Would You Stop Tipping if Minimum Wage Is Increased?

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minimum wage

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

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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.

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  • Kylie Ofiu says:

    Coming from a culture that doesn’t tip, I am really glad to see the potential minimum wage increase in the USA. Everyone deserves a decent wage. I tip generously when in the USA because our wages here are much higher and the service I get is always fantastic.

    So as a tourist, I’d still tip. If I lived there and that was my wage too, I’d probably stop tipping or only tip for really good service.

    • John says:

      Thanks for your input Kylie! I am glad to see discussion, and action, around it as well. I do hope for some changes to it, though I think it’ll take more than an increase to equalize some things.

  • DC @ Young Adult Money says:

    I think we’re going to have quite a few issues like this if the minimum wage was raised to $15 across the board. Restaurant owners would be forced to price that increase into the food/menu prices so I think we’d start to see tipping become a thing of the past.

    • John says:

      That’s a great point DC and one I didn’t bring up. I agree that we’d likely see restaurant owners be forced to raise their prices which would ultimately come back to impact the server by not making as much in tips, as well as us for not being able to eat out as much.

  • Laurie @thefrugalfarmer says:

    That’s a tough call, John, but I can see how tipping would go by the wayside if the servers made $15 an hour. I know a lot of the servers just in local restaurants like Applebees make more than $15 an hour with tips, so, that’d be too bad for them.

    • John says:

      I agree, it is a tough call. I know not every server makes good money with tips, but you really can depending on the establishment. It could definitely serve to impact them in the long run.

  • Travis @debtchronicles says:

    Yes, I would continue tipping – a tip is supposed to be something given for a job well done. I would hope that this 20-30% nonsense would cease though. If employers were forced to pay their employes a decent wage, they would likely then pass along that extra cost in the form of increased prices. THEN, the model could go back to what it’s supposed to be – employers PAY their employees, and the tip is again simply something given for a job well done – NOT the primary source of the service worker’s income.

    • John says:

      That’s a great point Travis and sort of inline with what DC had pointed out. I think it could impact many of us – restaurant owners, servers and clients. I’d still likely tip, especially for a job well done, but would probably be somewhat lower.

  • Brian @ Luke1428 says:

    Server pay does not impact the amount of tip that I leave. It’s all based on whether the person served me well. If a server’s pay is increased, it will be interesting to see if the quality of their service diminishes or not. If they believe they might not receive a tip, why serve the customer so hard? My wife was a server many years ago and she learned quickly that the quality of service greatly impacted the amount that was left for her.

    • John says:

      I agree, I wonder how it would impact service. You bring up a good point though, and one I left out of the post, the article actually shared a study that said it was the social connection between the server and diner that impacted tip the most and not service. I don’t know if that’s necessarily true, but it was interesting to see.

  • Liz says:

    I know when we were traveling in Greece last year we were at restaurants all the time. It is not customary to leave tips like we do in the US (15-20% roughly). So I think a lot of other countries already have their servers earning min wage or more. We still left fairly decent tips.

    • John says:

      I’ve seen the same thing when traveling in Europe. I do believe their wages, in general, were better but I still tipped. It just feels really odd not to. 🙂

  • GamingYourFinances says:

    My wife worked in the service industry so we’ve always been strong tippers and I would expect that to continue. Even at $15/hr servers are put through hell some days and so I wouldn’t mind giving them a bit extra. Would it be 20% every time? Probably not, but I’m sure we would still tip our servers.

    • John says:

      I agree, many are put through hell and back and most work to earn that tip. With how low their wages are as it is, I definitely understand it. I believe I’d still tip for a job well done, but would probably not be 20% every time.

  • Michelle @fitisthenewpoor says:

    I worked as a waitress while in college and I could not believe the amount of people who did not tip (even if I busted my butt for great service). Greedy, greedy people can make such a difference.

    When I went overseas, I would be amazed to see the culture of not tipping in progress. Even though they were not being tipped, we still got great service. So the idea that it would diminish quality of work is ridiculous. A job is a job. I do mine well despite not getting a service tip. I would expect service staff to do the same.

    • John says:

      We have a close family friend who has worked as a server for years and she has said the same exact thing. It’s a shame that greedy people can make such a difference and be downright miserly when it comes to recognizing a job well done.

