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Author Topic: Minimum wage bill stalls in Senate
citadel
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Minimum wage bill stalls in Senate
Republican bill, denounced as 'ploy' by Democrats, would also cut estate taxes.
August 4 2006: 6:27 AM EDT


WASHINGTON (CNN) -- Senate Republicans Thursday night failed to advance a bill coupling a 40-percent increase in the minimum wage with a cut in estate taxes, which Democratic leaders had denounced as an election-year ploy.

A move by GOP leaders to cut off debate and move to a final vote on the bill failed to get the 60 votes it needed under Senate rules. The vote, which fell mostly along party lines, was 56 to 42.


Read more http://money.cnn.com/2006/08/04/news/economy/minimum_wage/index.htm?cnn=yes


Wouldn't increasing the minimum wage give companies greater incentive to out-source low paying jobs, for example in manufacturing?

Wouldn't this mean even fewer jobs for those trying to support a family wage income(s)?

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katharina
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It is stalled because it allows lower wages for servers who can make up the difference in tips.

This law would trump state law. Eleven states do NOT allow lower wages for servers, so tips are on top of the minimum wage. This law would effectively cut wages for servers in those eleven states.

Hence the stalling.

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FlyingCow
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NJ is not one of those eleven states. Minimum wage for servers is $2.30 per hour (at least last I checked), which doesn't even cover taxes on the tips you make normally. Plus, they automatically tax you on at least 15% of your total sales (more if you made more), even if you had a slow night (or several) where you made less than 15% in tips.

Of course, the only way they can track tips is credit card tips, so if you made 17% in credit card tips and another 3% in cash, they'll automatically tax 17% and you're supposed to declare the other 3%. Contrarily, if you made 3% in credit card tips and 17% in cash, you'll get taxed as if you made 15% tips, and are still supposed to declare the extra 5%.

However, if you made 5% in credit card tips and 6% in cash, you'll still get taxed as if you made 15% in tips (even though you only made 11%).

It's a bad system, and lowering hourly wages just makes it worse.

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Dan_raven
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I heard that it was stalled because they tied the minimum wage increase to dumping the inheritance tax. The Republicans hoped to cut the rug out of the Democrats Upping THe Minimum Wage crusade while passing their stalled thier own agenda--tax cuts for the wealthiest.
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Dan_raven
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quote:
Wouldn't this mean even fewer jobs for those trying to support a family wage income(s)?
The problem is that at present, people on minimum wage can not afford to buy the staples of life. They must either work multiple jobs, cutting the number of available jobs since the same person is doing two or more, or relying on welfare, which increases taxes, which drives companies to out source, which cuts jobs.

On the other hand, increasing minimum wage would increase the amount of many that many people have, allowing them to spend that money, which will increase demand, which will increase employment. I call this my Trickle Up Theory.

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Irami Osei-Frimpong
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quote:
This law would trump state law. Eleven states do NOT allow lower wages for servers, so tips are on top of the minimum wage. This law would effectively cut wages for servers in those eleven states.
This assumes that the server's employers are going to squeeze the servers as much as they can under the law. That may be a fair assumption, but I don't know what it says about acceptable American business ethics.
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citadel
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quote:
On the other hand, increasing minimum wage would increase the amount of many that many people have, allowing them to spend that money, which will increase demand, which will increase employment. I call this my Trickle Up Theory.
Companies only have so much money to pay their employess to have x amount of service performed. If we double the minimum wage and the amount of service preformed doesn't change, it is likely that employmees' paid hours would be cut in half. It would also requires employees do x amount of work in half as many hours. This doesn't seem wise.

Perhaps the solution to the problem lies not in forcing employers to pay more, but rather in increasing the education & skills of minimum wage workers so they are more valuable.

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Dan_raven
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Citadel, those jobs still need to be done. If all employees have skills that make them more valuable, the who will do the jobs that the companies require?

Companies don't worry about this because they know that the solution you suggest is a pipe dream. Yet its a good phrase to use to sidetrack minimum wage increases.


