

When a night at a restaurant or bar finally comes to a close, most Americans engage in an instinctive ritual. They dig into their wallets, fiddle with their smartphone calculators, and then decide how much money to give their server or bartender for a job well done.

Tipping, while practiced around the world, assumes a unique role in America, one to which most diners are obliged, because the United States is one of the only countries that allows businesses to offload the burden of paying workers a fair wage to their customers. And though construed as a fair way to encourage hospitality and reward good service, tipping’s roots are in racialized exploitation, while recent data shows that it continues to be, at its core, racist, sexist, and degrading.

For many, it’s time for tipping — or at least the wage laws that allow it to penalize servers and diners — to end. Academics and advocacy groups are starting to push to pay servers the same minimum wage as in other fields, rather than having servers rely on the so-called tipped minimum — the low hourly rates (currently set at $2.13, federally) that servers are paid by restaurants in some 43 states — which forces them to rely on tips for a majority of their income.

Until that day, tipping continues to be the source of a power play between workers, employers, and diners. In 2015, Union Square Hospitality Group’s Danny Meyer began eliminating tipping at more than a dozen of his restaurants in favor of generally fixed hourly wages, paving the way for other restaurateurs to implement gratuity-free service, with varying degrees of success. (As some have noted, Meyer was not the first restaurateur to do away with tipping, but the shift at USHG is arguably the catalyst for much of the current conversation around going gratuity-free.) Most recently, the Trump administration proposed legalizing tip pools again, which would effectively transfer the ownership of tips from servers to employers, who could then distribute the money as they see fit — opening the door to pocketing tips entirely, as well as other, more subtle forms of wage theft — prompting an outcry in the industry and beyond.

Against this backdrop, Eater analyzed recent data from the U.S. Census and Bureau of Labor Statistics, the Equal Employment Opportunity Commission, the Department of Labor, and academic research and advocacy groups like Restaurant Opportunities Centers United in order to understand the unique impact tipping has on the American dining community. The results are clear: The case against the current tipping system in America is stronger than ever.

Tipping Reflects and Amplifies Racial Inequality

Source: Eater analysis of Current Population Survey data, courtesy of the Eater analysis of Current Population Survey data, courtesy of the Integrated Public Use Microdata Series

American travelers brought tipping to the United States from Europe shortly after the Civil War. Once home, they flaunted their newfound European etiquette by offering gratuity to unskilled laborers, many of whom were former slaves and immigrants. The practice spread, and by the early 1900s, some employers saw it as an opportunity to avoid paying wages by encouraging customers to tip workers instead. The Pullman Company, a train service that primarily employed African-American porters in the late 1800s and early 1900s, was notorious for openly underpaying its workers, forcing them to rely on tips. Despite civil rights battles and a brief ban on tips in some parts of the country, tipping became normalized in America. Many tipped workers, including restaurant workers, were even excluded from the country’s first national minimum wage laws until the mid-1960s, when the first “subminimum” wage — a wage for tipped employees set below the standard minimum wage, now referred to as the “tipped minimum” — was established. While the unskilled labor force has since diversified, employers of tipped workers can still avoid directly paying them a living wage, and tipped workers of color still suffer disproportionately under the current system. As studies, like one Cornell University report, have shown, some diners let race, gender, and attractiveness impact how much they pay servers: Most dramatically, diners of all races tend to give higher tips to white servers and lower tips to black servers. An Eater analysis of U.S. Census and Bureau of Labor Statistics data (see methodology below) showed that white servers and bartenders across all restaurant types make more in tips than most other racial groups: Between 2010 and 2016, the median estimated hourly tip for white servers and bartenders was $7.06; Latinx (who include people who identify as either black, white, Asian, or multiracial), earned $6.08 an hour in tips; black front-of-house workers made a median hourly tip of $5.57; and Asians earned a median hourly tip of $4.77.

Tipping Encourages Racial Profiling

Servers have biases too, and tipping unleashes them. A growing body of research shows that racial profiling over expected tips — or a lack thereof — can encourage hostility and flat-out discrimination toward diners of color, especially black diners. “There is a good amount of evidence that indicates that some servers do stereotype,” Zachary Brewster, a sociology professor at Wayne State University and author of a number of studies on racial profiling in restaurants, told Eater. “In most cases the form of discrimination is quite subtle.” For instance, servers may provide slower service to black diners — or try to turn the table over more quickly. Brewster’s body of research, which includes surveys and interviews with servers, found that in some restaurants, servers actively avoid waiting on black customers because they believe that they would lose out on tips. In some instances, restaurant staff played “games” in which servers tried to stick one another with black tables, or developed code words to warn each other when a black table is seated. This behavior was sometimes allowed by management, Brewster found. In one 2012 study, Brewster surveyed 200 servers from “bar and grill”-style restaurants. He asked the servers about their perceptions of black diners, and whether they’d seen discriminatory behavior by other employees. Most respondents admitted to providing different levels of service based a diner’s race, or witnessing another server do so, at least “sometimes.” In similar studies published by Brewster and colleagues, servers who admitted to profiling black customers justified their actions by claiming that black patrons demanded more and tipped less. Another study found such sentiments published on online message boards for waiters. (Earlier this month, Applebee’s fired employees at a location in Missouri for racial profiling.)

