The truth of tips
Updated: May 2, 2022
By Jennifer Ashikari
It’s a Saturday night, 9 p.m. to be exact, and you’ve been at work since 11 a.m.. You’re finally clocking out and you glance at what you’ve made today.
Sure it was a slow day. It was rainy and your manager put you outside, but you still had at least 10 tables.
You check your tip percentages and there it is, an average tip of 15%. You do the math, and it comes out to be $9 per hour. It’s not 20%, but still more than minimum wage.
But then comes the bar tip out. You dock 7% from your total alcohol sales of the day, and 7% of $300 is $21, leaving you with $69.
Subtract another 3% for the credit card service fee, and you’re left with $66.93 - $6.69 per hour. And this doesn’t even include the taxes that will come out of your paycheck).
Now repeat this 10-hour shift, five days a week for a few years, and remember your wage solely relies on the generosity of customers because guess what? The federally mandated wage for tipped employees is $2.13 per hour.
This is the life of a restaurant server in the United States - barely surviving on tips to make ends meet due to the archaic practice of the sub-minimum wage.
A system rooted in slavery
It’s a well known fact that servers in the restaurant industry rely heavily on tips to earn a living in the United States, but how did this practice begin and why is it an issue?
Tipping started in Europe during medieval times, when masters would tip their serfs for exceeding expectations in service. This began a trend there, one which was noticed by American tourists when visiting during the 1800s.
Upon their return to the United States, these Americans began to tip restaurant servers and other service workers in an effort to seem cultured and sophisticated. While met with some backlash, this soon caught on across the nation, especially during The Reconstruction era.
Starting after the Civil War, freed slaves began taking jobs as porters and other low-paying jobs that involved serving patrons nationwide. These workers were given tips on the job, and their White employers soon realized the economic potential of this practice.
To increase their profits, employers stopped paying these employees altogether, and insisted on a tip-only salary for their work. The lack of social power these freed slaves had forced them to accept this practice, and they were had to endure harassment and abuse at the hands of their patrons in order to make a livable wage.
The use of Black servers led to a stigma around service workers, and an ideology that excused the poor ways that customers would treat them. They felt the people working these jobs were beneath them, and were not deserving of proper treatment.
While the restaurant industry grew, so did the diversity of their servers, and non-Black employees began to overrun the service industry. These White employees began to make far higher tips than their Black coworkers, and after their often short tenure in the field, moved on to higher paying careers while the Black employees were forced to remain due to a lack of other options.
Although there was no established federal minimum wage for workers of any race during this time, tipped employees still suffered higher rates of poverty.
It wasn’t until 1938 when then-president Franklin D. Roosevelt enacted the Fair Labor Standards Act (FLSA) during the Great Depression that a federal minimum wage of 25 cents per hour was established.
That is, for everybody except tipped employees.
Another 28 years passed before tipped workers would be included in the FLSA, when the Johnson administration introduced a cash minimum wage for tipped-workers in 1966 -- but there was a catch.
These workers would receive a set wage, but it was set at only half of the federal minimum wage, which was raised to $1.60 that same year.
Instead of the full wage, tipped workers would receive a “tip-credit,” which is essentially a payment given by their employers to pay the difference between the two wages, but only if their workers did not receive enough tips to make up the difference themselves.
For example, if a worker in 1966 was making the tipped-wage of 80 cents per hour, their employer would have to pay them the remaining half to equal the federal minimum wage of $1.60. But, if that employee ended up receiving tips that totaled the 80 cents-per-hour, their employer did not have to pay that difference.
This practice has continued ever since, and the last time the wage for tipped-workers was increased was in 1991, over 30 years ago, when it was raised to $2.13 per hour.
Even worse, the practice of paying these workers half of the standard minimum wage was essentially eradicated in 1996, when the Clinton administration increased the minimum wage to $4.75 per hour and kept the tipped wage at $2.13 per hour.
This was at the coaxing of then-head of the National Restaurant Association, Herman Cain, who agreed to a slight increase in the federal minimum wage, but only if the tipped wage remained frozen in an effort to keep profits high.
