I’m interested to read the proposal in detail when Harris provides it. But nothing I’ve read about it so far suggests that it will somehow stop dishonest employers from skimming tips from workers.
And yes, we do need to seriously consider the downside future consequences including creating additional incentives for employers to shift more compensation away from wages and more towards tips.
But hey, you know where I stand on this and I do appreciate your good-faith effort to articulate why you think it’s a good idea.
My read on this proposal is that politicians are proposing a low-effort fix because they don’t want to put in the work to fix the underlying problem creating abuse; it leaves in place a system that forces workers to depend on tips for survival instead of enforcing a living minimum wage (or even the current legal minimum wage) for all workers.
That’s why both Republican and Democratic politicians have championed the idea: it doesn’t require any of them to address the root problem.
There’s no reason to do nothing while we wait for perfect. We can make incremental improvements in people’s lives without compromising doing even better in the future.
The main difference between Harris proposing this and T**** proposing it is that Harris might actually do it, while we all know T**** will just talk about it. It will always be two weeks away.
Right now, employees and employers are both incentivized to under-report tips, so there’s a bit of a Prisoner’s Dilemma going on that keeps workers shy about reporting full tip value. That opens the door for employers to skim tips. If there’s no disincentive for workers to report full tip value, it makes it harder for employers to skim because now workers can be completely honest about their tips and report employers who steal tips. Maybe not 100%, but a lot more often.
We shouldn’t do nothing. We should end the exception to minimum wage laws to ensure all workers are duly compensated. That’s no bigger a legal or logistical hurdle than this proposal is. The only reason politicians aren’t supporting that plan instead of this one is because they don’t want to lose the support of exploitative industries that force people to depend on tips for survival.
There’s a difference in the ability to make it happen across the board. There are already places where there is no exception to minimum wage for service workers, but there are many places where it would be extremely difficult to make happen. Whereas changing the tax on tips rule would face much less political blowback.
So yes, it’s much easier to make the tax change than to make the federal minimum wage both a living wage and apply to service workers. Pretending that political feasibility doesn’t matter in how quickly it can be accomplished isn’t helpful.
This doesn’t sound plausible to me. You think that employees tolerate theft by their employers because they’re worried about the IRS coming after them? Even though the agencies that tip theft would be reported to are completely separate entities from the IRS?
Maybe I’m wrong though. Hey all you tipped workers out there on this BBS: have you stayed silent about tip theft specifically because you fear IRS would come after you?
this is why i like to pay cash. you still have to trust the front end is going to share it with the kitchen staff ( and how fair all that is varies ) but it still feels better than the owners skimming off the top
worse of course are services like square who are also skimming off the tips. ( and my understanding is that the percentage take is different/higher for tips versus total bill, though i don’t have any links on that )
at least some states have mandated actual minimum wage + tips. unlike states like florida where it’s gotten worse, allowing employers to keep the tips until it passes some threshold
It’s anecdata, but I know people for whom that’s true. They under-report, their employer under-reports, and as a result they just have to suck it up and accept some skimming. Mutually-assured destruction, except the owner can afford better lawyers.
Did you think I came up with that out of thin air?
I get that, and understand some places will justifiably charge a premium price for a premium experience. However if you’re going to do that, charge a premium price up front and let the chips fall where they may. Don’t add a bunch of extra fees and surcharges on the back-end.
The reason that no-tip restaurants charge the surcharges is so that they can keep their menu prices on par with restaurants that do expect tips. If you have to up your prices by 20% compared to your competitor, suddenly your restaurant goes from seeming like a casual-date-night place (based on the menu price) to a the-folks-are-in-town place, or from a folks-are-in-town place to an anniversary-dinner place. It’s not the most logical thing in the world but it does reflect how people price restaurants when they’re deciding where to eat.
(I read an article quite a while ago on one of the trendsetting living-wage, no-tip rerstaurants where the owner straight up said that when they tried the model without the surcharge they lost tons of business due to the menu prices, but diners at least understood that the surcharge stood in place of a tip. This place was aggressively no-tips though, as in signs that read “any gratuities left at the table will be donated to local charities”.)
Whether a place does indeed do something ethical with the 20% surcharge is a separate question, though if they “don’t accept tips” then that suggests that they’d be bound to pay their employees at least standard minimum wage. At least theoretically. The place in the faintly-remembered article claimed to just use the surcharge income on staff salaries.
That’s not what @ficuswhisperer was talking about, though. They were talking about restaurants in a state where they don’t get an exception to minimum wage for service workers. Some charge surcharges to make up for having to pay workers minimum wage who then also make tips.
(I mean, really a model where tipping is expected at all is the enemy, but.) (*)
(* I once came across an anarchist pamphlet titled “Abolish restaurants”, which I laughed off at the time. In the intervening years I find that I’m increasingly coming around to that position.)
I like the European model, where service workers are paid a living wage but minor tipping is expected - typically just rounding up. Maybe a bit more for excellent service.
