Would You Stop Tipping if Minimum Wage Is Increased?
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I realize that minimum wage can be an incredibly hot button issue, politically speaking. There seems to be a myriad of arguments on both sides of the issue and my point is not really to get into that. 🙂
With that said, the minimum wage issue has been discussed quite a bit in recent history. The discussion spiked with President Obama mentioning his desire to increase the national minimum wage in the State Of The Union address back in February. Numerous states are either voting to increase the minimum wage or have enacted a raised wage already. That said, there is an interesting situation taking place in Washington state that I was reading about in this NBC News article recently.
What is at Issue with this Minimum Wage Increase?
The article discusses how Washington would go about increasing its minimum wage to $15 per hour for all workers, including tipped servers. This would mean that servers in restaurants would be making the same higher wage as those who work in what would be considered more labor intensive or “skilled” positions.
To make a long story short, the article describes how this could create an issue between lower middle class individuals and the working class who serve us and them food. Essentially, you have individuals working in fields such as heavy machinery that are saying they won’t feel the need to tip servers if this increase really does come to pass. They feel that because they don’t receive tips for their work then why should someone else who is making the same wage as they are get tipped?
The issues of class aside, I think a lot of this goes back to our tipping culture. Here in the States tips are pretty much expected. Heck, we even see tip jars at coffee and ice cream places – everyone seems to want a tip. However, there are many other cultures who do not deal with tips for one reason or another.
Are Servers Entitled to Tips?
There was a quote in the NBC News article that stuck out to me:
“This is the age of entitlement and a wake-up call is badly needed.”
I agree, on many levels, that we are in an age of entitlement. Many believe they deserve something for just showing up. I think most of us are guilty of that on some level and a sense of entitlement is important to guard against for many reasons.
However, a recent study from the Economic Policy Institute shows that 17% of tipped servers live below the poverty line. Just think about that for a moment…nearly 20% of the people serving us food are living in poverty and maybe even living on food stamps! Regardless of your persuasion in the minimum wage debate that should be just a tad bit eye opening. I believe so much of this goes back to the wage many servers earn, $2.13 per hour, which also has not been increased since 1991. So, while some may make decent money through serving the only guarantee they have is to get minimum wage if the tips don’t make up for the difference.
Going back to the entitlement issue, it’s a hard one to answer, but I do believe it’s something requiring serious thought in light to the wages many servers make.
Does Server Pay Impact Your Tip?
The article brought up an unscientific poll taken of about 3,200 people who were asked if they’d continue to tip if servers made $15 per hour and the resounding answer was no. I can’t say emphatically that I’d say no, but it’s something that I could potentially see crossing my mind.
Tipping is engrained in our culture and I believe many will give the assumed 15-20% tip in most occasions. Speaking personally, that is what I tend to tip. I realize the server is there providing a service for me and they should be compensated as such. There have been a good number of times I’ve tipped very generously if they’ve provided great service and can only think of a handful of times where it was considerably less due to horrid service.
Going back to the issue of an increased minimum wage and tipping, I believe this presents an interesting quandary as to what the expected norm would become. I don’t know that I’d necessarily stop tipping altogether, though I guess I couldn’t rule it out at the moment.
What are your thoughts? Would you stop tipping servers if you knew they were making something like $15 per hour? Do you think the minimum wage should be the same for all workers across the board?
Photo courtesy of: Robert Neff
John is the founder of Frugal Rules, a dad, husband and veteran of the financial services industry whose writing has been featured in Forbes, CNBC, Yahoo Finance and more.
Passionate about helping people learn from his mistakes, John shares financial tools and tips to help you enjoy the freedom that comes from living frugally. One of his favorite tools is Personal Capital , which he used to plan for retirement and keep track of his finances in less than 15 minutes each month.
Another one of John's passions is helping people save $80 per month by axing their expensive cable subscriptions and replacing them with more affordable ones, like Hulu with Live TV.