The economic structure of tipping is not equivalent to adding 15% to prices and adding 15% to wages with no tipping. It produces different outcomes for employees and they demonstrably prefer their outcomes under the tipping model in the US. Industries with tipping select for employees with these preferences.
Adding tips to base pay necessarily lowers aggregate income for employees in return for less income variability -- it is a tradeoff. Many people who receive tips are not "surviving" on them, their base pay is more in line with median western European incomes, so many American employees can afford income variability in exchange for higher average earnings, and people that cannot afford income variability select industries without it. In practice, this is their preference and it has been tested in the market many times. Every time tipping has been eliminated in the US in a business neutral way, the employees revolt because it reduces their effective total compensation.
Employees have all the power. Tipping being preferred in the US is almost certainly an artifact of the US having higher incomes than most other countries, a much larger percentage of the working class can afford income variability which creates an employment market for people with this preference. The median American has $1000/month left over after all ordinary expenses, which is more than enough to float some income variability if it means they can earn more.
This is just anecdotal, but I know of a restaurant that pays their workers the $2.13/hr minimum for Tennessee, and they assuredly do not reach TN's $7.25/hr minimum wage with tips.
This place can only get away with it because there's a steady supply of college students throughout the year who are desperate for any job that comes their way; the high turnover rate doesn't hurt them in the least.
You make good points. I wish your posts had a bit more visibility to the folks who hate tipping.
Tipping not only produces different outcomes for employees but it also impacts employers and customers. Even if you raise prices 15% it still won't be enough for most restaurants to keep their entire floor staff. Restaurants will be forced to cut hours and/or staff - this will lead to worse service and more unhappy customers.
And this has been my experience when visiting countries that don't have tipping (primarily the UK). Most of the restaurants are understaffed - there would be a single server covering 10+ tables. And because of that the service was really slow. And slow service is not only frustrating for customers but it is also bad for restaurants (fewer customers = less items sold).
I always get the feeling that the people who hate tipping the most have never actually worked in an actual restaurant.
That's complete nonsense. It makes no mathematical sense and if your business relies on the public's largesse to pay your own employees then your business is not sustainable.
The intellectual backflips people perform to justify this abhorrent, classist performative display of daily piety are a sight to behold.
Adding tips to base pay necessarily lowers aggregate income for employees in return for less income variability -- it is a tradeoff. Many people who receive tips are not "surviving" on them, their base pay is more in line with median western European incomes, so many American employees can afford income variability in exchange for higher average earnings, and people that cannot afford income variability select industries without it. In practice, this is their preference and it has been tested in the market many times. Every time tipping has been eliminated in the US in a business neutral way, the employees revolt because it reduces their effective total compensation.
Employees have all the power. Tipping being preferred in the US is almost certainly an artifact of the US having higher incomes than most other countries, a much larger percentage of the working class can afford income variability which creates an employment market for people with this preference. The median American has $1000/month left over after all ordinary expenses, which is more than enough to float some income variability if it means they can earn more.