Besides, companies don't just have X amount of money. They make X amount of profit off of each item or service they produce. If a hike in the minimum wage increases demand, and then increases profits, they will have more money in which to pay the increased labor costs.

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mr_porteiro_head
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I think they should eliminate tips entirely and pay servers a real wage.
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cheiros do ender
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I have a better system.

1. Do away with the national minimum wage, and all the State minimum wages.

2. Have individual unions associated with individual businesses (someone wanna tell me why a business with less than 15 employees needs nationally enforced labor laws?), where the employees get to choose whether to join and work under those negotiated resolutions (if there are any).

3. Make it illegal for employees at all levels to do anything to try and prevent their employees from joining that Union, or starting their own.

Seriously, most people don't care about Unions anymore. And with the political weight Unions have, only a small percentage of the workforce needs to have membership in one, and the rest will automatically get whatever is nationally enforced by them. There's no real incentive to join for most people.

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Belle
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I disagre, mph. I've been a server and I have a brother in the restaurant business. A lot of servers I personally know, and this includes me when I used to be one, would not take a wage job and eliminate their tips because they make so much more off the tips than they would if they were just paid minimum wage or even some above that.

My brother, for example, left bartending at a brass and fern type restaurant for management, and without his tips, he took a cut in pay. When I was a server, my salary check went right into the bank and I saved it for school tuition - I lived off my tips and they were enough for me to do so. (of course, I was a poor college student with an apartment that my parents paid half of the rent for me, I'm not suggesting I couild have supported a family on those tips)

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Farmgirl
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Depends on whether you are getting tipped at Italian Gardens or whether you are getting tipped at Sonic

(and I did ask this once at our local Sonic -- they are all paid minimum wage and expect tips)


FG

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katharina
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I want a Sonic limeade now. [Frown]
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citadel
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quote:
On the other hand, increasing minimum wage would increase the amount of many that many people have, allowing them to spend that money, which will increase demand, which will increase employment. I call this my Trickle Up Theory.
I am having trouble understanding this. Maybe you could elaborate.

The way I see it if were to raise minimum wage to say $10 1 of 2 things would happen:

1. Companies having limited money for payroll would layoff workers resulting in fewer workers & jobs with the same amount of stuff to do.

2. Companies don't layoff anyone but instead raise the price of their goods. Sure people make more, but everything costs more. If we raise mininmum wages then the cost of food goes up, because grocery stores have many minimum wage workers that will have to be paid more.

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mr_porteiro_head
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quote:
A lot of servers I personally know, and this includes me when I used to be one, would not take a wage job and eliminate their tips because they make so much more off the tips than they would if they were just paid minimum wage or even some above that.
I didn't say pay them minimum wage or just above.

Pay them what they're worth. Charge the customer what he's expected to pay.

I hate the entire concept of tips.

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Javert
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I think this does a decent job of explaining what's going on.
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FlyingCow
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quote:
I think they should eliminate tips entirely and pay servers a real wage.
What would be a real wage? And how much more are you willing to spend on food so that the restaurant can afford to pay this real wage?

A raise in minimum wage means a raise in overhead for a business, which means either a) a reduction of costs, or b) an increase in pricing. The first can mean fewer work hours, fewer employees, or lower quality product. The second is self explanatory.

The idea that "higher wage = higher purchasing power = greater demand" is fine, except that such a chain of events is not immediate. In the short term, businesses need to find the money to pay their employees (the two options above) and they are unlikely to revert to their earlier state once demand/profits increase.

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BlackBlade
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If minimum wage goes up wouldnt alot of wages eventually increase as they are attractive for being above minimum wage? Like for example I work in an office making $10 an hour. A year or so down the road would the same position be offered at $14 an hour?
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pH
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I like the concept of tips. It means if you're an ass and ignore me or take twenty minutes to bring me ketchup, I don't have to give you, personally, any money.

I'm actually a really good tipper, and it takes a lot for me NOT to tip well, but I like to have that option.

-pH

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BlackBlade
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quote:
Originally posted by pH:
I like the concept of tips. It means if you're an ass and ignore me or take twenty minutes to bring me ketchup, I don't have to give you, personally, any money.

