John Oliver targeted the problems associated with tipping culture in the US on his weekly show.
On Last Week Tonight, the British host said that “people are fed up”, with three in four believing that tipping culture has gotten out of control. He gave some examples of laughable situations including a mortgage company asking for a tip and an impound lot doing the same after a car was towed.
Donald Trump made a bold promise to eliminate taxes on tips for workers and right now, “lawmakers are deciding whether or not this proposal will make it into the budget”.
It’s a very American practice with wait staff around the world often acting “confused” when visitors try to tip. “You know a country’s in pretty good shape when they turn down free money,” he said.
Oliver said there had “consistently been pushback against” tipping and while “nowadays tipping is everywhere” he added that “it can seem like no one understands the rules on when and how much to tip”.
He said that “some consumers are now opting out of the system altogether” although “protesting it by stiffing your server is about as effective as protesting police budgets by flipping off a police dog”.
Oliver said that the most commonly tipped worker would be a server at a restaurant but anyone who gets at least $30 a month is classified as a tipped worker and “in most states employers can legally pay tipped workers a much lower wage”.
This wage is as little as $2.13 an hour, a rate that hasn’t changed since 1991, and it often “isn’t even enough to cover payroll taxes”.
He added: “If what you make up in tips doesn’t get you all the way up to minimum wage then theoretically your employer is supposed to cover the difference through what is called the tip credit but that can be hard for employers to keep track of and it’s a system that is easy to cheat.”
It makes a big difference not just “where you work but when you work” and your tips can be reliant on the “mood your customers happen to be in” on that day. “Someone’s ability to pay their rent can be dependent on a person who may be drunk or partying on a Tuesday,” he said.
Oliver said that poverty rates are twice as high for tipped workers and black and white consumers tip tend to pay white servers more as well as those who are female and conventionally attractive.
Even if people tip 20%, most servers are tipping 3.5% to other staff and at some places, if there is no tip, that gets taken away from the overall bill, affecting the server’s money. “Not only are you subsidising the servers, they may be subsidising other members of staff as well,” he said.
Studies have shown that if you show customers two different bills, one with the tips added in and one without then people view the menu with the built-in tip prices as more expensive even if they’re the same.
It’s all “led people to try and come up with other ways to relieve the financial stress for tipped workers” but he expressed concern over Trump’s plan. “I’m all for giving a tax break to low-wage workers but a lot of economists have major concerns for this particular policy,” he said.
The “tax relief it gives would be haphazard at best” with, for example, those delivering food gaining the break but those delivering mail not getting it, which “doesn’t feel fair”. It could also be exploited if those with higher income designate their wages as tips.
He believes that the country should eliminate the sub-minimum wage as seven states already have and “then your tip goes on top of that”. It has led to an “ongoing fight in Michigan” as some servers worry that customers will tip less if that’s the case. But Oliver said studies had shown that those in the seven states still tip.
He said there were also “good faith concerns from restaurant owners” who are worried about “sudden pay hikes” which meant it needed to be a gradual process.
“It’s unlikely to ever go away completely,” he said, as it was so “culturally ingrained” and in “a lot of places right now, it’s an absolute necessity”.
