It Might be a Terrible Idea to Ban Tipping, Says a New Study

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By F&W Editors Posted April 18, 2016

A new study questions the benefits of abolishing tipping.

Restaurateurs like Danny Meyer are waving the banner of the no-tipping revolution but it turns out that we might have reason to be nervous about service-included dining becoming the norm. A new study from the University of California, Irvine warns that eradicating tipping and implementing a $15 per hour minimum wage could actually shortchange servers, cause a drop in service quality and hurt businesses.

Conducted by economics professor Richard B. McKenzie, the study found that servers at both moderately-priced and casual restaurants with table service earn much more than many anti-tippers might think. “The wage that the restaurant servers indicated would be acceptable was in the range of $30 an hour, not $15,” McKenzie said in a press release. “Which is the wage rate states are considering.” The study also noted that businesses that have adapted a no-tipping policy have not seen positive results, for the most part. For example, in 2015 San Francisco’s Bar Agricole and Trou Normand eliminated tipping and paid the staff higher hourly wages across the board. Over the next ten months, the restaurants saw 70 percent of its servers quit. Why? The servers’ hourly wage ended up dropping from $35-$45 per hour to $20-$35.

McKenzie also avers that while tipping abolitionists believe that eliminating tipping would have no effect on service, the truth could be hazier. “Assessing the impact of service quality on tipping, or vice versa, is difficult at best,” he writes. “Service and tipping are interrelated, with each most likely affecting the other. That is, the level of service can affect the level of tipping, but the level of tipping can also affect service, and the interrelated effects can be difficult, at best, to disentangle statistically.”

One group not represented in this study: cooks. Getting rid of tipping is largely about widening pay for back-of-house staff, who cannot legally receive pooled tips. When he introduced his no-tipping policy, Meyer suggested that he was motivated by an increasing wage gap between the kitchen and the dining room.

So should we abandon the whole concept of replacing tipping with a “living wage”? McKenzie says it should be treated on a case-by-case basis. In the study’s conclusion, he writes that while arguments for abolishing tipping are “well-intended,” they don’t jive with most of the “key economic realities of the server-labor and restaurant market.” He goes on to add, “While some restaurants might find that a ‘hospitality included’ pricing plan works best for them, it will not necessarily work for others.”

We wonder what the vocally anti-tipping Hillary Clinton would have to say about these results.

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