I'm actually a really good tipper, and it takes a lot for me NOT to tip well, but I like to have that option.

-pH

I am a good tipper and really all you have to do to get it is be on the ball.

Just be polite (I am pretty nice to waitors because I know how hard it is for them) make sure I get plenty of refills on my drink, and after you bring my food stop by 1-2 times before I pay the bill to make sure everything is fine. You basically earn 20% of the total bill if you do all those things.

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Javert
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quote:
Originally posted by FlyingCow:
What would be a real wage? And how much more are you willing to spend on food so that the restaurant can afford to pay this real wage?

A raise in minimum wage means a raise in overhead for a business, which means either a) a reduction of costs, or b) an increase in pricing. The first can mean fewer work hours, fewer employees, or lower quality product. The second is self explanatory.


I'm sorry, but every time I hear this argument I think that God forbid the CEOs and owners of these companies lower their own wages a bit. It's purely an emotional response on my part, but I think it has at least some merit.
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mr_porteiro_head
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quote:
What would be a real wage? And how much more are you willing to spend on food so that the restaurant can afford to pay this real wage?
Why would I need to spend more on food? Take that money that is expected to be paid as a gratuity and roll it into the price that is charged the customer.
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Demonstrocity
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quote:
Originally posted by mr_porteiro_head:
quote:
A lot of servers I personally know, and this includes me when I used to be one, would not take a wage job and eliminate their tips because they make so much more off the tips than they would if they were just paid minimum wage or even some above that.
I didn't say pay them minimum wage or just above.

Pay them what they're worth. Charge the customer what he's expected to pay.

I hate the entire concept of tips.

YES.

Tips are another one of those "great in theory, absolutely awful in practice" sort of things.

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citadel
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quote:
Originally posted by mr_porteiro_head:
quote:
What would be a real wage? And how much more are you willing to spend on food so that the restaurant can afford to pay this real wage?
Why would I need to spend more on food? Take that money that is expected to be paid as a gratuity and roll it into the price that is charged the customer.
So everybody increases menu item prices by 15%? So server's don't care about the service rendered because it doesn't matter because their pay doesn't depend on it. Like when my wife had to go get her own utensils at Denny's because the server forgot to bring them 3 times.
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FlyingCow
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So, you'd essentially be paying 15-20% more for every item.

Of course, this would translate even to restaurants (fast food drive thrus, etc) that already do not have tips. Because, if the going rate for a burger jumps 20%, everyone's getting on board.

You can see this trend in movie theaters. Big stadium seating theaters with awesome sound opened up and started charging more for their service. Now tiny hole in the wall theaters that practically show their films with a hand crank and flashlight are charging the same amount.

Also, as an aside, tip culture creates better service. Incentives = good. Just like the hope of a big bonus at the end of the year improves office production, so to does the hope of a big tip increase table service.

If you pay a standard wage with no benefit for "extra" or "above and beyond" service, you will get the bare minimum... and restaurants will have the same service as the DMV.

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mr_porteiro_head
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quote:
So everybody increases menu item prices by 15%?
Exactly.

quote:
So server's don't care about the service rendered because it doesn't matter because their pay doesn't depend on it.
Do you think that's true of all professions, that if they aren't working for tips, they won't care about how well they do?
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Belle
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quote:
Do you think that's true of all professions, that if they aren't working for tips, they won't care about how well they do?
I think it can certainly be true of some professions, but certainly not all and it depends on the individual. Usually though, when there's something personal on the line, people are going to work harder. When my husband worked for someone else, he left a job and came home at 5:00 because that's when his employer stopped paying him. Now that he's back to running his own, he'll stay after five if it means he can finish something up and make a customer a little happier, because it's his personal reputation on the line and if he treats that customer well, he may recommend him down the road and he'll get more business. He definitely works longer hours and works harder when it's his business and not someone elses'. I think that's human nature.

Look at the example of the DMV - traditionally it's a terrible level of service because your satisfaction means nothing personally to the person working there. Whether you're angry or not, he/she still gets his paycheck and they don't get anything more by being extraordinarily helpful.

