I was struck by commentary around the discussion about a potential increase in the minimum wage for San Francisco to $15 USD per hour, which is very similar to what Seattle has already done. It seems as if the restaurant owners’ as­so­ci­a­tions in each city are looking for a carve-out for tipped workers in both the Seattle and San Francisco cases, and threaten very expensive meals if they don’t get it. If you look at this argument rationally, those restaurant owners are basically saying that the only way they can provide an affordable service is for their customers to directly subsidize the salary of their work force. In the United States, we call that subsidy a tip.

Let’s look at this argument. Normally, when I engage a vendor to provide a service, such as repair my car, fix a chipped tooth, etc. I don’t expect to be told that the service was X dollars, but I need to pay the actual employee who performed the service their wage on top of the bill I received for the service. I expect that the total cost of providing that service is built into price I paid, including the cost of labor. Why is this different in the restaurant business?

If I didn’t know better, I would think that the restaurant business is using this technique to obscure the actual cost of the product they are trying to sell, but no industry would ever try and do this to their valued customers. I believe there is even a government agency in the US that will step in if an industry actually were to attempt such a nefarious practice.

Now, the US is fairly unique in the world in that tipping is expected, and the reason given is that the person who receives the tip is not fairly com­pen­sat­ed for their work without the tip. Most of the rest of the world views a tip as it was originally intended, a gratuity that rewards exemplary service. I travel all over the world, and only in the US do I feel obliged to tip. That removes the reward component, and makes it a service fee or tax. It no longer represents the thank you that it was originally intended to provide.

The rest of the world pays it’s service workforce a living wage, or at least one that isn’t predicated on tip income. I don’t see the cost of services in those other parts of the world out-of-line with what I pay in the US. Are we saying that the rest of the world is just better, smarter, or more efficient in delivering those same services, such that they can pay better wages and still hit the same price points without relying on the customer to pay a hidden additional salary subsidy to the employee? Say it isn’t so…

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