Tipping is even worse than I thought

Published by marco on

This 13½-minute video taught me quite a few things about tipping in the U.S. It got me thinking about how tipping works in Europe and Switzerland, too.

The Dark Truth About Tipping in America by Evan Edinger (YouTube)

The federal minimum wage for tipped workers was legally set at ½ of the federal minimum wage for everyone else in the 1970s.
The law was originally configured to keep the federal minimum wage for tipped workers locked to ½ of the federal minimum wage in perpetuity.
In the early 1990s, the law was changed to lock in the federal minimum wage for tipped workers at $2.13. It has not moved in over 30 years.
Almost every state enforces tip-sharing, which includes sharing tips out to the people working federal-minimum-wage jobs.
The sharing extends to all employees, including managers.
More than ½ of your tip in those states does not go to your server; most of it channels through the management of the restaurant and all you can do is hope that your tip trickles back down to the person for whom it was intended.
The law is that, if a server does not earn the federal minimum wage based on their wages and tips, then the employer is legally obligated to make up the difference.
Over 90% of employers fail to make up this shortfall. Studies have shown time and again that nearly all restauranteurs are breaking this law in a grand wage-theft. Generally, nothing happens outside of some minor fines.
That means that, when you tip someone, you can only psychologically feel that you’re “helping” the person who served you if you have no idea how the system actually works.
What you’re actually doing is paying the restaurant more money. You are not even filling the wage-gap for that worker.
This applies even more if you’re using an electronic payment system, in which the money doesn’t even spend a single second with the server. Instead, it goes straight to the restaurant’s account and the restaurant would have to voluntarily give that money back to its servers.
Given the massive fraud and wage-theft in that industry, this is incredibly unlikely to happen.
I would imagine that this applies almost equally to Europe and Switzerland, where there are no laws about tips being applied back to workers. When you “tip” with an electronic-payment mechanism in Switzerland, you’re almost certainly just paying more for your meal, a gift that the restaurant is more than happy to just scoop up.
I don’t even know that there is a legal framework in Switzerland to determine what a business is obligated to do with the extra money that you give it for “tips”. Imagine if you just paid CHF5.- more for a T-shirt than it costs. Do you think that that money actually ends up with the person running the cash register that day? How would it? Why would it? The business would probably just pocket it. You might as well just put it in the mailbox.
I wonder the same now about tips in restaurants. It’s a whole fictitious mechanism; it’s functioning the way you think it does is contingent on the theory that the same business that is happy to pay its workers $2.13 per hour and happy to otherwise engage in wage-theft would do everything required to ensure that the extra $5.73 that you paid with your credit card will actually end up with the person who served you. Even thinking that they would bother to do that seems increasingly unlikely, especially with oversight being so shoddy. In the U.S., there are laws. In Europe and Switzerland, there are labor laws, but I wouldn’t even be so sure that there is oversight for a system like tipping that people just kind of start doing. Why would there be?
If you pay cash in Switzerland, you can often see them storing the tip in a different pocket of the wallet. That’s usually a strong indication that your tip has “landed” where you’d intended it to.
Tip in cash if you’re going to tip. At least this gives the server the opportunity to collect it for themselves—and to not declare or under-declare it on their taxes, so that Uncle Sam doesn’t get his filthy hands on it.