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Should You Be Tipping More?

By Expert Author: www.cheapfares.com

Given how hard the average person tries to keep travel affordable via a careful review of cheap travel options, including cheap airplane tickets and cheap vacation packages, it may seem strange to encourage people to start tipping 25 percent.

Tipping experts are starting to recommend higher tips as a result of salaries of restaurant workers, who often earn a poverty level $2.13 an hour before gratuities.

Some industry watchers want to see tipping go away altogether. The argument is that by withholding gratuity payments a fundamentally flawed and unfair system will crumble. However, unless the cost of the gratuity is included in menu prices, pulling tips will just hurt the servers.

While a handful of restaurants have done away with tipping and raised their menu prices, a Cornell University study found that higher prices would drive diners away. It appears that price sensitive patrons like the illusion that their meals are cheaper than they finally cost when tips are included.

Most servers embrace the practice of tipping, which totaled $40 billion in 2012. Even if the alternative was a higher base pay, many servers prefer tips in part because a portion of them often effectively go untaxed.

Understanding the economics of the restaurant business is a way to understand the need for higher tips. On average almost four in every 10 restaurant industry workers earn at or below the federal minimum wage, even after tips are included. Servers experience almost three times the poverty rate of the total workforce and rely on food stamps almost twice as much as the general population.

Ideally all restaurant prices would include the true cost of the meal, including servers’ salaries. The practice of forcing workers to rely on gratuities to earn a living is clearly not working for at least 40 percent of all servers. The current system that allows restaurant owners to legally pay below subsistence wages needs to be re-examined.

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