By Bonique Edwards-
In the pursuit of diversity, equity and inclusion (DEI) in America, there are systemic obstacles that hinder progress. One such obstacle, often overlooked, is the practice of tipping in the service industry. While tipping is ingrained in American culture and often seen as a method to reward good service, it perpetuates inequity, exacerbates wage disparities and undermines the very principles of equity, which is very hard for many to grasp.
Equity is the hardest to achieve in most cases because the penalty can be costly emotionally and financially for empowered colleagues, business owners and corporations. Many are unwilling to pay for the mistakes of the past. Yet our unwillingness to rectify these past transgressions makes it almost impossible for us to create equal opportunities for justice.
Let’s explore how tipping is not equitable and continues to attack America’s efforts to promote DEI.
Racial Bias in Tipping
The genesis of tipping originated to underpay immigrants and Black American workers post-slavery and then generously tip white workers performing the same job.
Studies have consistently demonstrated that tipping is influenced by racial bias. A landmark study by the National Bureau of Economic Research revealed that racial minorities, particularly Black Americans, receive lower tips compared to their white counterparts, even when controlling for service quality. This racial disparity not only affects individual income but also perpetuates wealth gaps, reinforcing systemic racism and impeding efforts to achieve true DEI.
Unequal Distribution of Tips
Tipping practices often result in an unequal distribution of earnings among service industry workers. In many establishments, tips are pooled and distributed among staff members. While this may seem fair in theory, it fails to consider the diverse roles and responsibilities of workers. Servers, who interact directly with customers, tend to receive the lion’s share of tips, while back-of-house employees, such as cooks and dishwashers, who are often people of color and who play an equally crucial role in delivering quality service, are often left with meager shares. This discrepancy in tip distribution perpetuates income inequality within the service industry, disproportionately affecting workers of color who are more likely to hold non-server positions.
Instability and Income Disparity
Tipping creates an unstable income structure for service industry workers. Relying on tips as a substantial portion of income subjects workers to uncertainty and inconsistency. Those who work in establishments with higher-priced menus or upscale clientele may receive larger tips. In contrast, workers in more affordable establishments or serving less affluent customers face lower tipping rates.
For example, the server at Denny’s will make approximately $8-12 for a $45 meal for two people. A server at Ruth’s Chris Steakhouse will make roughly $40-$50 for a meal, which is approximately $250 for two people. There is a discrepancy of at least $32 per patron based on the restaurant venue. Assuming a conservative number of servicing five tables per shift with the aforementioned dollar amounts and working four days per week, a server at a fine dining establishment can make an extra $640 per week. This volatility in income directly contributes to financial insecurity and perpetuates socioeconomic disparities, making it difficult for individuals from marginalized communities to break free from the cycle of poverty.
Should we assume the server is working harder at Ruth’s Chris than at Denny’s? Further, since many Denny’s restaurants do not have a liquor license, there will never be an opportunity for the servers at Denny’s to benefit from tips on alcoholic beverages. If one purchases a $100 bottle of wine from a fine dining restaurant, the consumer will pay a $20 delivery fee for the server to walk 10 feet from the bar to the table. I bet Amazon would appreciate the same delivery fees when their packages are delivered globally.
To complicate this process, coveted server positions at fine dining restaurants are overwhelmingly given to whites (78% and mostly men) who have access and connections to those opportunities.
Impact on Recruitment and Retention
Tipping practices can have adverse effects on recruitment and retention within the service industry. Research has shown that tipped employees often face higher turnover rates due to the unstable nature of their income. This turnover disproportionately affects minority workers, who may face additional barriers to finding stable employment. Moreover, the reliance on tipping as a source of income discourages individuals from pursuing careers in the service industry, limiting opportunities for career advancement and further entrenching existing inequities.
Alternative Models and Solutions
Alternative models exist that challenge the traditional tipping system. One notable example is the hospitality-included model, where service charges are included in the menu prices, ensuring fair compensation for all workers. This approach has been successfully implemented in various establishments and has shown positive results while reducing income disparities and creating a more equitable work environment.
Another option is paying service workers as professionals, so consumers are not burdened to cover the costs for lower wages.
Despite its cultural significance, tipping remains a barrier to achieving DEI in America’s service industry. Its inherent biases, unequal distribution of earnings and negative impact on stability and recruitment undermine efforts to foster a fair and inclusive society. It is crucial to critically examine and reform tipping practices to promote diversity, equity and inclusion. By adopting alternative models and advocating for fair compensation, we can create an environment that respects the dignity of all workers and moves closer to the realization of a truly equitable society.