This set a precedent that has remained ever since, with service workers today still only receiving $2.13 per hour compared to the set national minimum wage of $7.25 per hour, (state minimum wages vary).
The tip-credit is still enforced, however, with employers now having to pay a maximum of $5.12 to make up the difference if their employees do not receive proper tips.
Some states have individual wage laws pertaining to their tipped-workers, with some in recent years like Oregon eradicating the tip-credit altogether and paying their tipped workers the federal/state minimum.
While some states like South Carolina have attempted to raise their minimum wages, they are typically unsuccessful, with only seven states in the United States requiring employers to pay their tipped employees full state minimum wage before tips.
Servers struggle to make ends meet
While the serving profession may seem lucrative due to their ability to make more than the federal minimum wage, and even over $20 per hour, it’s an incredibly inconsistent wage to rely on.
With typical “9-5” jobs, employees aren’t fearful of “slow” seasons, because their wages are set. Servers do not have this luxury, especially during the winter months.
This change in season hit Melia Golliher, a server at Bay Street Biergarten in Charleston, SC, particularly hard.
“I was making around $800-$1,000 per paycheck in the fall. Since December, and because of slow season, they have been around $500-$800.”
Since Bay Street Biergarten has a bi-weekly pay schedule, these servers are making around $1,000-$1,600 per month. With an average rent of $1,708 per month in Charleston County, this makes housing extremely unaffordable unless there are multiple people within the unit to split costs.
The national poverty rate for servers in 2020 was a whopping 20.9%, as opposed to the total workforce’s poverty rate of 7.2%. In South Carolina, the poverty rate for servers was even higher at 21.2%.
With the tourism and hospitality industry driving the economic activity in Charleston, you might assume servers would be well taken care of. But that’s not always the case.
Olivia Nassos, another server at Bay Street Biergarten, says busy work days are crucial to her financial stability.
“If the restaurant is not busy for more than one day in a pay period, I often struggle to cover my financial responsibilities."
The critique is that 20% tips should be enough for a living wage, but the fact is that many customers either tip less than 20% or nothing at all.
Many servers in the industry believe that most customers are unaware of their true hourly wage, and Nassos agrees.
“I do not believe most customers are aware of server hourly wage. I have had several experiences where a customer states that tipping is not necessary because they feel the hourly wage is reasonable.”
This ignorance directly affects the servers and their ability to survive, and also leads to an imbalance in the power dynamic between customer and server.
The pressure to perform
Servers rely solely on the generosity of customers, a practice Golliher describes as “toxic.”
Despite the lack of coverage on the issue, harassment and sexual assault on servers is extremely prevalent in the industry.
A report published by One Fair Wage in 2021 found that “71% of women restaurant workers had been sexually harassed at least once during their time in the restaurant industry.”
The rate of sexual harassment for tipped servers nearly doubles that of servers given a fair wage, with 71% of tipped workers reporting harassment compared to 52% of wage earning servers.
While still high, the decrease in harassment for servers earning a fair wage can be attributed to them not feeling as vulnerable at the hands of their customers for money.
In fact, a non-scientific survey of 1,000 Americans on their tipping habits showed that men on average would tip 19% if their female server flirted with them.
Not only is harassment extremely common while on the job, so is side-work.
Despite being paid only $2.13 per hour, servers are required to do non-customer related work that typically involves stocking and cleaning to keep the restaurant running smoothly.
Opening the restaurant requires mundane tasks such as preparing sauces for meals, rolling silverware, brewing tea/coffee, and filling water pitchers.
Closing entails sweeping, mopping, taking out trash, and stocking dry goods.
During a shift - when not taking orders or bringing and refilling food and drinks - servers are trying to fit in those same tasks of rolling silverware, bussing tables, taking out trash, and putting away clean glassware.
When performing all of these duties, Golliher can’t catch a break,
“Customers think that you’re being lazy when they can’t find you for five minutes but in reality we’re in the back just trying to keep things moving. It’s frustrating and exhausting work, and can impact our tips as a result.”
While the list of duties is clearly extensive, they are not paid any additional wage for this work.
In fact, servers are actually responsible for paying the bartenders and servers assistants a portion of their own tips.
