Tipping: not only about money but more about economic institution
It is hardly to explain why the behavior of tipping that is a billions dollar social phenomenon becomes a tradition and does not die. There is always a debate about whether the tradition of tipping should be terminated, because such tradition becomes increasingly mandatory and makes some customers uncomfortable. Those who appeal to terminate tipping argue that quite amount of customers give tips to servers according to their moods at that time but not the service quality of servers and the major function of tipping to reward high quality of service is disappearing. Although there are types of different reasons for opponents to appeal to terminate the tradition of tipping, tipping …show more content…
Taking U.S. as an example, the minimum wage of service sectors receiving tips is $2.13 that is much lower than the average social minimum wage $5.15. But many researches proposed that the minimum wage of service sectors receiving tips should not be easily enhanced. Wessels’ study in 1997 found that increase of minimum wage of these service sectors would improve the employment rate at the beginning, but the employment would decline along with the further increase of minimum wage (Wessels, 1997). Another outcome of raising the minimum wage of these service sectors is that employers need to replace the tips with service charge that should be finally handed to the employers. This behavior could cover the cost of employers after raising the minimum wage. However, this finally harms the interests of servers and reduces their incomes, because customers will not pay unified service charges for uneven service qualities. Israel had regulated that minimum wage in those service sectors receiving tips should be raised as same as other sectors. The outcome of this regulation was the tips were replaced by service charge and the actual income of servers decreased (Sinay, 2001). For servers, the income from tips actually is over their minimum wage and reservation wage. When the tips are replaced by service charge, employers only pay minimum wage or reservation wage (Sinay, 2001). In addition, income from tips always does not need to pay taxation while the wages of servers need taxation. Hence, such regulation in Israel actually reduced the income of
It is hardly to explain why the behavior of tipping that is a billions dollar social phenomenon becomes a tradition and does not die. There is always a debate about whether the tradition of tipping should be terminated, because such tradition becomes increasingly mandatory and makes some customers uncomfortable. Those who appeal to terminate tipping argue that quite amount of customers give tips to servers according to their moods at that time but not the service quality of servers and the major function of tipping to reward high quality of service is disappearing. Although there are types of different reasons for opponents to appeal to terminate the tradition of tipping, tipping …show more content…
Taking U.S. as an example, the minimum wage of service sectors receiving tips is $2.13 that is much lower than the average social minimum wage $5.15. But many researches proposed that the minimum wage of service sectors receiving tips should not be easily enhanced. Wessels’ study in 1997 found that increase of minimum wage of these service sectors would improve the employment rate at the beginning, but the employment would decline along with the further increase of minimum wage (Wessels, 1997). Another outcome of raising the minimum wage of these service sectors is that employers need to replace the tips with service charge that should be finally handed to the employers. This behavior could cover the cost of employers after raising the minimum wage. However, this finally harms the interests of servers and reduces their incomes, because customers will not pay unified service charges for uneven service qualities. Israel had regulated that minimum wage in those service sectors receiving tips should be raised as same as other sectors. The outcome of this regulation was the tips were replaced by service charge and the actual income of servers decreased (Sinay, 2001). For servers, the income from tips actually is over their minimum wage and reservation wage. When the tips are replaced by service charge, employers only pay minimum wage or reservation wage (Sinay, 2001). In addition, income from tips always does not need to pay taxation while the wages of servers need taxation. Hence, such regulation in Israel actually reduced the income of