Photo by Sam Truong Dan on Unsplash

My partner and I were on vacation over the holidays. It was great, we had a lovely time, but there was one thing I hate in abundance—tipping. Within an hour or so of landing we’d already tipped our driver, a server, and a barista. During the length of our stay it was hard to go out and do anything without tipping multiple people along the way. We’d be expected to tip every single person who took an order, brought out food, or made a drink, along with each of the housekeepers, tour guides, the instructors, captains, etc.

On the third day we went parasailing, a one-hour boat ride with five other groups where we’d be in the air for eight to ten minutes. Taking us were two men who looked to be in their early 30s. When we boarded and sat down there was a sign directed at us which read:

“If you came to ride or fly / and you don’t want to see / two grown men cry / please tip your crew.”

And that was really the breaking point for me. Part of it was that they were basically, albeit playfully, saying you’re a shitty person if you don’t tip them. Moreover though, if you have to put up a sign informing me that I should tip, you shouldn’t be working for tips. Because it means, sans sign, the employees wouldn’t get enough tips to live on, and in that case the employer would just have to pay them a wage directly, which is a solid system the vast majority rely on get by. When you get down to it, why should I tip these two? I know it sounds petty. But if I really should tip them the answer should also be obvious. They’re not making less than minimum wage like restaurant servers and it’s not like the business is operating on razor thin margins.

One hour of parasailing cost us about $50 each and the boat that day held twelve passengers, which amounted to $600 in net revenue for our trip. They also sold an SD card with photos from your ride for another $50 even. Two groups from our trip bought the photos, brining the total up to $700. They do five trips a day six days a week and three trips on Sunday, bringing it to 33 trips per week. Where we traveled is warm year round so this business doesn’t particularly have an off-season, though I imagine some months are more popular than others.

Even estimating more conservatively, accounting for bad weather or other factors that cut down on fares, that they average $500 per trip, do 30 trips a week, and work 48 weeks a year, that brings it to a net revenue of $720,000 per year. Oh, and they run two boats at a time, so for arguments sake let’s say it’s a cool $1.5 million they bring in per year parasailing. And that’s just one facet of this business’s operation. They do snorkeling, eco tours, sunset cruises, you name it. It’s easily a multimillion dollar company whose only physical assets are a dozen boats and a tiny office by the docks.

Now, I don’t know exactly what it costs to run their business, but even accounting for overhead like licensure, liability insurance (though all their customers have to sign away any and all right to sue under any circumstance), property taxes, and so on, it certainly seems to me though that they’re making enough in revenue to pay a fair wage to the two employees we were expected to tip. Nevertheless, there they were asking for it. Here’s a quote from the website of a similar parasailing company:

“Our crew works very hard to ensure your experience is GREAT! Like all in the service industry, they do work on tips. A 15–20% tip is appreciated.”

Retail employees work very hard but if you bought a TV and then at checkout the management told you, “Hey you should give us 15% to 20% more money because we don’t pay our employees very well,” we’d all be furious with that experience. But suddenly if we’re exchanging money for a service rather than a product it becomes just that. Going back to my estimate of how many passengers they serve each year, an extra $8 per person for one boat is maybe $115,000 per year. If they need to bring in that much more per year to pay these two a living wage that’s fair, I won’t argue it, but baking that price into the cost of the trip would be a better experience for the customer. You see the full cost upfront, you pay it, you get the thing. There’s none of the guilt, no stopping at an ATM or breaking larger bills, it’s just less to worry about.

The only reason the operators of these services are putting up signs to pressure everyone to tip is because it makes them, the operators, more money. You get to advertise a lower cost than the actual final price, you get to scale your employees’ pay with the day-to-day rate of business, and you get to pay less taxes on those wages if they don’t report all their tips.

Even in restaurants where tipping and tipped employees are ubiquitous, this socially mandated expectation of tipping sucks for customers.

For one of the last dinners on our trip we stopped in a small, casual restaurant. It took more than five minutes to even be greeted, at which time we were ready to order. I asked for water but ten minutes later I had to flag the server down to remind them. The next time our server visited our table was after we finished our meals and our plates had been stacked for fifteen minutes. Throughout our experience this server was not in the slightest degree apologetic or even remotely personable. It just felt like we were an inconvenience to them. The service, in short, was bad. Easily one of the worst I’ve ever had.