  • Shannon @ Financially Blonde says:

    Both me and my husband worked in the food service industry through high school and college and tipping is an absolute necessity to making ends meet based on current salaries. And I disagree with the “entitlement” quote. The word TIP actually means “To Insure Promptness” and it has everything to do with good service which is earned by working hard not through entitlement. All that being said, though, if servers were making $15 an hour, it would definitely change how I feel about tipping.

    • John says:

      I agree Shannon, tips are a necessity to make ends meet for most, if not all, servers. That is especially the case when you look at the wage they’re being paid by the restaurant.

      I think in light of the tipping and wage issue, I would agree with you on the entitlement quote as servers are busting their butt and paid little and the tips are a means to help them make ends meet and recognize a job well done. Taken outside of this singular issue though, I believe the quote is spot on.

  • Daisy @ Prairie Eco Thrifter says:

    I think tipping will always be the norm because it’s been a practice that has been around for ages. I can’t imagine who would want to be the first to start the non-tipping trend. It’s interesting that there are statistics that show that so many servers are below the poverty line.I read somewhere that they often make well over $100K/year if they work full time when you factor in tips. It likely depends on what part of the country you live in and what restaurant/establishment they work in though.

    • John says:

      I agree that we’ll likely always have a tipping culture here in North America. I know I wouldn’t envision being the one starting it as I have no problem tipping those who’ve done a job well. I think they can make over $100k, but I bet that’s the exception as opposed to the norm. I would imagine you’d have to work in a higher end restaurant for that generally to be the case.

  • Natalie @ Financegirl says:

    Very interesting topic! Personally, I would still tip if minimum wage increased. However, if there was a culture change and everyone stopped tipping, then I probably wouldn’t tip. Now, even with a wage increase, I think it would be common practice to tip people in the service industry and unless that changes, I would feel awful not tipping!

    • John says:

      Thanks Natalie! I would still likely tip as well, it might be somewhat lower but I’d still tip for good service.

  • Holly@ClubThrifty says:

    I don’t mind tipping for good service. Food service jobs suck! On the other hand, I might stop tipping if servers started getting paid $15 an hour. That’s a lot more than I ever made in the food service industry.

    • John says:

      Neither do I. As I see it, they are serving me so they deserve to be tipped. I might lower it if they were paid that much higher, but would still tip.

  • Tina Mollett says:

    Not for good service. I am in the service industry and do rely on my tips. I think people should for personal service.

    • John says:

      I agree Tina, you should still tip for the service. The way I view it, you as the server are doing something for me and, as a result, deserve to be tipped for doing so.

  • Kathy says:

    In response to an earlier comment, of course prices at restaurants will go up. How could they not? Either prices will go up or the number of employees will go down. And if the minimally skilled employees suddenly start making twice as much money per hour, do you really think that employees already earning higher pay would not also want a raise. I know I would. If I’m a bookkeeper earning $15 per hour and suddenly the maintenance people start earning that much, I’m going to ask for $20. This is one of those issues where the intentions are noble but the outcome has far-reaching consequences.

    • John says:

      I agree Kathy, we would see restaurant owners be forced to raise prices. They’d either have to do that, or deal with not making as much money (or potentially losing money) and we both know that won’t be something they’re ok with. Great point that it can, and likely will, have other far re.aching consequences for most of us

  • Tonya@Budget and the Beach says:

    I would definitely still tip. We tip on things like hair cuts and other things where the worker makes a decent income, so why not with service industries like restaurants?

    • John says:

      That’s a great point Tonya! We do tip for things like that, even though they might make a decent wage. As I view it, they’re doing a service for me that I’m not willing to do myself so I’d still tip at some level.

  • Retired by 40 says:

    I would tip significantly less – say, $1.00 per person if minimum wage went up to $15 per hour. I used to work as a server, so I know what it is like, but honestly, I made fantastic money serving….more per hour than I make now as an accountant.

    • John says:

      That’s interesting. What kind of restaurant were you working in? I know that I’ve heard that those in a higher end establishment can make good money, but don’t know how far that reaches.

