Thoughts on Tipping

Tipping. Often our brain's last remaining useful application of mental math. You've had a nice meal with friends or your date and then the bill comes back. The stress begins and you tug at your collar or fidget with your jewelry as the thought bubbles begin to flood your mind:

How much to tip? (15%?)
Was the service really that bad? (20%?)
Was it really that good? (let's compromise at 18)
Who do I blame for that salty pork chop? (18?...Shit, I need a calculator)
I wanted ranch on the side!!! (I'll just round to the nearest dollar)
I know I tip the bellman but what about the person who cleans my room? (Carry the 1...)
I know restaurants are at least X percent, but what about the nail salon?
-Quick - let's leave before they see what we wrote!

While a stressful practice stateside, tipping is not practiced extensively in most developed countries, and it can even be considered rude.  From restaurants and bars to nail and hair salons, tipping is woven into many of society's transactions.  If not for credit cards, you'd need more $1's than Blondie if you were to take a cab from the airport to your upscale hotel, make a quick trip to the nail salon before dinner and then meet a friend for dinner.  As part of the tipping debate, it's necessary to emphasize that in many of these service industries, those receiving these tips rely on them as a significant part of their income, and without them, many of these workers would not earn what most consider a living wage.

A recent discussion prompted me to consider why we tip. Is it a customary procedure to keep our STEM skills sharpened?  Is it to reward those who are exceptional at their job - to in effect give micro-bonuses? As someone who is privileged/spoiled to have very limited service industry experience, I have no firsthand knowledge of the effort, patience and energy it takes to work these jobs.  Furthermore, this same privilege and desired career track has led me to a salaried position that provides 8 hours' pay, even when some hours are admittedly more productive than others. Most days I believe I add value to the projects I'm working on and teams I'm a part of; however, some days my mind drifts more than it perhaps should or I didn't sleep well or one or a hundred possibilities.
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Pretend it's 4:00 on Friday, just before your 3 day weekend begins and the office is already nearly empty.  Or maybe you're not feeling well but can't afford to take time off.  Or maybe you've had a death or serious illness in your family but are still at work, trying to push through until the funeral.  Whatever the reason - hangover or heartache, many of us have the privilege of being able to continue billing hours, even when we know we're not giving our best work, and we know there will likely be no direct impact.  No one bills these hours at a lower rate or tells their supervisor - "I didn't deserve my full salary today when I was thinking about my ill family member...or my upcoming vacation"  Yet, conversely, how many of us start to wonder if we deserve a bonus after a few focused 10 hour+ days, weekend warrior campaigns, or back to back weeks of exceptional effort?
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After that tough day at the office, you head to the nearest restaurant to avoid the effort of cooking and cleaning.  Your service is a little slow, the food isn't cooked to your liking, and they forgot to put ranch on the side.  Or, after heading to the salon after a long day at the office you notice your new 'do doesn't look quite as fresh as it usually does or perhaps your cab driver missed a street on the way home, adding precious minute(s) to your trip home.
In how many of these instances does your waitress/stylist/driver deserve a lower tip?  Most would argue that we tip on performance, just as salaries/bonuses are similarly influenced by production.  Yet, it could be argued that in service industries, the relationship between performance and compensation is both more immediate and greater in magnitude than in most professional industries.

Most professional jobs come with higher salary ceiling than most service industry jobs. Should society further reduce service industry workers' wages if they aren't at the very top of their game 100% of the time?  An alternative compensation structure would be to increase service workers' hourly wages so that they can earn a decent living without tips, and then encourage society only to tip when service is extraordinary.  If service is average, then the servers/stylists/etc will receive no additional money, but if they go above and beyond, you can leave an additional 5 or 10%, knowing that the worker will see this gesture to indicate a job well-done.  Workers are still incentivized to get it right and give extra effort, but are not punished severely on off-nights.
In addition to perhaps becoming a small solution to the nation's growing income mobility and inequality issues, this policy would simplify our shopping, dining, and transportation experiences.  Forget calculating the tip.  That $15.00 quinoa burger & kale fries might come with sticker shock, but the listed price would capture the true cost of preparing it for you and paying the wait staff, not $12.49 + whatever tip you think should be added.

