5. The waiting staff are paid low hourly rates because employers have successfully tricked their customers into taking on a significant portion of their staffing costs. If you don’t like the sound of that, all is not quite lost – there is a socialist running for president this time.
Where else does the money come from other than the sodding customers?
“5. ……….. If you don’t like the sound of that, all is not quite lost – there is a socialist running for president this time.
6. You can have anything you want, as long as you can pay for it.”
Cognitive dissonance from one paragraph to the next.
Quite. Waiting staff are paid low basic and make up their wages by the customer rewarding them for their services Much of the sales industry works along the same lines – low basic, high commission for selling the product.
The point is, instead of seeing the price advertised by the business and paying that price as in civilised countries, in the US you are forced (in the case of sales tax absolutely forced, in the case of tipping effectively forced) to pay substantially over the advertised price, in a manner that benefits nobody compared to Paying People Actual Bloody Wages and Charging The Actual Bloody Price.
John’s point has merit.
Yes, many sales occupations are commission based. But that’s between the employer & employee. The customer gets the bottom line price, unadorned.
Service charges & tips are illogical. They’re not related to what’s being provided. The service provision in a restaurant is the same on a meal ordered from the cheapest end of the menu or the dearest. So logically, one should be tipping a fixed sum, not a proportion of the bill.
“Where else does the money come from other than the sodding customers?”
Well, if we were discussing ‘green’ energy companies, a lot of it would have been coming from government subsidies.. 🙂
@JuliaM
Is the nuclear industry covered by the green energy umbrella? It has been subsidised a lot over the years. In fact, the energy industry in general has received tax payer money over the decades in one form or the other.
@ Salamander
British Energy was nearly bankrupted by the Blair government’s imposition of the fossil fuel levy on its nuclear plants.
Although having the sales tax not included in the advertised price has the salutary effect of showing/reminding what the Actual Bloody Price is and how much the State feels the need to charge you for the privilege of paying said Actual Bloody Price…
I’m with John B on this one. The point quoted by Tim is badly worded — it’s not the costs that customers are taking on, obviously. But the existence of tipping is used as an excuse for shite wages. Every other industry, employees get paid by their employers. It’s only in hospitality that employers get to tell their employees, “Oh, you want the rest of your wages? Don’t hassle me about it. Go get them off the customers yourself.” In some industries — banking, for instance — that would be illegal.
And the IRS’s practice of taxing tips regardless of whether they’re received makes the situation worse in the US.
The IRS doesn’t tax tips that aren’t received. Instead, given the centrality of tipping to the culture, asks you to prove that you weren’t tipped.
“Oh, you want the rest of your wages? Don’t hassle me about it. Go get them off the customers yourself.”
That’s generally how state employees (policemen, customs, etc.) are employed in the developing world.
> The IRS doesn’t tax tips that aren’t received. Instead, given the centrality of tipping to the culture, asks you to prove that you weren’t tipped.
Sorry, Tim, but what’s the effective difference between those two things? The latter is literally unprovable.
I agree with John B’s point. But that wasn’t the writer’s point. Tim is right about the economic idiocy on display there.
Because they don’t make it that hard. And it really is the way they work the system. Each “tipped” employees sales are reported to the IRS. They assume a certain percentage as tips. If you under report to that assumed percentage then you get audited (or at least face the risk of that happening). Just like HMRC will audit a plumber stating that they only made £1500 last year.
I was actually under the impression that you can do quite nicely in the US at a waiter or waitress. Not so much in a cheap coffee shop, obviously (nowhere in the world is that true), but get into the more up-market restaurants, or even just steakhouses, and you can make a decent middle-class living. (For a job that no central planner would rate as a difficult one.)
Why is it that Brits who go to the US always make the same banal, over-familiar observations over and over again, and think these are worthy of being published? It’s like there’s this one article on file that every British newspaper has had since 1961 and they just re-publish it every year with a fake byline and picture.
A pity about the lunacy; it’s otherwise an amusing article.
Quite so, I’ve done it. Couple of stints over there as a waiter in the early 80s. Slinging out $5 fish dinners and happily making $500, $600 a week (a lot back then).
Not just in the states were tips done.
Lived in Blackpool for years and worked some hospitality jobs.
Tips in a day could be higher than wages – this was before minimum wage.
A mate worked at a hotel – if there were 4 weddings catered there – the maximum they could take – he often came away with £100 in wages and tips. His day job during the week in an office only paid £200 for 5 days.
Ah, the 80s and 90s – good years for hard workers.
Tim, an IRS audit is now process-is-punishment: a minor US State audit cost me $6,000 in accountant’s fees & a lot of time forging Outlook Calendars.
Dear Mr Worstall
Way back in the 70’s I was told that waiters paid to work in top Parisian restaurants. The tips were so generous the market determined that waiting positions were effectively sold as a franchise.
There used to be (maybe still is) a restaurant in London with a priceless menu. Customers paid what they felt the meal was worth (including tip, since that is part of the cost of a meal in a restaurant).
DP
There’s one of those in Perth, DP. It’s a vegetarian restaurant so I’ve never been, but it’s apparently quite popular among the sticks and leaves crowd.
The “conning the customer” point might be better made by looking at the mortgage industry, where lenders tag on a raft of fees that are essentially charges for them doing the paperwork inherent in their own bloody jobs.
It’s like going into a shop and buying a $10 item, only to be told “OK, that’s $10 plus $1 towards our electric bill, 50c towards the water, $1.25 towards our insurance premiums…”
@JeremyT
Wouldn’t it have been simpler and more profitable for the IRS just to have said “Look, either we put you through the process and make you pay you accountant $6000, or you can just pay us $4000 and call it quits. Which would you prefer?”
OK, sounds like a shake down scam, but it is what the IRS and Justice Dept have been doing to European banks.
We’ve been going to the Oktoberfest for 12 years, always book a table in the same tent, and we’ve had the same waiter every year. Their pay is only from the tips, and those positions are like gold dust.