Still Nickel and Dimed: Unpacking Tipping, Minimum Wage and the Fight for Equity

If you’ve been paying attention to the news, then you’d notice that there’s been a lot of talk about the federal minimum wage lately.

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Today, Uncle Sam sets the minimum wage at $7.25 an hour but some states have their own minimum wage laws—allowing employees to earn a little more than the federal standing.

But, if you are a restaurant worker who earns tips, the sub-minimum wage is $2.13 an hour and has been on ice for decades.

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Today in America, 43 states allow for a sub-minimum wage for tipped workers, while only 28 of these states have instituted state sub-minimum-wages above $2.13. This means that in 15 states, and Puerto Rico, tipped restaurant workers take home an hourly wage that is just enough to buy a pack of gum.

The $1.9 trillion COVID relief bill that has been all the buzz was first introduced with a federal minimum wage of $15 an hour. It also eliminated the tipped minimum wage of $2.13. Alas, Senate officials shut the proposed minimum wage hike down, but politicians and advocacy groups continue the fight for $15.

Saru Jayaraman is one of those warriors.

As the president of One Fair Wage and the director of the Food Labor Research Center at the University of California at Berkeley, Jayaraman is committed to seeing that tipped restaurant workers are paid equitably. The attorney and professor reminds us that the legacy of tipping in the United States is based on a legacy of slavery.

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Here’s how: In the U.S. tipping spread in the 1800s, following the Civil War. Emancipated Black men often worked as Pullman porters on trains, while Black women worked in restaurants. And despite being freed, both groups were first exploited and denied what they rightfully deserved.

“The idea of tipping being mutated from an extra bonus on top of the wage to becoming the wage itself—becoming a replacement for wages—really cannot be understood as anything other than a devaluation of Black lives and women’s work,” says Jayaraman.

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Rev. Dr. William J. Barber II also has been fighting for economic justice and other issues of equality for decades. He’s the national co-chair of the Poor People’s Campaign and says that racism goes beyond racial slurs and violence.

“Racism is not just police brutality.” Rev. Barber continued, “Racism is also when you use public policy to block people from health care and they die. In this particular epidemic, the majority of the people that died first, that were forced to go to work first, got infected first, got sick first, died first were poor, low wealth people.”

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Learn more about tipping, minimum wage and the fight for equity in this episode of Unpack That.

Afro-Cuban woman that was born and branded in New York. When León isn't actually creating cool videos, she's thinking of cool videos that she can create.

DISCUSSION

R/askhistorians, which is largely written by professional historians, had an assessment of the theory earlier this week, and the overall impression I got is that tipping is about as tied to racism and slavery as moveable type is to antisemitism:

Ironically, given the perception today, the ‘tipping norms’ used to be geographically reversed; that is to say, in the United States, tipping was rare, while it was common and expected in Europe. In England at least, the origins come from the ‘vail’, a practice in the Early Modern period where guests in well-to-do houses would provide a small gratuity to the service staff upon their departure as a thanks for the services rendered (Especially coveted service positions could see the gratuity far outstrip their wages), a practice that lasted for centuries until abolished in the mid-1800s, and eventually found its way into the service industry as a whole there, where it outlasted the ban in houses. Likewise on the continent, tipping was common and expected in the 1800s, although not necessarily the same origins. Interestingly in France, some servers would work for no wages at all in the 19th century, earning only their tips, while in other establishments a ‘token’ system was used, described by Eeckhout thusly:

Each morning the waiter had to buy a certain number of tokens, which he would then return successively over the day according to the number of drinks sold, but 5 to 10 percent of what he paid was withheld by the owner in order to finance les frais, or general expenses. The waiter’s contribution had to be paid regardless of the actual tips he received. A customer who did not tip therefore cost the waiter money.

Anyways, origins aside, it was American travelers to Europe who complained about having to tip back in the 1800s, and in fact, the very emergence of tipping in the American hospitality industry can be found in the switch to the so called “European Plan”, from the “American Plan”, in hotel accomodations. While in the latter, staying at a hotel meant that food was included in the room price, this was not the case in the former.

