The Trouble with Tipping (hint: it’s inequality)

by Crystal Paradis-Catanzaro

Tipping promotes inequality, and fosters discrimination and sexual harassment. The roots of tipping in the US can be traced back to the freeing of enslaved people, when change-resistant employers could avoid paying newly freed people an actual wage by making them work for tips. People who work for tips are twice as likely to live in poverty, and can be paid far below minimum wage. People of color are tipped at lower rates than their white colleagues. Workers who rely on tips to make a living experience twice as much sexual harassment. Is this what we meant when we used to say, “Here — for your trouble”?

We’re the only major country where tipping is still a widespread practice. Other countries, notably the UK where it originated, have largely eliminated the practice. But in the US, we’re literally stuck in the past — in 1996, legislation was passed (due in large part to influence by restaurant tycoon Herman Cain) to decouple the minimum wage for tipped industries from the minimum wage for all other industries. This has left the federal minimum tipped wage at $2.13/hour, where it was set in 1991. There are only nine states in which tipped workers earn at least the federal minimum wage. Here in New Hampshire, minimum wage for tipped industries is 45% of the applicable minimum wage ($7.25/hour), equaling $3.26/hour. Hourly wages can vary depending on individual companies — for example, many coffee shops pay standard minimum wage, although their employees accept tips. But most restaurants pay their servers the minimum $3.26/hour, letting the rest of their workers’ income depend on the whims of each customer.

This leads to a power dynamic between server and customer that is the source of documented discrimination and sexual harassment, which can go both ways. Customers feel they can harass servers because they’re controlling their literal livelihood; servers can give unequal service based on the perceived tip potential of the demographic sitting at their tables. And despite the problematic dynamic it creates on both sides, there is in fact no reliable correlation between tips and service — how can there be, when tipping happens post-transaction?

There are also plenty of economic detractions to tipping — the turnover rate for the hospitality industry is drastically higher than all other industries (20.7% in 2016) and part of this can be linked to the instability of what restauranteur Danny Meyer calls a “false economy” that doesn’t factor service into base pricing. Taking all of this into consideration, what if a restaurant owner decided to simply get rid of tips and put all employees on salary? New Hampshire law prohibits this. In the “Live free or die” state, an employer is not allowed to make their own decisions about employee compensation, even if they’ve concluded that paying salaries would save costly turnover rates and training time.

I learned about these surprising state-specific legal barriers when I spoke with Dave Boynton, who has made headlines recently as his restaurant, 7th Settlement Brewery, gears up to become the first restaurant in the state of New Hampshire to go to a hospitality-included model. While it’s also called “tip banning,” banning tips outright is illegal in the state of New Hampshire. Boynton had wanted to completely remove the power and control dynamic from the interactions between their guests and employees by implementing a policy that donated any tips left to a local charity, but in New Hampshire, any employee in a tipped industry cannot be barred from accepting tips. They’re still working on the details, and hosting conversations with the community to introduce the concept. But tip banning, or hospitality included, isn’t the only revolution that is brewing to bring justice to tipped workers.

There are also efforts, including those led by Saru Jaramayan of Restaurant Opportunities Center, to eliminate the minimum wage disparity between industries considered “tipped” and the rest of industries. In a Freakonomics podcast episode titled “Should Tips Be Banned?” lawyers discussed the potential of a federal ban, since tipping has been proven to be shown as discriminatory based on race, age and other federally-protected classes. The mitigating factor that would determine such a case’s viability, say the lawyers, is public opinion. Enough of a cultural shift in perception of tipping as an outdated and unfair practice, and the courts would likely follow suit and outlaw it.

No matter where you stand currently on this issue, I challenge you to keep learning about the history of tipping, and about the systemic treatment of tipped workers. Investigate the resistance to change in this area, and consider the influence of ingrained racism, sexism and anti-immigrant sentiment.

If you want to see progress towards equality for tipped workers, start by having your next meal or brew at 7th Settlement here in New Hampshire, or other restaurants in your area who are taking the risk of opening up this conversation in their community, and putting their own financial future on the line to do so. Encourage restaurant owners and hospitality employers you know to think about changing their policies in a way that makes sense for their business. Ask your local representative in the state house how they can help Granite State employers make their own choices about how they compensate their tipped employees, and how they can ensure fair treatment for all our state’s tipped workers. Support federal efforts to standardize the minimum wage across all industries.

And finally, until sweeping reform occurs, make sure your own personal tipping practices aren’t reinforcing the dark history and problematic side-effects of tipping. Until we move past this inequitable practice, take it upon yourself to tip fairly, and consider raising your own standard tip amount to make up for the less thoughtful or less aware among us.


This article was originally published on July 22, 2017 in Seacoast Sunday, the combined Sunday edition of The Portsmouth Herald and Fosters Daily Democrat. Read it online at or with additional resource links on Medium at: