Does “Tipping Fatigue” Justify Paying Minimum Wage to Tipped Workers?
Massachusetts lawmakers are considering a November ballot question to phase out the state’s subminimum wage for tipped employees. Photo via Unsplash/Dan Smedley
Does “Tipping Fatigue” Justify Paying Minimum Wage to Tipped Workers?
Proposed Massachusetts ballot question phasing out state’s subminimum wage for tipped employees raises concerns, says SHA professor
“Tipping fatigue has hit American consumers hard,” ABC News reported about the backlash to burgeoning gratuity requests for things such as takeout. Two-thirds of Americans have negative views of tipping, according to a 2023 survey.
The Massachusetts legislature has until tomorrow, April 30, to place a tipping-related question on the November ballot; if it doesn’t, advocates can seek signatures petitioning that the measure go before voters. The question asks voters to join the seven states that have phased out the subminimum wage paid to tipped employees—$6.75 an hour in Massachusetts—that currently covers them instead of the general $15 hourly minimum that applies to other Bay State workers. (State law allows tips for any “wait staff employee, service employee, or service bartender.”)
By law, tipped workers are supposed to net $15, with their employers making up any difference if workers’ subminimum and tips don’t add up to that. But too many employers don’t follow the law, say advocates of abolishing the subminimum. Opponents counter that especially after the pandemic, restaurants’ profit margins are so low that they cannot afford higher payrolls.
The proposal, which would phase out the subminimum over five years, includes a second provision that would allow employers to split tips among all their workers, including non-tipped employees. The Massachusetts Restaurant Association has sued to keep the question off the ballot, saying two separate policy proposals in one question should be ruled ineligible.
Would paying minimum wage to servers eliminate the need for tipping altogether? It’s more complicated than that, says Sean Jung, an assistant professor of hospitality analytics at the School of Hospitality Administration. He has worked as a busboy, a waiter, a cook, and a restaurant manager and once co-owned a food cart on Wall Street, which can be an unexpectedly violent profession. (Vending spaces on Wall Street are jealously guarded, Jung says, and a competing food truck once rammed his cart, splattering hot grease on his business partner.)
With all his time in the trenches, Jung testified about his reservations to the proposed ballot question at a March legislative hearing on whether to put the measure before voters. He shared his thoughts with BU Today.
This interview has been edited for clarity and brevity.
Q&A
With Sean Jung
BU Today: Are you for abolishing the subminimum?
Sean Jung: I have concerns. This is just my personal opinion, but if it definitely increased wages for your employees, I would say give it a go. But that’s not the case if you look at research [into] whether wages increased for those seven states. It’s mixed.
BU Today: Are advocates correct in their assertion that significant numbers of restaurants ignore the law requiring them to get their workers to $15 an hour?
Sean Jung: [A state regulator at the hearing] mentioned that there was a pretty substantial number of violations. It was quite higher than I was expecting. If the owner was not able to pay, that means that they’re close to going out of business. As a person who worked in the restaurant industry, I don’t think people would try to exploit their employees. It’s a service sector; that means that if the employer treats the employee wrong, then the service also goes down.
Even though [recent] menu prices have increased about 20 or 30 percent, restaurants are still having a very difficult time bringing in high margins. The reason is because costs of ingredients have skyrocketed over the last three years. It’s really hard to make a buck.
Tip workers actually receive more money than people in the back of the house receiving the minimum wage. That’s also a problem, to be honest, because nobody can live on the minimum wage around Boston.
For the restaurants, there are only two options [if they must pay minimum wage]: close or find an alternative to bring in money so they can survive.
BU Today: Or get by with fewer employees?
Sean Jung: That assumption is saying restaurants are inefficient, they have room to cut. This isn’t a manufacturing company. Employees in restaurants are efficient. The average [food wait] is seven minutes. There’s no way a restaurant would be able to survive if you had a 30-minute wait for your food.
BU Today: Many people are suffering “tip fatigue.” What effect has abolishing the subminimum had in the states that have gone that route—do people tip less, or not at all?
Sean Jung: Full-service, casual dining restaurants are implementing a “service charge.” It’s a mandatory—the common norm is 20 percent—charge.
BU Today: A mandatory add-on to help the restaurant balance its books?
Sean Jung: Exactly. People still pay tips.
Even though prices have increased in terms of the menu about 20 or 30 percent, they’re still having a very difficult time bringing in high margins. The reason is because costs of ingredients have skyrocketed over the last three years.
BU Today: Do they tip a lot less because they’re paying the service charge?
It’s not as substantial as I would expect. It’s around 15 percent. In America, tipping is considered an ethical thing. It feels like you’re not doing your job as a consumer if you don’t pay the amount of tip that is [expected]. It’s built in our system.
BU Today: Restaurants wouldn’t increase prices on their menu instead of a service charge?
That would be the last thing that they would want to do. Consumers look at the menu prices. It looks like you’re asking for more as compared to the person who is asking for a service charge [instead of raising prices]. How many people actually say, oh, there’s a service charge? Nobody would have that consideration when they’re just going to have a burger.
This service charge is not a guarantee for people working in the front of the house. The service charge is for the restaurant owner.
BU Today: When you go to Starbucks, do you give servers a tip?
I do. There’s a theory called nudging. If you are [asked] for a tip, regardless if you’ve received tabletop service, you are more likely to tip when [a tip screen is] right in front of your face. They’re asking you to pay 20 percent. The [smaller tip] button is, like, very small, in the corner, where you have to click on it and then write down exactly the percentage. That’s extra work. I do have a problem with that.
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