When the American hospitality industry was tiny, this hadn’t been an issue as far as tipping went. Establishments were almost all quite tiny, and service was provided by the owner and his family. Tipping them would have been seen as an insult. The issue arose in the latter half of the 1800s, as the American hotel industry expanded and it became more likely that service was being done by employees. Under the ‘American Plan’, owners and managers of hotels did not look kindly upon tips. Rather than being seen as a gratuity for the quality of service provided, they were continually suspicious of guests using tips as a small bride for the service staff, who would in return provide them extra food beyond the regulated amount under their room and board cost.

So slowly, in conjunction with the expansion of the industry as a whole, the transition to the ‘European Plan’ occured in the American hospitality industry, but to be sure, I do mean slowly. Much debate within the industry over the relative merits of the approaches went round and round, in near endless debates, but the ‘European Plan’ eventually won. Interestingly, Prohibition was an indirect factor on the final hurdle. Its passage significantly cut into the profits for hotels (alcohol had been extra, of course) and the tightening budgets pushed the remaining holdouts into the ‘European Plan’ to improve their finances. But regardless, as the shift occurred, tipping no longer was quite the nefarious way the guest was undermining the hotel. Although it wasn’t immediately embraced by all hoteliers, as we will touch on below, most eventually came around to the advantages of allowing tips, which could help trim down on payroll and pass it off to the customers to provide! Only in the exclusive high-end joints did the ‘American Plan’ remain the norm, and tipping firmly dissuaded, at least until the post-WWII era.

Backtracking slightly though, the period from roughly 1900 until 1920, as that shift was occuring, was of course the most contentious. the shift to the ‘European Plan’ hadn’t, afterall, intended to bring tipping into practice, and for management, but especially customers, it was met with reactions ranging from awkward acceptance to outright hostility. In “anti-tipping” hotels, the ‘Servidor’, a small compartment with a door on the inside and outside of a room, was an innovation to prevent the guests from even coming face to face with service staff. Likewise, rather than have table service, and see guests faced with the dilemma of whether or not to tip, some hotels replaced restaurants with cafeterias. The scourge of the tip was such a pressing matter, that several states went to far as to pass laws banning the practice in that period - although enforcement never was very effective. The laws were short lived, and all eliminated by the mid-1920s, since by then, liked or not, tipping had become firmly established, and the accepted norm. Trade publications, which had been hostile to the practice up until the beginning of the decade, began to at least accept it was here to stay, such as this passage that Mentzer highlights from a 1921 issue of ‘Hotel Monthly’:

When it gets so that a man pays money to another man in order to retain his own self-respect, which he forfeits if he doesn’t, it certainly may be said that tipping has entered the national consciousness”

Again, it was only the very high end establishments that really tried to resist allowing tips after that point. Segrave notes the Grace Dodge Hotel in DC, which opened in 1921 explicitly as a ‘no-tip’ hotel, and was actually quite successful at attracting clients who wished to avoid gratuities (although of note, it was for women only in its early years), and Longchamps restaurant was founded in 1918 to be a ‘tip free’ joint, expanding to nine establishments. But these were the exception, and most establishments balked at the higher wages necessary for the approach. And for Longchamps, they more fudged the whole thing, simply having a ten percent service charge on the bill, so more just keeping the patron from having to tip in person, and keeping it formalized on the bill. Some other “no-tip” establishments also tried the service charge route, but it was generally not seen as successful in the US.

One important dynamic that ought not to be overlooked, of course, is the unique place that class, and more importantly race, played in the shift sketched out above. Some popular retellings perhaps go a bit heavy, such as with this Washington Post article, and try to really paint a direct lineage between slavery and tipping, but that is a bit far, the line being a crooked one at best.

Now, to be sure, anti-tipping rhetoric often made use of ideas of slavery. For many, it was seen as undemocratic. To tip someone providing a service broke the fiction that you were equals, it created a power imbalance, or as Ayres describes it “both the giving and the receiving of tips were perceived as an acceptance of the recipient’s inferiority.” Segrave quotes from a 1916 anti-tipping activist William Scott who goes over the top to decry “[i]n the American democracy to be servile is incompatible with citizenship. Every tip given in the United States is a blow at our experiment in democracy,” and further that “the relation of a man giving a tip and a man accepting it is as undemocratic as the relation of master and slave.”

