just dining out across the country.
The whole practice of tipping is condescending, demeaning, inconsistent, unreliable, and from an economic perspective, merely shifts risk from employers to employees, who are all too often unable to influence the fiscal behavior of customers. The elevated earning potential of a few anecdotal tipped positions or businesses cannot stand in for the wide variety of workers and employers who are reliant on the model, and left unfairly vulnerable to it.
America has an obsession with treating every problem by prescribing economic incentives and penalties, despite evidence that this doesn't actually work. From tax policy to medicine, we want the promise of a little bonus to transform human behavior and thereby the entire country. It won't. These "tips" are not some skeleton key to unlocking productivity, quality, and superiority.
Joe's Crab Shack has done much more than change its policy: it has shed invaluable light on a critical issue in the United States that has long been ignored, justified, or tolerated without scrutiny. Tipping is an archaic and destructive institution that deserves to be abolished. Joe and his Shack are on their way to being the Bunker Hill in the war on tipping tyranny.
