mountaindewslave said:
Raistline said:
A few quick thoughts on the Tipping conundrum within the US.
1) Wages made from tipping do not get claimed for taxes, the govt requires 8% of the employee's total receipts added to your W-2 (reported wages for you Non-US people). With the average tip in the US being closer to 12% of total receipts. This allows the individual to have that extra 4% to not be claimed on their W2. Legally the individual needs to claim all tips but they just don't, and the govt does not force them to. For example a person tends bar and sells exactly $100 worth of drinks. They get tipped 15% so they make $15. The company has to report $108 of wages on the W-2. The bartender walks away with $7 on non-taxed income.
2) If you remove tips and increase wages the same bar will increase the price of alcohol. Let's say they only increase it by 8%, the amount they must add to a W-2. So a $10 drink now costs $10.80. This increase in price will reduce total sales. The bar loses money, but the people buying alcohol are actually paying less money because they no longer tip. Where they would normally tip 12% and the drink would cost them $11.20 they are no saving 40 cents per drink. But the average person will not see this and will only see higher prices and choose not to buy as much.
3) following the last example, price go up only enough to cover government required W-2 submissions. The increase in price lowers sales. Now add on the increase of money for wages to the bartender, which will be far in the 20-30% increase so that the pay increase at least covers what the employee is missing in tips, and now we have a company that is losing money very fast. Even if they do brilliant marketing and increase business they will still likely lose money, go out of businesses and the bartender now has no job.
As much as it sucks, changing the tipping structure in a drastic fashion will not work. We are basically stuck with it, it is its own trap. If we change the model businesses that rely on it will die. If we don't change it people will continue to get screwed.
My sister is a long time bartender and and very liberal. However, she is not in favor of changing the tipping model, nor is she in favor of minimum wage increase in her field. Changing either the minimum wage or the tipping model of business will effect her negatively. In fact, our area has had minimum wage increases and the increase has caused drink prices to go up, and as a result her tips, and thus wages, have lowered since people are ordering less to drink. |
because your sister is a bartender, a job where she's serving drinks and getting tipped out by drunk people. Of course she doesn't mind it.
The average server can have extremely hot and cold days. You act liike the tip processs can't be done away with because of the aforementioned things in your post- of course it can; if you literally get rid of the tip system entirely and just have restauraunts pay their employees regular hourly salaries.
you hear all this nonsense about how it will massively raise food prices- but newsflash: every single retail type of business on the planet that's not FOOD somehow manages to survive without a tip based payment system from customers. I also will point out that generally speaking restauraunts have fantastic margins in terms of what they're paying for the food/ingredients versus what they mark them up for as in a meal
|
Every other retail business on the planet increases prices of their products when their bottom line is affected. Retail stores, depending on their size, carry hundreds, to hundreds of thousands of different types of products that they can increase price on. This allows them, for example, to increase the overall price for everything by just a few pennies and recover costs of increased wages without having a negative impact on their bottom line.
Ther restaurant and bar business is a much different beast. If a restaurant increases pay to accomadate tips the effect on the bottom line is massive. IS someone is paid $4.25 an hour and that person brings home an average of $100 a day that which amounts to $134 of wages each day. Now turn that into hourly wages and that person now has to be paid $16.75 an hour for equivielent pay. Again, we have this restaurant with 15 people working on tip wages averaging 30 hours a week per person. Now in this isntance the business has to find a way to recover $7,537.50 worth of lost revenue. If this is a modern restaurant they have about 30 different menu items that they can use to spread the cost around. For easy numbers sake, Let's just say that this company can afford the loss of $4,537 in weekly revenue and still make a decent amount of money, mostly to make the math easier. So the company now has to spread $3,000 of loss each weak over the 30 menu items. Let's also say that they average 100 entrees a day, accounting for higher volume on weekends and lower volume on weekdays. This still means that the company has to increase the average price of every menu item by at lest $1. If they could not afford the $4,537 loss of revenue and need to break even with current revenue the average cost increase per item would be $2.
This may not seem like much of an increase at first but it will have an impact on total sales. If you go to a restaurant where you are used to paying $12 for a burger and fries, and then suddenly you now have to pay $14 dollars you are less likely to go as frequently. The fact that the restaurant no longer allows tipping would not enter the average persons mind. All they will see and consider is the upfront price.