Now, as for actual (former) slaves, and African-Americans generally, I think it doesn’t need to be said that even with the end of slavery, in much of the country, and for much of the population, black persons were looked down upon as second class citizens. Segrave makes brief mention of the Pullman company to illustrate the racial angle, which I dug into a bit more. Pullman had the largest black workforce of any private company in America in the late 19th to early 20th century, by 1930 with 12,000 black persons (almost all men) on its payroll. The company had aggressively moved towards encouraging tips to its porters, certainly being one of the realms within the American hospitality industry most favorable to the rise of the tip. They made no secret that they were paying the porters a low wage on the very expectation that tips would supplement their income.

This was not popular with many of the workers, or activists for equality. Arneson provides several choice quotations from the early 20th century on the matter, one opponent stating “From every angle the tipping system is unjust. It is unjust to the Negro because in accepting tips he feels himself less a free man, and because necessity forces him to perpetuate the system”, while a 1917 newspaper editorial opining it degraded the porter into a “beggar, a soft-soaping, coin-coaxing creature, instead of an upright, honorable, manly man, who is paid an honest wage for an honest service.” Although it can’t, of course, be said that every porter was against the system - a well-tipped worker could make a very comfortable living given the expectations of the time for a black man - attacking the tipping system was nevertheless one of the first priorities of the newly formed Brotherhood of Sleeping Car Porters, when the porters Unionized in 1925. Under the slogan “Not servitude, but service”, they requested their wages be more than doubled (entry level from $67.50 to $155) while tipping be prohibited in Pullman cars.

The movement was, however, unsuccessful. Tipping remained, and wages did not double. The white men in charge, of course, insisted there was nothing demeaning in forcing the black men to depend on handouts from whites, and if anything, that the Pullman Company was doing them a great service in even employing them at all. Robert Todd Lincoln, Chairman of the Board (and son of the former President), noted at the time “the colored race, as we know, were subject to great limitations in the past to obtain employment in this country [but] outside of what you might call the learned professions [...] the one large element which has done more to uplift them is the service in the Pullman Co.’’ A threatened strike in 1928 never materialized as Pullman began the preparations to bring in scabs and strikebreakers, and the Union backed down.

So, while race isn’t the entire story of the rise of tipping in the US, it does play a fairly central roll, as in the US the rhetoric of tipping, generally, and anti-tipping rhetoric from those in service, especially, hedged heavily on the disparity of station that tipping made evident. The volatile nature of race relations in the period from the end of the Civil War through the 1920s, when the ‘tip’ was establishing itself in the US, absolutely intertwines with that, but it is only part of the larger picture of the growing hospitality industry and changing ways of doing business, so shouldn’t really be seen as the driving force, as it was most central to the experience of the Pullman porters.

In any case though, taking a step back, the larger picture of tipping in the United States is of a slow rise beginning in the wake of the Civil War, which saw the expansion of the hotel industry, and travel generally, and the changing approach to food service especially within the hospitality industry, which was mostly solidified by the 1920s.

Sources:

Arnesen, Eric. Brotherhoods of Color: Black Railroad Workers and the Struggle for Equality

Ayres, Ian, Fredrick E. Vars, and Nasser Zakariya. “To Insure Prejudice: Racial Disparities in Taxicab Tipping.” The Yale Law Journal 114, no. 7 (2005): 1613-674.

Eeckhout, Patricia Van den. 2015. Waiters, waitresses, and their tips in western europe before world war I. International Review of Social History 60, (3) (12): 349-378,

Mentzer, Marc S. 2013. The payment of gratuities by customers in the united states: An historical analysis. International Journal of Management 30, (3) (09): 108-120

Segrave, Kerry. Tipping: An American Social History of Gratuities

Bates, Beth Tompkins. Pullman Porters and the Rise of Protest Politics in Black America, 1925-1945

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