I don't know how much experience you have as an employer, but I have a fair amount, and I know that people who don't have a personal stake in the business will not put forth the same amount of effort as someone who does. Sounds terrible, but in my experience it's true.

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mr_porteiro_head
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I think people should start tipping me for being so awesome.
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BlackBlade
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quote:
Originally posted by mr_porteiro_head:
I think people should start tipping me for being so awesome.

So far today the coolest thing anybody has said.
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mr_porteiro_head
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*holds hand open*
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Dan_raven
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Citadel, all companies produce either products or services. Someone has to pay for those products or services. If more people have more money, they will buy those products and services. Henry Ford realized this when he decreed that everybody working for his company would earn enough to be able to buy his product.

So take Joe McDonalds Owner. He has to up the pay for most of his employees. His costs go up. On the other hand, thousands of people in the area are getting pay raises. What do they do with their money? They go to McDonalds, increasing Joe McDonalds Owner's gross sales.

On the other hand, tipping is the last, purest form of capitalism you will find. People earn not what the state thinks, but what they work for.

On the other hand, having a definite minimum wage is socialism. That is the state mandates support for the poor performers who do not work hard enough or are lucky enough to earn good tips.

Those who want to abolish tipping represent communism. That is the state determines your income, not you. No matter how hard you work, or how terrible the service is that you provide, the state pays you all the same. Little motivation equates to lousy service.

Face it, anti-tippers, you are all commie pinko scum.

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BlackBlade
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They could be monarchists or despots Dan_raven
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Dan_raven
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BB--No they couldn't. I've never seen one of them at any of the meetings.
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Belle
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One thing that bugs me about tipping is restaurants that automatically add the tip if the party is six or more. When my family goes out to eat, if my mother joins us it's seven of us, so this happens to us.

It always, always costs the server. My normal tipping range is around 20% and I acknowledge how hard a server must work to keep a table of seven happy, when three of those seven are under 10. Usually, I reward such a job with at least 20%. But out of principle, when they add the gratuity to the check I pay the check only, and it means the server loses around 5%.

If they just wouldn't force me to tip, I'd tip more. And yes, I know I have the option to tip more if I like, but it usually angers me so much I just pay the bill and leave, and most of the time put that restaurant on the list of ones NOT to re-visit.

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mr_porteiro_head
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quote:
Face it, anti-tippers, you are all commie pinko scum.
It's always a fun day when I get called a liberal or a commie. [Cool]
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Demonstrocity
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quote:
Originally posted by Dan_raven:
Citadel, all companies produce either products or services. Someone has to pay for those products or services. If more people have more money, they will buy those products and services. Henry Ford realized this when he decreed that everybody working for his company would earn enough to be able to buy his product.

So take Joe McDonalds Owner. He has to up the pay for most of his employees. His costs go up. On the other hand, thousands of people in the area are getting pay raises. What do they do with their money? They go to McDonalds, increasing Joe McDonalds Owner's gross sales.

On the other hand, tipping is the last, purest form of capitalism you will find. People earn not what the state thinks, but what they work for.

On the other hand, having a definite minimum wage is socialism. That is the state mandates support for the poor performers who do not work hard enough or are lucky enough to earn good tips.

Those who want to abolish tipping represent communism. That is the state determines your income, not you. No matter how hard you work, or how terrible the service is that you provide, the state pays you all the same. Little motivation equates to lousy service.

Face it, anti-tippers, you are all commie pinko scum.

I'm anti-tipping not because I'm anti-capitalist (as I love the idea of being able to provide my own personal, direct incentives to people who render me service) but because the current tip "rules" are ridiculous.

Why has a tip, regardless of the quality of service, become standard? Gratuity is just that: extra. If you do not do anything extra for me, why do you expect a tip? If I don't feel my cab driver did a better-than-average job, why the hell should I tip him? If my waitress does only an average job (read: the job she's already paid to do), why am I expected to tip her 15%?