“ I will not take Black tables unless I have no other option; call me racist, but I also walk out with more money than the people who end up with them.” Source: "Race Differences in Restaurant Tipping: A Literature Review and Discussion of Practical Implications," by Michael Lynn

Research does show that black diners appear to tip less than white diners — by roughly 3 percentage points — but the reasons are nuanced, Brewster said. One explanation is that African-Americans are generally less familiar with the unwritten rule that a 15 percent tip is the minimum. Other researchers speculate that black diners may have less exposure to dining out growing up — according to the Bureau of Labor Statistics expenditure data, black households spent an average of $2,228 on food away from home in 2016 compared to $3,243 from white households — and thus may be less acquainted with sit-down restaurant norms, he added. Black servers are also underrepresented in front-of-house positions, leading to less familiarity with the direct role that tips play in a server’s income. “So they are less likely to learn this tipping norm,” Brewster said. Still, Brewster added, servers often exaggerate the tipping differences between black and white diners in order to justify discrimination. “This exaggeration is a function of racial prejudice and working in a racialized workplace,” he said. Prejudice over tipping can also become a cycle that perpetuates itself, as law professor Lu-in Wang described in one report, published in the Virginia Journal of Social Policy and the Law: “Some restaurant servers recognize that stereotypes regarding customers’ tipping habits can set in motion a self-fulfilling cycle by affecting the service they provide, and in turn, the tips they receive from those customers.”

Tipping Widens Opportunity Gaps Between White Servers and Non-White Servers

One straightforward explanation for why white servers earn higher tips than servers of color is that they are disproportionately employed at fine-dining restaurants — defined by the restaurant worker advocacy group Restaurant Opportunities Centers United as “full-service restaurants with a price point per guest of $40 or more including beverages but excluding gratuity.” According to a 2015 study by ROC United, which analyzed U.S. Census Current Population Surveys and surveyed 133 fine-dining restaurants, white people make up 55 percent of all restaurant servers, but comprise 78 percent of the total number of servers in fine-dining restaurants. Additionally, fine-dining servers are more likely to be men: While women make up 52 percent of restaurant workers, they represent only 43 percent of fine-dining front-of-house workers. People of color are more likely to be employed in “back-of-house” or non-tipped jobs — like dishwashers and line cooks — where they often find it difficult to rise up in the ranks to better-paid tipped positions in the “front of the house,” in part because of implicit biases, according to Teófilo Reyes, research director with ROC United. Here’s how one restaurant owner described so-called successful employees in ROC United’s 2015 report on race and gender in restaurant workplaces: People who have had really good parenting, where there’s been boundaries, and encouragement, and positive feedback, do the best. And people who come from broken homes, and don’t understand boundaries, who don’t understand punctuality, or make bad choices, or have never really faced consequences for their choices do the worst … this is very much a performance-based environment. The report argues that such sweeping generalizations are welcome mats for bias, having an impact on who managers see as being fit for higher-paid jobs, disadvantaging people of color. The resulting lack of representation in tipped and higher-paid restaurant positions inherently discourages people of color from applying for them, according to Reyes. “There’s a type of self-selection that occurs if people think they’re going to be rejected,” he said. The fine-dining opportunity gap between white men and everyone else has far-reaching consequences: As data from FiveThirtyEight showed last year, on average, workers in casual dining restaurants have to work nine times harder than their counterparts in fine dining to reach the standard minimum wage (turning four tables an hour, versus 0.2 tables).

