Ask Laz: Tipping: Time to do away with an archaic custom
Dave writes in with a relatively common query about tipping:
“I always tip at a restaurant or bar on the amount before tax,” he says. “Someone said it should be on the after-tax amount. What’s the norm?”
The norm has been, and remains, to tip on the pretax amount. But this is a tricky business.
Many restaurant owners will tell you that customers now routinely tip on the post-tax amount to help servers get by.
Then there’s the question of how much to tip. The standard these days runs between 15% and 25%, with 30% tips offered for exceptional service.
Is this the best way to do things? The economic rationale for tipping is that service will be better if a worker has a financial incentive to perform well.
The reality, of course, if that because tipping has been largely institutionalized by the dining and hospitality industries, it no longer reflects service received and is instead a customary gesture on the part of customers.
A 2008 study by researchers at Cornell University found that 44% of Americans would prefer that servers be paid a living wage rather than rely on tips.
That’s why I say minimum wages nationwide should be increased to living-wage levels, based on local living costs -- and the archaic practice of tipping should end.
Americans borrowed the idea of tipping from Europeans, who then outgrew the practice and largely abandoned it. It never caught on in Asia or most other parts of the world.
We’re the laggards. So how about if Los Angeles serves as the nation’s test kitchen for no more tips?
With the local minimum wage set to reach $15 an hour for many employers by 2020, let’s do away with tipping and see what happens.
Obviously, restaurant prices would go up, although your out-of-pocket costs might stay about the same. Hopefully servers would fare better than they currently do.
And imagine the selling point to tourists, both domestic and international: “L.A. -- No tips required.”
I have a dream.
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