Even so, I stressed over what sort of tip to leave. I frankly wanted to leave nothing, but at the same time I was plagued with doubt. If I wasn’t expected to leave a tip at all the experience would have been so much easier to write off. The restaurant was busy, maybe someone called out, they could be overwhelmed, whatever. The food was good and the poor service just a passing frustration. Instead I’m now tasked to evaluate and reward their job performance appropriately, and unlike their employer I have no idea if any of the extenuating circumstances I imagined are true or not. It could be they just did a bad job and don’t care one way or the other.

In the end I left about 10% with a little note saying we were disappointed. I still don’t know if it was the right call. Looking back on it I’m more inclined to leaving nothing. Some argue you have to leave 15% regardless because otherwise the server has pay for you when they tip out to support staff (this is not how it worked when I was a server though.)

Furthermore, tipping is a gateway for all kinds of implicit bias and that sucks for employees and job-seekers.

In an interview for the Freakonomics podcast, Michael Lynn, a Cornell professor in Food & Beverage Management who has studied tipping extensively, said that, “Blondes get better tips than brunettes. Slender women get better tips than heavier women. Large breasted women get better tips than smaller breasted women,” and that, “Women in their 30s get better tips than either younger or older women.” He went on to say that diners on average, “will tip a white server more than a black server,” and that’s, “even controlling for perceptions of service quality.” Lynn described tipping as, “discriminatory,” and suggested, “it’s not inconceivable to me that there will be a class-action lawsuit on the part of ethnic minority waiters and waitresses claiming discrimination in terms of employment.”

The nature of why, when, and how much we tip is a squishy gray area that leads all of us to make poorly informed judgements clouded by bias. When people rely on these tips for a living wage it’s subjecting their very existence to that bias.

Not to mention a culture of ubiquitous tipping often leads to corrupt and criminal behavior, which just sucks all around.

Tip pools for one are frequently misused when tips are funneled into the hands of non-tipped employees or even owners. In the last restaurant I worked the salaried private event managers would often get a portion of cash tips, especially a large one. And because what the restaurant pays out is so incidental to their employees’ take home pay (the federal minimum for tipped employees being $2.13 an hour) employees can be robbed of it without it being immediately apparent. Servers, busboys, and other tipped workers are often told to work off-the-clock or aren’t paid for overtime after forty hours in a week. All it takes is a quick search for endless examples.

Mason City restaurant must pay employees over $100,000 in back pay Nov 28, 2018 — MINNEAPOLIS, Minn. — A North Iowa restaurant will have to pay back wages to 26 employees after an investigation by the U.S. Department of … 34 area restaurants owe more than $1.3 million in back wages to … Mar 30, 2012 — More than $1.3 million in back wages are owed to nearly 500 restaurant employees at 34 popular local restaurants, including 15 Not Your … El Paso Mexican Grill ordered to pay over $650K in back wages for … Jul 16, 2018 — A Tex-Mex restaurant with a dozen locations in the New Orleans area has been ordered to pay more than $650000 in back wages to 567 … El Paso Mexican Grill owes $654,366 for violating multiple labor laws, including:. Roanoke area restaurants and owner to pay $3 million back in wages … Nov 15, 2017 — Six Roanoke area restaurants have been ordered to pay back $3 million in wages and damages to workers due to the violation of federal labor …

And these are the rare minority of cases brought to justice. It’s difficult to get a lot of employees together and gather all the evidence to bring class-action suits. That is, if you’re even legally allowed to bring such a suit. More business, restaurants included, are requiring employees to sign away their right to collective-action lawsuits as a condition of employment, especially after the Supreme Court recently ruled in favor of their use. If you don’t get a class action suit together it’s going to be nearly impossible to retain an attorney for the few thousand dollars an individual server or busboy was cheated out of.

If that’s not bad enough, according to data compiled by the US Equal Employment Opportunity Commission, more sexual harassment claims in the U.S. are filed in the restaurant industry than in any other. A 2014 report from the non-profit Restaurant Opportunities Center United found that, “nearly 80% of women and 70% of men experienced some form of sexual harassment,” from co-workers and customers alike. The organization attributes such staggering figures to the fact that:

“Absent a stable base wage from their employers, tipped workers are forced to tolerate inappropriate behavior from customers on whose tips they depend to feed their families, and from co-workers and management who often influence shifts and hours.”

With the advent of smart POS systems like ShopKeep, Square and Revel, a tip jar to the side of the register is being replaced by the need to either tip or affirmatively select, “no tip,” while checking out, making it harder for any of us to just say no. Some estimates of how much Americans tip put it at $40 billion per year. As service industry and gig economy jobs continues to rise, more and more people will rely on whims and biases of tipping. If we could redirect that money into steady, consistent pay we’d all be better off.