Tipping Fosters High Sexual Harassment Rates in the Restaurant Industry Compared to Other Industries

Sexual harassment in the food industry is pervasive, and tipping plays a role in perpetuating it. A 2014 ROC United study showed that nearly 80 percent of female restaurant workers reported experiencing some sort of sexual harassment from customers at work. The food service industry accounts for more sexual harassment filings (referred to as “charges”) with the Equal Employment Opportunity Commission than any other industry, according to EEOC data (many filings are also unassigned to any particular industry, while sexual harassment may be underreported in others). According to Reyes, one reason is that tipping creates a power dynamic in which servers adopt a mentality that “the customer is always right." In a situation in which servers are actually working for diners and their tips, rather than for their employers’ wages, they may be more vulnerable to abuse. That notion is borne out in data showing that women working in restaurants in states with lower minimum wages for tipped employees are twice as likely to report experiencing sexual harassment than those who work in states that have one minimum wage for all workers. Both male and female servers working in tipped minimum wage states report higher rates of sexual harassment — women, for instance, were three times more likely to report being told by management to dress “sexier” or to alter their appearance. As the country moves forward in its discussion about sexual harassment in light of the #MeToo movement, tipping customs expose the industry as one of the most affected industries outside of Hollywood..

Tipping Encourages Worker Exploitation

$39,800,000 amount of back wages owed to food service workers (Department of Labor wage data)

The restaurant industry suffers from an endemic wage theft problem. According to the Department of Labor, the food services industry is one of the biggest violators of wage and labor laws; in 2016, the department found that the industry owed $39 million in back wages. Wage theft takes many forms: not paying for overtime work, failing to properly distribute tips, and withholding paychecks, among others. Tip-pooling, the practice of collecting and re-distributing tip revenues among the entire staff, has long been contentious, with the debate leading to a ban by the Department of Labor under the Obama administration in 2011. A new tip-pooling proposal under Trump’s labor department takes the opposite stance, arguing that employers should be able to collect worker tips and redistribute them as they see fit — to back-of-house workers, for instance. Critics say that the bill, as proposed, will give restaurant owners a legal opportunity to keep tip revenue, rather than actually redistributing it back to workers. The best way to fix the broken institution of American tipping, Reyes argues, is to pay restaurant servers like any other non-tipped professional. “There are certainly plenty of countries around the world where they look at restaurant workers as professionals, they treat them like professionals, and they pay them a professional wage,” Reyes said. “I think we can move to a more professional system.” Some restaurants have already attempted an entirely tip-free system, and the results have been mixed. After Danny Meyer fully eliminated gratuity from his restaurants — a move he called a win for back-of-house staff and diners — 40 percent of his long-time front-of-house staff quit. Menu prices were raised, with the additional revenue redistributed in the form of higher base wages for all employees; a lawsuit against Meyer and other restaurateurs alleges that after the switch to a gratuity-free model, money was not fairly distributed between the restaurants and front-of-house staff. Ultimately, an equitable tipping system will require getting rid of the subminimum tipped wage and paying servers, bartenders, and other service employees the standard minimum wage, while allowing them to receive bonuses for exceptional service. However that happens, everyone involved in America’s restaurant culture — owners, servers, and diners — will have to play a part.

Methodology

To determine the median hourly tip rate for American servers and waiters by race from 2010 to 2016, Eater looked at Current Population Surveys released by the Bureau of Labor Statistics and the U.S. Census. The surveys are conducted monthly, with 50,000 to 60,000 households queried per month. Eater used data from 2010 to 2016 surveys, filtering responses from servers and bartenders (occupation codes 4040 and 4110), then filtered the results further to show only workers who made an hourly wage and “usually receive overtime, tips, or commissions” — three additional forms of income that the CPS survey refers to as one group. (Also filtered from the results were people who worked more than 40 hours a week, didn’t make an hourly wage, and or who provided “non-universe” responses, which indicate that for one reason or another the question did not apply to the respondent.) These filters left a dataset of servers and bartenders receiving hourly pay and some form of additional commission, overtime, or tips, which were assumed to be tips. The data included the year of the survey, weekly earnings, number of hours worked per week, hourly wage, gender, race, and weights for earnings and wage values. Eater converted the overall weekly earnings and hourly wages to 2016 dollar values using the Consumer Price Index purchasing power formula, then multiplied the reported number of hours worked by the reported hourly wage to determine weekly hourly wages. Eater then subtracted the weekly wage value from the overall weekly earnings value to calculate tips each respondent received. That number was divided by the number of hours each respondent reported working to determine the amount in tips the respondents made per hours worked. To find the median hourly tip for all respondents, Eater filtered any result that indicated no additional income or tips were made, then calculated the weighted median of the remaining hourly tips (the CPS provides weights for weekly earnings data, indicating the number of people a respondent actually represents, given his or her overrepresented or underrepresented demographic group).

Vince Dixon is Eater’s data visualization reporter.

Visuals and Design Manager: Brittany Holloway-Brown

Special thanks to Daniela Galarza and Ryan Sutton