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There is no revenue/wage neutral way of restructuring how the costs are presented. A 20% service charge generates less income for waiters than tipping. Adding 2

There is no revenue/wage neutral way of restructuring how the costs are presented. A 20% service charge generates less income for waiters than tipping. Adding 20% to menu items generates less income for waiters than adding a 20% service charge. This effect isn't due to redistribution but a reduction in bill + tip revenue. No one has to like it but there is a lot of empirical evidence for this effect (and there are good theories as to why it happens). By trying to eliminate tipping, you are working against the interest of waiters since they naturally want to maximize their income. You may not like tipping but it is economically optimal in many contexts. Businesses need to compete for employees and tipping maximizes employee income relative to revenue. Where I live, most of the bartenders and waiters I know personally earn on the order of $80k/year if they do it full-time, and not at high-end establishments. Not an ostentatious lifestyle but definitely middle class.

ryanbrunner 4y ago
You can definitely go higher in certain contexts (bartenders at busy nightclubs, fine dining as you mention). There's also a lower end like diners, but even then it's a unique case of an easy to enter job that can pay a fairly liveable wage.
pull_my_finger 4y ago
You're ignoring the part that it should not be the customers burden. Sales and marketing people have high ceilings too, I can respect the hustle, BUT they don't get tips. They get a normal wage/salary and their company is on the hook for providing bonuses/commissions. It's not consumers "working against" the workers, it never should have been positioned that way in the first place. If business owners want to incentivize hustle, they should do it on their own dime. It's a grey pattern to offer your product at 1 rate but implicitly you impose an additional 12-20% . Just pay them more, and charge more for the product, the end result is the same from the consumer. If the workers are no longer satisfied, there are other sales and marketing jobs that offer real salaries plus bonuses/commissions as mentioned above.

ryanbrunner 4y ago

You can definitely go higher in certain contexts (bartenders at busy nightclubs, fine dining as you mention). There's also a lower end like diners, but even then it's a unique case of an easy to enter job that can pay a fairly liveable wage.

pull_my_finger 4y ago

You're ignoring the part that it should not be the customers burden. Sales and marketing people have high ceilings too, I can respect the hustle, BUT they don't get tips. They get a normal wage/salary and their company is on the hook for providing bonuses/commissions. It's not consumers "working against" the workers, it never should have been positioned that way in the first place. If business owners want to incentivize hustle, they should do it on their own dime. It's a grey pattern to offer your product at 1 rate but implicitly you impose an additional 12-20% . Just pay them more, and charge more for the product, the end result is the same from the consumer. If the workers are no longer satisfied, there are other sales and marketing jobs that offer real salaries plus bonuses/commissions as mentioned above.