The truth about tipping

Saru Jayaraman is an activist, lawyer and author from Los Angeles. She's the co-founderand president of One Fair Wage — a campaign for workers to be paid proper wages instead of having to rely on tips from customers. Jayaraman tells Business Spotlight about tipping's troubling history and wonders whether a sea change might be on the way.

When did people start to tip?

Tipping originated in Europe as a bonus from aristocrats to serfs and vassals, always on top of a wage. You can see references to it in old English literature or Victorian novels. That idea came to the States in the 1850s, when rich Americans traveled to Europe and wanted to show off that they knew the rules of Europe. They started trying to tip.

At first, the idea was resoundingly rejected by Americans. There was an anti-tipping movement, and some states passed prohibitions on tipping at the time. They called it "feudalism." People should get good service regardless of how much they can afford to tip. That anti-tipping movement, which was a populist movement, spread to Europe at the time. It got rid of tipping in a lot of Europe.

What caused that to change in the U.S.?

Two things happened in America around the same time. First, waitstaff (who were mostly men) went on strike. They were getting a full wage because of the rejection of the idea of tipping, and they went on strike and demanded higher wages. In response, restaurants in major cities across America replaced them with women. Women entered the workforce in the late 1850s, and then, in the early 1860s, emancipation happened. The restaurant industry wanted newly freed slaves — they wanted to continue slavery with free labor.

The combination of women and Black workers entering the industry changed tipping from being a bonus on top of a wage, as it always had been, to being the only wage that these women, and particularly Black women, received because restaurants didn't want to pay them, plain and simple. That is how we ended up with a subminimum wage for tipped workers today. It became the law at $0 an hour in 1938. Today, it's $2.13 an hour. That is the federal minimum wage for tipped workers in the U.S. — and 43 states persist with this legacy of slavery.

Don't some people make a lot of money from tips?

A minuscule percentage of folks who work in fine-dining restaurants make a lot of money in tips. The vast majority of tipped workers are women, disproportionately women of color, disproportionately single moms earning very little in tips. Government data shows tipped workers use food stamps and other forms of public assistance at double the rate of the rest of the U.S. workforce. They have a poverty rate that is three times the rate of the rest of the U.S. workforce. They are mostly poor and suffer from the highest rates of sexual harassment, poverty and racial inequity of almost any industry in the United States.

Is it likely that things will change?

We've had 160 years of resistance from the National Restaurant Association, led by chain restaurants. They've been around since 1919 and were formed intentionally to stop wages from going up. It's been incredibly difficult to end the subminimum wage for tipped workers. Unfortunately, we've seen politicians from both major parties in the U.S. kowtow to the restaurant industry.

However, we're in a real moment of change right now. Millions of workers during the pandemic realized that this is not working. For the first time in U.S. history, since emancipation, millions of workers have left or are leaving and refusing to work for these wages. It has had a huge impact. We're seeing thousands of restaurants raise wages now to a full wage with tips on top. Now is the moment to really institutionalize this through policy. I think we're finally on the cusp of change.

Do you think that tipping leads to better service?

Yes. Through the pandemic, we're seeing a renaissance of the restaurant industry. People are experimenting with all kinds of models. Some people are moving to service charges, which is a set amount — a 20 percent service charge, for example — rather than tips, which are inherently biased. Some people are moving to gratuity-free.

I think wages are going to go up and tips will end up being on top of a wage. In general, what we're seeing is a move towards the professionalization of this industry. That's where we're at right now. Workers are saying: "We're professionals and we deserve to be paid and treated and compensated like professionals." And that means a wage. That means tips are just an extra, but it also means things like career ladders and set schedules and benefits and all the things that come with having a skilled profession.