Why do only very specific jobs earn tips? There are a ton of service jobs where not only is gratuity not the standard, no means exist to give a gratuity, period. In many jobs, you are not allowed to take gratuity.

...

Fix the rules, and I'm all in favor of tipping.

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FlyingCow
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I just thought of something else.

If a restaurant can pay its workers 50% of what it had been paying them, they will make more money as a company. This will not be translated into lower costs for their product, though it may translate into the company hiring extra waitstaff to increase customer satisfaction.

More waitstaff means fewer tables for any given server, which means fewer tips. This is on top of a lower wage.

I know from personal experience that when a new group of servers were hired, tips went into the toilet. Three weeks later when many of these servers quit, tips went back up.

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BaoQingTian
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I liked what you said about socialism/capitalism Dan, that was funny. However, I don't think Joe McDonald's example is quite that simple.

The problem is that all those people holding this extra money have to pay more for their milk, more for their clothing, etc. as rising wages force dairy owners (and others) to raise their prices to pay their employees. Also, Joe McDonalds is paying more per extra-processed patty of meat as the meat packers wages go up, the people at the food processing plants wages increase, Sysco's costs go up, etc.

Everything would really have to go up across the board unless companies were willing to reduce profit margin. This does not make stock holders happy, etc. Assuming that if the minimum wage goes to $10 and everything will cost the same seems a bit simplistic.

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citadel
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quote:
So take Joe McDonalds Owner. He has to up the pay for most of his employees. His costs go up. On the other hand, thousands of people in the area are getting pay raises. What do they do with their money? They go to McDonalds, increasing Joe McDonalds Owner's gross sales.

I understand this. Joe makes more money and has more expenses. Everyone has more money, so money is de-valued so things cost more - inflation. So if I make twice as much, and everything costs twice as much, what has really changed besides the fact that I am probably in a higher tax bracket?
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FlyingCow
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quote:
It always, always costs the server.
Not in my experience. It all depends on your clientele. Business expense account lunches? Required gratuity will kill a server. A group of 16 year olds at TGIFridays in a lower income neighborhood? The required gratuity might be a lot more than you'd get normally.

quote:
If my waitress does only an average job (read: the job she's already paid to do), why am I expected to tip her 15%?
Because they'll get taxed on it whether you give it to them or not.

Granted, that's only because the system is screwy, but not giving 15% is actually costing your server money. If 15% comes to $10 and you give $3, the money you left will be gone in taxes and it will be as though you tipped nothing. If you do not tip at all, it would be like taking $3 out of your server's wallet and giving it to the government.

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The Pixiest
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I love overtipping good servers. It goes along with my rule of "Always smile at people who bring you food."

I also enjoy stiffing poor servers. If they don't care enough to get me my food before it grows all heat-lampy, then they've just saved me some money.

Generally, though, I tip about 20%. I want them to be happy to see me coming next time I go to that restaurant.

Pix

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katharina
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When did tips go from 10 to 15%? That has changed in the past decade or so.

I read an article that theorized that that's how restaurant prices have stayed down. Food is still cheap, but labor is more expensive, but the cost of labor is not reflected in menu prices. Instead, the percentage for tipping has gone up.

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citadel
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quote:
Originally posted by katharina:
When did tips go from 10 to 15%? That has changed in the past decade or so.

I read an article that theorized that that's how restaurant prices have stayed down. Food is still cheap, but labor is more expensive, but the cost of labor is not reflected in menu prices. Instead, the percentage for tipping has gone up.

Tipping percentages are not regulated except as what is acceptable by society, so how did this change?
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katharina
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Yes, it is. Especially for large groups, and servers are taxed as if they earned 15% in tips.
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Morbo
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quote:
Originally posted by FlyingCow:
quote:
Originally posted by Demonstrocity:
If my waitress does only an average job (read: the job she's already paid to do), why am I expected to tip her 15%?

Because they'll get taxed on it whether you give it to them or not.
Besides the taxes, you should tip an average server because it's customary and part of our system. Often a server is paid below regular minimum wage, at a much lower minimum wage for tipped employees. It used to be $2.15/hour. So if you don't tip anything, you're getting average labor at sweatshop wages. Bravo.

