Cutting Tips

I have to admit that I have a soft spot for those who live on tips.

Why? Because when I was in high school and in the summers that followed, I worked in a restaurant. And as a senior in college, I drove a New York City taxicab for nine months (yes, it's true).

While I can't say that I would want to do those jobs again, I think they taught me a lot about people and the way the world works (I also learned how to make those abrupt six-lane crossover turns that NYC cabbies are famous for).

So when I read reports like the following, "Tough Times for those Working for Tips," by the Associated Press, I compelled to say that if you can afford to eat out or take a cab, try not to punish the guy (or girl) who is behind the wheel or carrying the tray. They depend on you.

Cabbie: 'I understand they just don’t have it, but that cuts into my income'

At the Corner Pub on Cincinnati’s west side, bartender Melissa Metz can count the cost of the economic hangover in the stack of bills she has at the end of a shift.

Those tips make up the majority of her income, but they’ve been dwindling for months amid rising gas prices and other economic woes. Right now, her weekly income from tips is down about 25 percent.

“Some people are coming in less and maybe not staying as long when they do come in,” Metz said. “And normal customers who would normally tip $5 are tipping about $2 now.”

Bartenders, waiters, hair stylists, cab drivers and other workers who depend on tips for much of their income are among those who say they are seeing decreases as customers feeling the economic pinch trim their gratuities — or sometimes omit them entirely.

The pinch can come from many sides, as customers are also cutting down on how often they eat out, have their nails done and get other services that typically involve tipping — or spend less each time, meaning a lower total to tip on.

How much it’s hurting is hard to tell, since agencies like the Internal Revenue Service and the U.S. Census Bureau that collect employment information don’t break out tip data. While the U.S. Bureau of Labor statistics includes tips in its wage estimates for professions that involve tipping, the information supplied by employers is not broken out separately. Because the government surveys only every six months and publishes the data just once a year, even the statistics it released last month are from before the economy hit the skids.

At the state level, some efforts have been made to help workers dependent on tips for part of their income. The Delaware Senate approved a bill this month that would raise the minimum wage for service workers and others who depend on tips. Supporters say it would help low-wage workers struggling in the current economy. In April, the Missouri House of Representatives rejected legislation that would have lowered base wages in the state for tipped employees.

The National Bartenders Association says the amount of tip income can vary by type of bar, but tips across the board probably make up about half of many bartenders’ income — and based on what it’s hearing from its members, tips are down.

Association President David Craver said the economic pressure on bars and restaurants now is high, especially in very competitive markets.

“There is less overall business to begin with, and then on top of that, people are a little tighter with their money,” Craver said. “Someone who might have tipped $5 may only be leaving $3 now. The next thing you know, everybody’s making 25 to 30 percent less on a monthly basis than they normally do.”

Waitress Jewell Cundiff, 24, is trying to pick up extra days at the Anchor Grill in Covington, Ky., to make up for it.

“We used to get tips of about 20 percent of a bill, but now it may be 15 percent or less,” said Cundiff, who says 75 percent of her income at the diner depends on gratuities.

“People just aren’t eating out as much either,” she said. “If you don’t serve as many people, you don’t get as many tips.”

Hair stylists at Chappies Hair Design in Crescent Springs, Ky., say they haven’t seen a cutback in individual tips, but see people waiting longer between appointments — cutting down the amount of times people tip.

“Some who might have come in every four weeks for a haircut are trying to stretch it out and come in every six weeks,” said general manager Carla Frazier.

Michael Lynn, a consumer behavior professor at the Cornell University School of Hotel Administration, has studied tipping behavior and isn’t surprised workers are reporting that it’s declining. Since his studies show that people with high incomes tip more than people who earn less, he said, it follows that people tip less when the economy sours and their income drops.

“Paying $80 to fill up your gas tank can really put a chill in people,” said Anthony Townsend, a professor in the College of Business at Iowa State University. “And people react to more apparent times of economic distress by tending to economize around other issues.”

Cincinnati cab driver Dawit Medhane said the tips he usually received had made up only about 15 to 20 percent of his income, but helped cover some of his gas costs — which have tripled compared with last year. Customers who previously gave 15-20 percent are now more likely to give 5-10 percent, or nothing.

“People are using cabs less, too,” he said. “Some companies have cut corporate travel, and that means less business and less tips.”

Business customers who fly into Cincinnati haven’t reduced their tips, said Sam Brown, who has been driving a cab for 34 years, but many others who take a cab to the grocery, work, or a doctor’s office aren’t tipping at all now.

“I understand they just don’t have it, but that cuts into my income,” said Brown.

Anna Duran, a nurse from Grand Junction, Colo., who was visiting Boston, admits she doesn’t tip any more than she has to when she eats out.

“Sometimes I feel cheap,” said Duran. “I try to give what I can because I am not the only one trying to save.”

Neil Tibbitts of Boston, a former waiter, said he has been trying to dine out in less expensive places, but always tries to leave at least 20 percent.

“If the service is good, that should be rewarded.”

That should be good news for Metz, who is trying to make up her lost income the only way she knows how.

“I was working a 40-hour week, now I’m working 50,” she said.

Comments

[Rachel @ Master Your Card]

It is tricky. If you are finding it hard to afford that taxi or meal out then the tip can just be the final straw. If you have carefully put money aside to pay for one of these you may have forgotten to allow any money for the tip and so may just not have enough. It is tough on people who rely on them but unfortunately everyone is feeling the pinch.

[Erik]

I agree that the cost of a reasonable tip should be built into the overall price when one considers whether to eat that meal out or take that taxi, and that people shouldn't try to scrimp by squeezing the tip.

However, the tough part is that some people tend to be more generous tippers, often giving more than the customary amount, particularly people who once worked in tip-based service jobs. Is it "fair" for those people to cut back during harder economic times to the customary / standard tip levels? Sure, but it still hurts the service employee.

[Groty]

Bruce Kovner drove a NYC cab for a year while teaching himself about the markets and how to trade futures.

He turned out ok, and I bet he tips well.

[Deborah]

Tips for the service industry got way too far out of line with the job. Have you done the math?

I worked in the service industry when I was young and the truth is that I would have done far, far, far better had I stayed as a waitress than having gone back to school for 8 years of university.

There is something seriously fundamentally wrong when the job you had before finishing high school would give you a better economic future than two degrees.

My wage with two degrees has worked out to the $10/hour range many times. I sit in a restaurant and calculate that at 10% of the bill tips would work out to $30/hour and they evade taxes on tips. In after tax dollars it is more than $40/hour, and we have social pressure to tip 15 or 20%?

[Jes]

It's time for us to move past the malarkey of excepting food service from normal minimum wage laws. Pay waiters real wages, stop tipping. This works well in other countries and we ought to do it, too.

[A. Zarkov]

"I compelled to say that if you can afford to eat out or take a cab, try not to punish the guy (or girl) who is behind the wheel or carrying the tray. They depend on you."

Suppose you can't afford to give a full 15%-20% tip. Is it really better for the employees if you forgo the service and they get zero? Isn't a 10% tip better than nothing?

[Steve]

The story does bring back memories. I worked for a restaurant going to school in the '70's and again in the early '90's after my business failed. It is hard work and it seems you are always at the mercy of the overall economy. (The only time I was ever laid off in over 35 working years, was when I worked for a restaurant.)

So I agree with Michael. When I waited tables I could usually tell those who never had to do similar type of work in their life. (Supposedly Doctors are among the worst tippers...doubtful they ever had to wait tables or drive a cab.)