In the dark days of COVID isolation, a lot of us tipped as if we were fairy godmothers.
I would pick up takeout at my favorite pizza joint or the dearly departed Rotary on Holly and lavish the workers with a 25% or even 30% tip out of gratitude for their willingness to work under extraordinary conditions.
It seemed like the least I could do, and it made me feel good.
Alas, I don’t feel so good about it anymore, and I’m not alone. The Pew Research Center has found 72% of Americans say they are expected to tip in a lot more places now than they were five years ago. Further, expectations are a whole lot higher about the amount of the tips, too. Tips of 10% or 15% are considered insults.
It’s tipflation, and it’s rampant.
So, it’s no surprise that a lot of us have lost that lovin’ feeling about the whole experience.
Sometimes it seems patently ridiculous. Like at the coffee shop where you order your basic cup of brewed medium roast. The busy server hands you a cup and you pour your own. You swipe your card, and the screen suggests a range of amounts for tips.
Sure, I leave a tip, just as I do at dozens of other establishments that offer the most basic routine service, but it doesn’t make me feel good. I feel like a sucker, contributing to an unsustainable system of rank exploitation that creates a persistent underclass — primarily comprised of women struggling to get by on the kindness of strangers.
Which is why the whole idea of eliminating taxes on tips is such annoying election-year pandering.
Both presidential candidates stumping through swing-state Nevada (where a whopping 5% of workers rely on tips for income compared to 1% in Colorado) are pitching this deeply flawed idea.
For starters, it doesn’t help many of the underpaid workers, and the ones who need help the most get nothing.
The Budget Lab at Yale has calculated that about 4 million U.S. workers, or about 2.5% of all employees, get a portion of their income from tips. In Colorado, that number is about 32,000.
In 2022, the Budget Lab found 37% of tipped workers made so little money they paid no federal income tax at all. Their median weekly pay was $538 compared to $1,000 for non-tipped workers.
In other words, you need basic income to pay income taxes, and a whole lot of tipped workers don’t have it.
Meanwhile, policies such as Sen. Ted Cruz’s proposed No Tax on Tips Act could create just one more gaping loophole for rich dudes to exploit.
Hedge fund managers, for example, could negotiate compensation packages largely based on something that could be defined for tax purposes as “tips.”
The Center for American Progress calculated that a married couple earning $1 million in wages running a hedge fund could cut their federal taxes by $180,000 by taking half that income as tips. The same law applied to a single parent with one child making $5,000 in wages and $19,000 in tips working as a waitress in a fast-casual restaurant would reap exactly zero in tax cuts.
It’s a dumb idea.
But just like the tax-cut fever that afflicts voters across the country every four years and for decades has only made the rich richer, the American tipping culture is stubbornly resistant to any effort to inject common sense into the equation.
Frank and Jacqueline Bonanno, owners of several Denver restaurants including Mizuna, Luca, Osteria Marco and others, began charging a “Creating Happy People” fee of 22% on diners’ checks at most of their restaurants when they reopened after the pandemic.
If diners choose to add a tip to recognize outstanding service, that’s their call, but the 22% charge is meant to cover the cost of excellent service and helps them create a more equitable compensation system for restaurant workers regardless of whether they’re scheduled to work on slower shifts or in back-of-the-house positions.
It may be the right thing to do for employees — and, incidentally, it’s standard operating procedure in much of the world — but patrons here aren’t always so accepting. Restaurants like those of the Bonannos frequently face blowback from customers upset about automatic service charges.
It’s nuts, and we don’t even realize how crazy it is until we travel.
On a recent trip to Cuba, I asked a guide what most people thought of tourists from the U.S.
“Everybody loves you because of your tipping culture. Nobody in the world tips like tourists from the U.S.,” she said.
And then there’s the patronizing notion that a tip is a gracious reward for a job well done.
Um, not quite.
Research (appropriately) from the University of Nevada Las Vegas has found that since tipping has become de rigueur, it has little to no effect on the quality of service.
If you doubt that, consider the usually excellent service you receive when traveling abroad where hospitality workers receive a living wage, health insurance, pensions — and only occasionally a small tip.
Now that’s a real way to create happy people.
Incidentally, the UNLV study also traces our tipping culture to former Black slaves who were given small tips for service instead of decent wages. The practice created such an uproar, seven states passed anti-tipping laws around the turn of the 20th century. … But I digress.
Here, well into the 21st century, it might be time to increase the minimum wage nationally and stop compensating workers as if they are slaves forced to ingratiate themselves to the upper classes to survive.
That’s probably not a winning campaign message but, hey, given the vast differences between the two presidential contenders, their screwball proposals to stop taxing tips are pretty much irrelevant anyway.
Diane Carman is a Denver communications consultant.
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