As far as the taxes for servers, the rate used to be 8% of sales years ago. Did it really go up to 15%?

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mr_porteiro_head
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Morbo -- your argument looks a lot like "You are expect to tip because you are expected to tip."
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Demonstrocity
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quote:
Originally posted by Morbo:
quote:
Originally posted by FlyingCow:
quote:
Originally posted by Demonstrocity:
If my waitress does only an average job (read: the job she's already paid to do), why am I expected to tip her 15%?

Because they'll get taxed on it whether you give it to them or not.
Besides the taxes, you should tip an average server because it's customary and part of our system. Often a server is paid below regular minimum wage, at a much lower minimum wage for tipped employees. It used to be $2.15/hour. So if you don't tip anything, you're getting average labor at sweatshop wages. Bravo.

As far as the taxes for servers, the rate used to be 8% of sales years ago. Did it really go up to 15%?

Like I said in my post: the rules for the system are broken.
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Jon Boy
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quote:
Originally posted by mr_porteiro_head:
*holds hand open*

*drops in a few coins*
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Katarain
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Servers should be paid a full-wage by their employer. If this means that the price of the food goes up, so be it. If you can't afford to pay for the privilege of having a human being serve you your food, then you can't afford to eat out at a full-service restaurant. After that, tipping should not go away. You should still tip, but the percentage could go down a little, since the customer doesn't have to compensate for the stingy wage the employer is paying the server.

The very idea that tips should be part of wages is ridiculous. Tips should be given for "above and beyond" service. If you get your pancakes, it shouldn't matter that the server had a scowl on her face. She's doing her job--serving you--and should be compensated accordingly.

Besides, taking away tips as part of wages does NOT remove the incentive for good service. The establishment's name is still on the line, and the owners/managers don't want to get a bad reputation. If you complain to the manager, action will be taken if they're smart. If it isn't, don't go to that restaurant anymore. It's as simple as that. Customer service representatives at most businesses and stores don't receive tips, and they still have an incentive to provide good service--they want to keep their jobs. And the recourse you have as a customer would be the same--talk to the management. If no action is taken, you simply don't do business anymore with them. You can even spread the word, giving them bad press.

And as to whether or not the economy can afford to pay a living wage to their employees, I really don't think that matters. Just like I said above, if you can't afford to pay higher prices at a restaurant because the servers are actually being paid minimum wage, then you can't afford to eat out period. Well, if your business can't survive paying a living wage (as if minimum wage is a living wage, anyway) to your employees, then that's too bad. There's something seriously wrong with your business plan. Fix it or fold. Someone else will come along who can make it work.

I just don't agree with all of the doomsayers who think that the economy will collapse if we increase the minimum wage. It will recover--and if it so happens that the new minimum wage is devalued again, raise it again.

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ElJay
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What I don't like about tipping as a percentage is I don't think the service at a restaurant where the tab comes to $30 for one person is usually that much better than the service at a place that charges $7. At both places the server taks my order, brings me my food, checks in on me, keeps my beverage filled, clears things away as I finish them and brings me the check. So why is on person's efforts worth $1.05 and the other's $4.50? The difference in cost is due to the restaurant ambiance/location and the difference in cost of the food -- a steak with a sauce and two sides takes more time and more expensive ingrediants to prepare than a burger with fries.

I balance the discrepency in my head by over tipping percentage-wise at less expensive places. . . at a full service restaurant it's rare for me to leave less than 3 or 4 bucks dining by myself, unless the service is really bad. But if I knocked down the percentage a little at expensive places, too, because I don't think they're doing to work to justify a $15 tip I'd both come off as cheap and be screwing them on their taxes.

I also hate going someplace with a group and when splitting the bill some people "forget" to add tax and tip to their share. Even for people who don't like the system, tipping IS a part of the system. If you don't like it, don't go out. Or open your own restaurant where the servers are paid fairly and it's printed in big letters across the menu that everything is more expensive because the tip is included.

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