At the end of the night, servers must take a percentage of their total alcohol sales, and give that money to the bar staff out of their own earnings. The same is then done for the servers assistants, who take a percentage of the food sales.
According to Golliher, she must tip out the bartenders “7% of alcohol sales and 3% of food sales for servers assistants.”
The lack of a livable hourly wage for all restaurant employees thus places the burden on the serving staff, ultimately making them responsible for the payment of their peers.
J.R., a former server at the now defunct Mellow Mushroom King St. location, recounted how after working one particularly slow 7 hour lunch shift, he had to ask his manager for money to pay the parking garage where he stowed his car while working.
“I wasted an entire day busting my ass, just to have to beg for some money at the end of the shift. The parking garage only cost about $14, and I didn’t even have that, it’s ridiculous.”
The onset of the Coronavirus has amplified these issues with reports stating that harassment of employees has increased, while tips have plummeted.
So, not only do these servers have to endure the harassment from customers to receive a tip, they have to share this money with others. This pressure to perform is detrimental to the mental health of servers, and can create tension between front-of-house staff.
Whose got their backs?
While there are certainly managers who care about the wellbeing of their staff, the majority of the restaurant workers are often mistreated, and even robbed of their tips, due to greedy management.
A report published by One Fair Wage in September 2021 highlights how the coronavirus pandemic has led to a startling increase in wage theft in the restaurant industry, with “35% of tipped workers report their tips and additional wages did not bring them up to their state’s minimum wage.”
Wage theft has been an issue in the industry since its inception, but it is often ignored due to a lack of federal investigations. This leaves the struggling employees to advocate for themselves, and their complaints are often ignored.
When the U.S. Department of Labor does investigate, however, they often find immense violations of workers’ rights. One report from the Wage and Hour Division found that “as many as 84% of investigated restaurants reported having some type of wage violation.”
Servers are rarely compensated for overtime, and it’s been reported that minorities and female servers are often given poor hours and sections that greatly diminish their opportunity to earn good tips.
This discrimination is extremely common in the industry and is hard to prove because managers can simply claim that the sections and schedules are random or based off of the server’s availability.
“I’ve had so many instances where I’ve been put in the same section for weeks, while my male coworkers rotated the best sections and got more tables and tips,” says one female server, called “T,” for privacy. “You can try to say something to management, but they just take it as a personal attack.”
Even if the managers are not intentionally discriminating against their female employees or employees of color, the internal bias that many managers have plays a role in their decision making and creates an inequitable work environment.
Management can often be incredibly hard for servers to work with, due to the unbalanced power dynamic. Servers are ignored or retaliated against when requesting better work environments, and are usually unaided during stressful shifts.
These issues are extremely prevalent in Charleston’s restaurant scene, and J.R. can recall countless examples.
“They’d always say, ‘If you have time to lean, you have time to clean,’ the second we had a break after a rush. Meanwhile they would be making personal calls in the office or sitting at the bar drinking with customers
while we were struggling.”
The “other” NRA
While restaurant owners and managers contribute to the problems that plague the industry, the true culprit is the National Restaurant Association, or the NRA.
Upon first glance, this organization may appear to be a positive force fighting to provide workers with fair wages and working conditions, but they have actually been working for years to prevent these very things.
This widespread institution has local branches all around the country, and has worked tirelessly to lobby for laws that keep the sub-minimum wage and the tip-credit intact.
Most notably, the NRA successfully lobbied to freeze the tipped minimum wage at $2.13 in 1996 under the leadership of then CEO Herman Cain, who went on to be accused of sexual assault by two former employees during his tenure at the NRA.
The NRA makes billions of dollars per year due to relationships with large corporations such as McDonalds and Taco Bell, and have an incredible amount of influence in Capitol Hill, allowing them to manipulate legislation in their favor and keep their practices under the rug.
The NRA has no plans to share the wealth with the workers who make their pockets full, however. On top of opposing a fair minimum wage, the NRA continuously lobbies against providing full time employees with health insurance.
When the Affordable Care Act was implemented, the NRA took to the Supreme Court to challenge the law. While unsuccessful, NRA affiliated corporations such as Applebees and Papa Johns announced they would be cutting back employee hours to avoid providing health insurance.
