Citizens of the Rail take on the restaurant tipping industry

When we started The Daily Rail newsletter, it was our hope to have subscribers contribute to the conversation in a real and substantive way. While we cherish every interaction we have with a reader, they have been less frequent that we had hoped. That is until this past week when we published a blog entitled Four Reasons Why Tipping Sucks.

It seems we stirred some controversy and the comments section of that blog reflect some strong feelings on the subject. Among the first to post their response was today’s guest blogger and Rail Subscriber Jason Clay.

Jason was so animated by our post that he initially unsubscribed. However, we reached out and asked him to share his thoughts and instead of walking away from us, help us balance the conversation. As a result, we give you Jason’s take, unfiltered/edited and look forward to a further discussion this and any controversial topic. --AIJ

By Jason Clay, Governor's Restaurant & Bakery

When I opened up my email last week and saw a Daily Rail email with the headline “Four Reasons Why Tipping Sucks” I pretty near spit out my coffee.

First a little background: the state of Maine is currently battling over the tip credit/server wage tied to a citizen's initiative minimum wage question passed this past November. The restaurant industry in Maine, specifically the full-service industry, has been under attack for several years by policy groups pushing the same arguments that Ms. Bartholomew list in her post.

The problem is that the people most affected by tipping, the servers, feel that the list is inaccurate, and that the elimination of tipping will lead to a mass reduction of jobs, increased prices, and potentially failing restaurants.

Tipped wage gives the full-service restaurant industry the ability to create more of the highest paying jobs per hour in the industry. The economics are pretty simple. Increased labor costs to restaurants will force restaurants to reduce staffing levels even with significant price increases. With an increase in tipped wage from $3.75 in 2016 to $12 per hour in 2024, full-service restaurants will face a 260% increase in labor cost for the front of the house alone. Don’t forget about the increase in payroll taxes this would cause to the restaurant as well.

This is Maine, where the median household income falls in the lower third of the US, which makes it difficult to simply rely on price increases alone. Increasing labor cost for these employees will force companies to reduce labor to compensate. And what happens to the back of the house? Merit increases for those deserving cooks and dishwashers will be hard to come by.

Is the restaurant tipping system broken? Restaurant owners & operators are split.

The elimination of tipping will cause career servers to take a pay cut, and leave the industry. Many servers in our company do as well or better than our management staff annually. Working for a tipped wage allows servers to work less than a full-time schedule and make as much or more than a 40 hour per week employee.

Our company has many students of folks with a full-time job such as teachers that work one or two shifts a week to supplement their income. Working for a wage of $12-$15 per hour will either cause them to work more hours or make less money -- if those positions still exist.

Tipping causes sexual harassment? There is sexual harassment in every industry. Obviously as a male I have a certain perspective. However, our company has a sexual harassment policy that protects our team members not only from sexual harassment from fellow team members, but allows them to refuse to serve a guest if they feel they are being sexually harassed. I’ve spoken to many other restaurant companies that have similar policies in place.

Servers are GUARANTEED to make the minimum wage if they don't earn it in tips. So if the minimum wage is a "living wage" in your state then you are guaranteed to make at least that amount with the opportunity to sell and earn much more.

I started out as a cook/dishwasher in this industry. I saw then and still now see back-of-the-house employees making the transition to servers because the earning potential as a tipped employee is so much more.

What it really comes down to is this: Servers have an opportunity to work as their own business person. They are the ultimate commissioned sales person. The restaurant provides them the opportunity to sell. The more they sell and the better they take care of guests the more they earn. When you eliminate tipping, you cap the potential income of these professionals. There is a reason why the tip credit/tipped wage system hasn’t changed in a state since 1983… because the system works for both employees and employers.

Talk to your servers! If servers don’t want change, and restaurants don’t want change, then why are we trying to fix a system that really isn’t broken? Proponents of eliminating tipping suggest we’ll just have to figure it out, but why are we risking the livelihood of thousands of people just to hope it works?

Thanks to Jason for sharing his thoughts!

As always, we love hearing from fellow Citizens of the Rail and are open to both feedback, criticism, praise, and new ideas.