  • Grayson Bell says:

    To be honest, I would stop tipping unless someone blew my socks off with their service. I only tip because that is how they make a living. You can’t live on $2 an hour. It just won’t work. If you don’t tip them, then they don’t eat. If they are making $15/hour, then they don’t need the tips. I don’t even like th concept of tips.

    • John says:

      I agree, you can’t do much of anything on $2 per hour, though I think I would still tip at some level for a job well done.

  • Lauren says:

    I would not stop tipping. I tip well when the service is good, and I see no need to stop doing that, regardless of how much the server is earning. Some states already pay servers and bartenders minimum wage, but that never crossed my mind when I’m traveling and dining out. Food service jobs stink, and tips are pretty much the main thing that makes them appealing!

    • John says:

      I read that as well Lauren and is likely would be the last thing on my mind. If they do a good job then I’m going to tip as I figure they deserve it.

  • Deacon Hayes says:

    It really depends. If it is not required and the the person gives poor service, than no tip. But if it is not required and the server does a great job, than absolutely I would tip. However, if the minimum wage does increase for servers, chances are the cost of eating at a restaurant will rise as well so we would probably eat out less if that is the case.

    • John says:

      I agree Deacon, it would depend for me but if they do a good job then they’re still going to get a tip from me. We would be eating out less as well, not that we do much anyway, but it would be less as I’m confident prices would go up.

  • Andrew@LivingRichCheaply says:

    If my server made $15, I probably wouldn’t leave the standard 15 to 20% tip. I would probably still tip for great service to reward the server for a job well done, whereas nowadays, it seems like we just tip no matter what because we have to subsidize their pay since the employer is only paying $2.13. It does seem like a tip should mean something so maybe a raise would be a good thing.

    • John says:

      That’s a good point Andrew – that a tip should mean something. I can see myself cutting the amount, but still giving one where good service is given.

  • Kurt @ Money Counselor says:

    I think tipping is unrelated to the service provider’s salary, but rather reflects gratitude for and acknowledgement of the quality of service. So yes, I’d continue tipping!

    • John says:

      That’s a great point Kurt! I’m not going to give less, if good service is provided, to someone who makes more or less.

  • Jordan Hanson says:

    This is a very tough issue. I think if the minimum wage is increased many people will feel less of a need to tip a server. My understanding is that a server is usually paid less because of the opportunity to make tips. People working on machines all day do not necessarily have this opportunity for them. I believe that if the minimum wage level is increased, people would feel less inclined to leave large tips because the serves are already getting paid “well enough.” I think people tip for two reasons, good service and the preconceived notion that servers do not make as much as others so they need the tips to “make ends meet.”

    • John says:

      I agree Jordan, it is definitely a tough issue. I think that is part of the reason why they’re paid lower, but the sad fact is even that wage hasn’t been increased in 20 years.

      • Jordan Hanson says:

        I agree. I think that is absolutely why they are paid lower. They have opportunities to make a good amount of money via tips that many other occupations don’t. I do think the minimum wage needs to be increased, however, to what degree I have no idea.

  • MMD says:

    I think a lot of things would happen if everyone started making $15. Not only would I most likely not tip anymore, but I’d probably stop going out to eat! As much as I’d like to see people do well, I’m sorry but some jobs just don’t constitute $15 per hour pay. The amusing thing about this whole debate is that no matter what number they pick, the economy will adjust in such a way that it will still be too low.

    • John says:

      I would tend to agree MMD. I think what little dining out we do now would basically evaporate if their wages went up to $15 – or whatever considerably higher number you want to throw out there. The owners would have to make up for that somehow and that would fall squarely on the consumer and then the employee as the frequency of dining out would decrease.

  • Catherine says:

    Minimum wage here is almost $11/hour and there is no variation in job. If you deliver pizza, you make min wage, if you serve/waitress you make min wage…there is none of this variations in min wage like the USA has like a server making something like $5/hr ASSUMING they get tips to ”top up” the hourly rate. Everyone makes at least $11/hr PLUS tips, MOST of which are NEVER claimed on income tax. To me this isn;t a fair system. Why should they get tips which they usually (not always) claim in income tax to supplement their income when I don’t and I arguably work in a service industry too?

    That being said I tip 99.9% of the time unless service is really crappy but it’s not always 15% (assuming you tip based on tax)

    • John says:

      That’s interesting to see the differences between the States and Canada. Not claiming tips makes this a whole new argument to consider as well.