What’s being done?
Despite the power of the NRA that is actively working against restaurant employees, there are a plethora of organizations that are working to increase the tipped wage and provide healthcare for workers.
One Fair Wage is an American organization that has worked since 2013 to advocate for a fair minimum wage of $15 per hour in the service industry on top of tips.
Through their work, they have successfully passed One Fair Wage on the ballots in Maine and Washington, D.C.. Although this was overturned via lobbying from the NRA, it was a major turning point in the fight for fair wages.
On top of its political advocacy, One Fair Wage has conducted research on the consequences of the subminimum wage, and has released reports on the financial state of workers as well.
Restaurant Opportunities Centers United is another organization that is working to aid restaurant workers in the United States.
Like One Fair Wage, ROC United is attempting to increase wages for service workers, but they are also focused on combating the racism and harassment within the restaurant industry.
One of their campaigns includes the BE HEARD Act, which was introduced in 2019. This act would combat harassment in the workplace by limiting non-disclosure agreements, implementing the federal minimum wage, expanding anti-harassment protections, and fund grants for low-income workers to obtain legal help.
Locally, the 5th Street Group has developed its own strategy to ensure fair wages for both
their servers and their kitchen staff.
Since April 2021, the restaurant group, which owns Tempest and Church and Union in downtown Charleston, has implemented their “Tip the Kitchen” initiative to supplement the wages of their employees.
This new concept is incredibly simple, but effective, because instead of having only one tip line for the server on the bill, there is now an additional tip line for the kitchen staff.
“What we came up with was, you know, adding a tip line to our checks for a guest, and clearly state on our menus what the intent is” said chef and 5th Street Group partner Jamie Lynch.
Not only are customers now able to tip the kitchen staff, but the owners are matching tips up to $500 per day.
Lynch gives an anecdotal explanation stating, “so let's say you know, the back of the house earns $200, one particular day, we'll put $200 into the pot, equaling 400, and then that will get paid to the people that work that day, equally in the back of the house.”
Although it may seem like servers would suffer due to customers splitting the tips between servers and chefs, the 5th Street Group has created a stop gap system to prevent any animosity from the waitstaff.
So, even if a customer tips 13% on a bill and then leaves $15 for the kitchen, the owners will pay the difference in order to make it a 21%, while also matching the $15 for the kitchen.
Lynch says that this method has improved the relationship between front-of-house and back-of-house staff.
“They look at themselves as a team rather than as a, you know, back-of-house front-of-house kind of segregated employees,” Lynch says.
This method is a huge incentive for both the kitchen and serving staff by supplementing the chef’s wages and essentially guaranteeing a 21% tip for servers, and has resulted in a decrease in staff turnover for the restaurants.
It’s a win-win scenario for both the owners and the workers, because while the worker’s wages have increased, the owners are saving money in the long-run by not having to train new staff.
“We have a lot less turnover. Now, our staff are very happy. This is benefiting them in an amazing way, and as a result, those costs that are related to turnover: training, waste, uniforms, have gone down,” says Lynch, adding that they have tipped their kitchen staff a total of “$1.26 million so far company wide,” since its inception.
The success of the “Tip the Kitchen” initiative is incredibly important, and can be used as the blueprint for other restaurants to mimic in order to pay their workers a fair wage, and decrease staff turnover.
The future of tipping
While there are many avenues that restaurants can take to pay their workers a fair wage, the most effective method is to implement a fair minimum wage for tipped employees.
The tipping practice and its roots in racism are still felt today, and the concept of relying on strangers to pay the bills leads to a dark pattern of harassment and assault that is consistently swept under the rug.
The lack of protection for these workers leads to them being taken advantage of by not only customers, but by managers and owners, all of whom have complete control over their wages and employment.
By providing a fair wage for these workers, they would no longer have to endure these conditions in order to receive a fair tip, because they would have the security of a set wage.
With lobbying continuing to be done on the behalf of tipped workers, the future is looking a little brighter in terms of financial security, but there is so much more work to be done.
In the meantime, always remember to tip your servers and treat them well.