I guess I've known for a long time that servers in restaurants are paid "minimum wage" so tips are not only justified for the hard work they do, but an essential part of their compensation.
But -- define minimum wage! Katherine Rampell's rundown on the real story of tipping ("A Bad Way to Pay Servers") is probably a surprise for many of us who haven't tried waiting tables ourselves. It makes clear how the system cheats both servers and restaurant customers. The key point is that in most states, there is a separately defined rate for "tipped minimum wage," meaning that employers whose employees typically receive gratuities can pay much lower than the standard minimum wage, on the assumption that tips bring total compensation up to the minimum wage rate.
That "tipped minimum wage," Ms. Rampell says, is $2.13 (federal) and has not been raised in 23 years. As she goes on to note, this system really is unfair in many ways - to servers, to taxpayers, and to diners. It's good only for the restaurants themselves. (Restaurateurs will argue this point but there is pretty good evidence to support this conclusion.)
But the situation isn't as dire as it sounds, nationwide, because minimum wage decisions are really made by states.* So several states (i.e. Alaska, California, Nevada, Montana, Oregon, and Washington) do require restaurants and other employers to pay their tipped workers the same state-mandated minimum wage that all other employees receive. Quite a few states specify a rate that is higher than $2.13, but lower than the legislated minimum for non-tipped workers. On the other end of the spectrum, some states mandate only the $2.13; and some have NO minimum wage law at all.
*(Note: The ever-useful Wikipedia has a great chart on this, showing the standard and the tipped minima, state by state. Check it out for free here - and think about giving them a donation while you're at it!)
Implications
We dine out quite a bit but have found that rising costs, and rising expectation about tipping that has gone from 10% to 25% in our lifetime, to be serious obstacles, especially in retirement. No one - well, hardly anyone - wants to penalize servers, but there are steps that seem reasonable to me. As a matter of fairness, individuals should push local legislators to up the "tipped wage minimum;" and they might also want to extend their complaint to restaurant owners. Would a change in the TMW lead to higher prices for meals? Perhaps, but we'd find that system fairer than what now exists.
On the other hand I think the variability among states also implies some bad news for some servers. We should be aware of what our own state's TMW is, and think about tipping accordingly - give what you want for super service, but most people tend to figure a standard percentage. Maybe that percentage should really be 25% in a state where restaurants may pay servers only $2.13 an hour (Virginia, where I live, is one of those); but should I leave that same percentage amount on the table when I'm visiting California? Maybe not.