Paralleling other wage-related and inequality issues, the American service industry should re-consider its stance on tipping and transition from an industry where its workers often rely on tips to one where tips are merely appreciated.  If they work 40 hours a week, stylists, waiters, taxi drivers and many other service industry workers should make enough in base salary to cover their own food and shelter needs.  If they give great service, then diners and others should be encouraged to give an additional tip for a job well done - like an immediate micro spot bonus that many of your companies may give.  If service was average, customers can leave without tipping but with the knowledge the person serving them was still paid a decent wage. Service workers can do their jobs without the stress of worrying about rude college kids leaving a 10 cent tip on a 40 dollar meal, while still having an incentive to provide impeccable service.

Research: http://tippingresearch.com/uploads/Waiter_Survey_Initial_Report__1_.pdf

http://waitbutwhy.com/2014/04/everything-dont-know-tipping.html
Labor Statistics: http://www.bls.gov/oes/current/oes353031.htm

Red vs. Blue and the American Dream

Recently, Richard Florida, Canadian, frequent contributor to the NY Times, urbanist, and frequent commentator about his self-coined "Creative Class," wrote a piece in the Times entitled:

 "Is Life Better in America's Red States" 

Via Reddit

In the piece, Florida chronicles the often stark divide between red and blue states, how their economies differ in what they need to thrive and what they provide to local citizens, how blue states have become more unequal, and the crux the nation faces going forward between these two strategies.

Please read the article; for those who read Florida frequently, his comments and conclusions likely won't surprise you.  And for those of you who know me (let's be real - this blog has been live for like 4 days - everyone reading this knows me) - you probably already know my thoughts on many of the topics discussed in the article.

To be clear, I agree with Florida in that a society cannot frack and sprawl it's way to prosperity without some consequences (health, environmental, etc).  Yet, it is important to emphasize Florida's points about inequality and the high cost of housing in blue cities like San Francisco, Boston, New York, and Washington D.C.  I think most would agree that the public and innate benefits offered by these cities (transit, food, arts, education the opportunities that stem from museums, great universities, and being surrounded by a dense collection of intellectuals) are superior to those offered in redder cities - sorry Dallas, Houston, Atlanta, etc. 

People have long indicated their preference for this with their zip code and wallet - some people sacrifice more square footage for a more walkable neighborhood and many people continue to choose the more bucolic American dream in exchange for being weekday commute warriors on the road.  What I have often posed to my friends in redder states (especially those I have known for awhile back in Texas), is if they would continue to choose to live there were the environmental and health damages induced by sprawl monetized and applied to their housing costs?  I won't try to sway any votes tonight, but considering the environmental externalities is at least worth a brief consideration.

The most daunting challenge I took from Florida's article is the inequality induced by these popular blue cities.  Because so many people want to live there and the tax rate needed to maintain a dense lifestyle is relatively high, housing costs in these places have sky-rocketed.  Build too high and the cost of going vertical makes housing expensive; building without density results in higher land costs - both of these factors have resulted in smaller and smaller units and longer and longer commutes.  Creating methods to provide low-medium cost housing going forward will be critical for these blue cities.  I certainly have no breakthroughs.  My only direct thought would be to perhaps explore asking developers not to build units with stainless steel appliances and granite countertops in every unit.  The higher profits the developers can glean from these units also end up pricing the median worker out of most new construction.  I realize this request would not employ capitalism to the fullest, but that probably bothers me less than it might bother you.  

Other potential solutions likely involve examining tax policy in general - but that would digress from the intended discussion points of this article quickly.

I am always amazed at how divisive our country can be.   Children who grow up in the same neighborhood in similar family structures can end up with vastly different political and social values.  The divisiveness seems as strong as ever and these differences will likely remain strong for better or worse - some people will still prefer 400 ft studios in Manhattan and others will still prefer acre lots in McKinney or Acworth, and I have come to accept there is nothing wrong with that, as long as all parties are paying for the resulting external costs.

As emphasized in the article, red and blue states will continue to depend on each other.  Blue states will need to find long-term solutions to at least quell the recent rapid rise of housing costs and provide reasonable options for their lower-income residents.  Red states will need to recognize many of their recent low tax high frack policies are both environmentally and economically unsustainable in the long run.  There will be no shortage of opinions offered in the meantime.

Thanks for reading - have a great day!

--------------------------------------------------------------UPDATE ---------------------------------------------

See update to this post in other blog entries