      I’m basically the same way – I’ll tip the expected amount unless it’s horrible or great service, at which point I alter it accordingly.

  • Shannon @ The Heavy Purse says:

    It’s honestly unbelievable that they haven’t changed the wage most servers earn since 1991. That’s crazy. I don’t know if I would completely stop tipping – the habit is ingrained so deeply within us – but I don’t know if I won’t automatically tip the standard 15-20%. It might actually become a true tip – a little extra for exceptional service. Do I believe servers wouldn’t perform as well if their salaries went up. I don’t think so. The good servers would continue to serve well and those who were bad servers would remain bad. However, since they are now earning a good wage, they may face more competition for their jobs too. A big bump would mean big changes – both good and bad, which is the reality of most change. There are always winners and losers.

    • John says:

      I completely agree Shannon. I was in high school the last time it got increased and that’s just absolutely nuts. That’s a great point about the potential for increased competition – there are many things that would change in light of a significant increase like that.

  • anna says:

    I would still continue to tip, but perhaps drop it to a lower level. For mom and pop places, I tend to tip more, and would probably continue to do so.

  • Mortgage Free Mike says:

    First, this is never happening. But I would not stop tipping. As a former server myself, it is tough work. Yes, I made good money. My first job at age 16 I made 20 – 25 dollars an hour. But I didn’t get full-time hours and there are no benefits. I recently interviewed an etiquette expert who says the new normal is 18 – 20% on the total bill — not just before tax. I generally tip 20% or more and will continue to do so unless I have a bad experience.

    • John says:

      From what I’ve read though I wouldn’t go that far, but you never know. The minimum wage in Washington is already at $9.32 and there does seem to be some support for it. If it does, it definitely will lead to some changes across the board for most.

  • Girl Meets Debt says:

    You raise quite a few thoughtful points and questions in this post John. I was a server for many years and to this day, it’s still the hardest job I have ever had so I tend to tip higher than the average Girl for great service because I know how physically and emotionally draining it can be. I might not tip as high if I knew servers were making $15/hr though. That’s double what I made and I was a server not that long ago…

    • John says:

      Thanks for your insight GMD! I believe I mentioned this to a previous commentor, but we have a very good family friend who has been a server for a number of years and know from them that it can definitely be a demanding job and thus a nice tip is called for when good service is provided. I likely wouldn’t tip as much at that high of a rate, but I’d still tip.

  • Jason B says:

    I would still tip even if the minimum wage was increased. I doubt it would be as much, but I would still leave my server something.

  • Raquel@Practical Cents says:

    We are so used to tipping in the USA that it’s difficult to let that habit go even when you travel oversees. So it may take a while for people to stop tipping if wages were increased to $15/hour. I think I would still tip but much lower than the standard 15 to 20%

    • John says:

      I agree Raquel, it has become so ingrained in our culture that it seems a bit odd when you travel to other cultures which do not tip.

  • kathryn says:

    I’m Canadian, but also live in Australia for a good part of the year.
    In Canada I do tip, but it is not a percentage of the bill. It is usually $2. How much I spend on a meal, does not make my server work any more.
    In Australia, tipping is not expected.
    Personally, I feel if someone wants to work as a server, that is their choice. Tipping is supposed to be optional..not required.
    Foodstamps are something we also don’t have, nor do I want. It just makes people dependant on government, instead of themselves. If the foodstamps went, people would start living within their means, or get another job/ income stream…but that is a whole other topic 🙂

    • John says:

      It is interesting to see how it differs from culture to culture. Here in the States it’s definitely an expected thing to happen, especially when the large majority make $2/hour while doing it.

  • Amanda @ Passionately Simple Life says:

    If the wage increased to $15 an hour, I’d definitely still tip for good service, but at a smaller percentage than what I do now. As a server, a few really bad tips can really make my night a wash. It’s difficult seeing people who have to rely only on tips who have a bad night and rent is due tomorrow. Having a set amount can really help get some people in the industry out of poverty.

  • Chris says:

    I always tip a reasonable and often generous amount. At $15 an hour minimum wage that will stop for me forever! I will make it a goal to convince as many people as possible to do the same.

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