The Moneyist: ‘Low-paying jobs are the economy’s way of saying you should get a better job’: I’ve decided to stop tipping, except at restaurants. Am I wrong?

All Tipped Out

Also see: My late brother’s three children say they should receive the same annual monetary gifts their grandmother gives to her other children. Are they entitled?

Dear Tipped Out,

You’re wrong in one key point: It’s a mistake to blame workers for low-wage jobs, especially given that so many of the lowest paid jobs involve the most labor-intensive, backbreaking work — in factories, food preparation, the service industry, leisure and hospitality, and education and health services. As millions of people realized during the pandemic, these jobs form the backbone of the U.S. economy. Not all workers in low-wage jobs ask for tips, and to tar them all with that brush does millions of people a disservice. 

There are approximately 30 million prime-age, low-wage workers making less than $16.98 an hour in the U.S., according to a recent report from WorkRise. WorkRise is a platform hosted by the Urban Institute, a Washington, D.C.-based think tank dedicated to identifying and sharing ideas for transforming the labor market. “In total, low-wage workers make up more than a quarter of the total labor force,” the report says. “These jobs are often the most essential yet experience the least security.”

“A person working full-time at that threshold makes about $35,000 a year,” WorkRise reports. “In America’s three largest cities, the average yearly rent for a one-bedroom apartment comprises at least half of that amount.” Then factor in utilities, groceries and any other necessities, and it’s clear that these workers don’t have it easy. Fewer than a quarter of low-wage workers have a work-based pension plan, compared with 47% of higher-wage workers, and only 57% have an employee-sponsored healthcare plan, versus 88% of higher earners.

Conflating two issues

More than 70% of Americans say they are expected to tip more often than they used to tip, but only one-third of people say they know when they should tip and how much, according to a recent study by the Pew Research Center. The mistake is to take that frustration and blame the workers for low wages instead of, say, large corporations for not treating their workers better or not creating opportunities for them to improve their skills and climb the corporate ladder.

Pew surveyed 12,000 Americans about their tipping practices and found that 57% said they would tip 15% or more for an average meal at a sit-down restaurant — as you say you are willing to do. So far, so good. And 77% of those surveyed said the quality of the service they receive is a major factor in deciding whether to tip and how much to tip. That’s why they call it a gratuity: No one is forcing you to tip 15% or 20%, as is common in big cities like New York and L.A., for shoddy service. 

Waitstaff generally rely on tips to supplement their income and to help pay the rent. Whether you agree with the practice or not, their wages often take into account the fact that they will receive tips from customers. The federal minimum of $2.13 per hour for tipped employees is followed by more than a dozen states. You won’t change that by writing a big, fat zero where the tip should be, and I’m glad that you are not willing to punish waitstaff for the recent proliferation of tipping requests at the ice-cream parlor or the doughnut shop.

Blaming low-wage workers 

The problem is that some people are freaking out when asked to tip when buying a $7 coffee or even when making a donation to a charity, and they use that experience as an excuse to stamp their feet and say they’ll never tip again. The workers are the ones who pay the price — not the companies that sell the digital tipping screens or the companies that use them. It’s not always clear that such tips will even go to the employees or whether they are instead being levied as some kind of murky service charge. 

The average annual salary for waitstaff in the U.S. last year was $33,020, according to the Bureau of Labor Statistics. That works out to $15.87 an hour. However, 10% of waitstaff were paid $8.77 an hour in 2022, and 25% were paid $10.49 an hour. In some states, including New York, restaurants are allowed to pay less than the minimum wage if tips make up the difference. I urge everyone to familiarize themselves with the laws of their state before deciding that the service staff are the ones out to fleece them.

Because fast-food workers and baristas are more likely to receive their state’s minimum wage rather than having to rely on tips, you are not obliged to tip them. To help with the decision making, my colleague, MarketWatch reporter Nicole Pesce, put together this guide on how much all of us should, or could, tip. She also lists professions where it’s considered unethical to accept tips — those include government employees, lawyers, law-enforcement officers, nurses, postal workers, teachers and therapists. 

Put yourself in the shoes of the person serving you when deciding whether to tip. 

More from Quentin Fottrell:

I want my brother to inherit my estate. I’ve three other siblings. Do I need an attorney? What could go wrong? 

I don’t want to leave my financially irresponsible daughter my house. Is that unreasonable?

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You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com, and follow Quentin Fottrell on X, the platform formerly known as Twitter. The Moneyist regrets he cannot reply to questions individually.

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