Do you tip?

Semantically, you are correct: wages would not increase, but you are missing the point:

The amount received by the employee would immediately increase by 35-45% because federal taxes would no longer be deducted. This includes federal income tax, social security, medicare (including the employer paid side) total ~40% depending on tax bracket.


Freeing up that amount of capital to business and consumers would be a huge boost to the economy because discretionary income would increase so dramatically. It would also give businesses a huge increase in profits allowing them to institute no tipping policies and raising wages substantially.

It would work. Beautifully. Please think before nay-saying.

 

You are correct here. You can't make a law of no tipping and many business owners would take the tax savings and screw their employees. However, MOST small business owners actually do care about their employees. An educational campaign would go a long way here. I am strongly considering opening a bar/restaurant and will be posting a "We care about our employees and pay them well. Please do not tip." sign.

So much inefficiency and waste goes into managing tipping that it's actually better and more profitable for the business owner to pay their employees and skip the tip. Even if you were to raise prices 20% across the board to do it.

 

Hmm, "dining out" Vs "eating out" .

 

They are not low and a lot of the costs are adjustable based on sales. Why can McDonald’s sell a sandwhich, fries and drink for $5 but Ruby Tuesday charges $10 for the burger, plus $2 for the drink and then on top of that you have to shell out another 15-20% for “unpaid” labor costs? It doesn’t make sense.

Let me tell you how restaurants work. Generally labor and food cost are each about 25% of sales. These are obviously the most controllable costs you have. After that are all the other mostly fixed costs the you pay on a monthly basis. These include rent/mortgage, insurance, utilities, advertising, franchise fees etc. Let’s say these are 20k per month. At the start of the month you are 20k in the whole. So you have to do about 40k just to pay all of the bills. But here’s the key. For the most part, everything after 40k is 50% profit. It actually might even be more than that because when it is busy, it doesn’t take twice as many employees to do twice as much sales. They all just do a little bit more because there is less down time.

 

Quote from Sandybestdog: Why can McDonald’s sell a sandwhich, fries and drink for $5 but Ruby Tuesday charges $10 for the burger, plus $2 for the drink?
---------------------------------------------------------------------------------

Volume.

 

Quality. Ruby burgers are damn good. Much tastier meat than Ronald Mickey d. Try one. See what I mean

 

Yes and no. Obviously McDonald’s has so many restaurants that they only need to make a little on each one. My sister works at an upper class burger and steak restaurant. She says that on a busy night, sometimes they’ll do $10,000 an hour in sales. I went to Applebee’s the other day. On a Wednesday night the place was packed, 15 minute wait. They didn’t lower the prices or pay their employees any more, that I know of. There were obviously doing a lot more volume than the McDonald’s across the street. On top of that, waiters are usually required to do at least an hour of cleaning or whatever after their shift at $2.13. Obviously the only purpose of this is to get cheap labor out of them.

I guess it just doesn’t really matter. People are still paying the higher prices and paying the tip on top of that. As long as people are doing that, nothing will change. I for one am not someone willing to pay that much, but that’s me. Panera and Boston Market and such are just fine with me and a lot cheaper. Plus, I can go get my own refill instead of waiting for someone else. That’s a big plus for me.

When we do go to a restaurant though, obviously I over tip because I deliver pizza and have to look out for my fellow man. But otherwise, I think tipping is stupid. It’s just an excuse for employers to pay their people less. What a shocker it is so prevalent and probably originated in America. Some rich restaurant owner probably thought one day the best way to make more money was to pay his servers next to nothing and then put up a sign saying “Please support our servers, they provide a valuable service for you.” And then of course went on about how they get paid below minimum wage and work for tips. It’s all a bunch of crap. The other day I was talking to my dad about this and he says that it’s important they work for tips to keep the service up. I said they should keep the service up because it’s their damn job to. I mean, we aren’t expected to tip the cashier at the grocery store. Shouldn’t we tip them so that they check us out quickly and pack our bags correctly?

Obviously I think pizza delivery is sort of different. I think of it more of as a delivery fee. It’s simple, you can pick it up for $15, or have it delivered right to your house and give the guy a few extra bucks. I don’t see what’s wrong with that. But of course employers were greedy there too and now add a $2 delivery charge that, get this, doesn’t even go to the driver. Yes the driver pays for all car related expenses, but the delivery charge goes straight to the store. On top of the fee, you still are expected to tip him. Now that’s a scam.

 

Yea exactly. So why can’t they pay their people more out of the higher price? If McDonald’s can pay someone $8 an hour to sell $5 sandwhiches, how come Ruby Tuesday has to pay people $2.13 an hour to sell $12 sandwhiches? Doesn’t make sense. The food cost is not exponentially more.

 

Occasionally, I get Dominos delivered. Out of curiosity and to figure what a fair tip would be, I asked the driver how much of the $2.50 delivery fee the driver gets. I don't recall the exact amount, but it is over half of the fee. I guess it boils down to what the local labor market will bear.

P.S. Please excuse this off topic question, but does anyone know what are those symbols where apostrophes should be?

 

He had to have been a somewhat new driver because otherwise he would have told you 0. It’s simple, before there was a delivery charge the pizza was $10 and the driver would get something like $1 for mileage, which is included in the price of the pizza ($10). Once the fee was added, the pizza is $10 plus the $2 delivery charge and the driver still gets $1. So the driver gets nothing of the delivery charge. The management will say he gets $1 of the fee, but he didn’t drive for free before the fee, he still got $1. So he gets nothing out of the $2. It’s a scam. They didn’t want to raise their prices, so they sneak a delivery fee (which of course is not displayed anywhere on their menu or advertising) on their orders and then the customer thinks the tip is included and the driver gets screwed so the Man can make more money.

Drivers put up with this for one simple reason. People would rather live as a slave than die. At least they still have a job. If they protested it, they’d get fired because there are 100 other people at the door willing to work for crappy pay. These people hate their jobs and are willing to work hard given the right opportunity. If a non greedy business owner would simply come along and treat their employees well, they would work hard for him. As a result they would take massive market share out of the other restaurants. In the end both the employee and owner would make a lot of money. Just my opinion though.