Cheer you up true story from Maine

by on July 5, 2017 at 12:36 am in Economics, Law | Permalink

As the Maine House voted on a bill to reduce the minimum wage for tipped restaurant workers, Jason Buckwalter and a dozen fellow servers huddled in a back room listening to the vote call at the Bangor steakhouse where they work.

They all hoped to hear one thing: that state legislators had voted to lower their wages. Some cried with relief, Buckwalter said, when the final vote ended at 110 to 37 — overwhelmingly in their favor.

The vote, which took place on June 13, marked the conclusion of a months-long political saga that has upended conventional wisdom about the minimum wage. Workers have traditionally supported such increases, which advocates say are critical to lifting millions out of poverty.

But in Maine, servers actively campaigned to overturn the results of a November referendum raising servers’ hourly wages from $3.75 in 2016 to $12 by 2024,  saying it would cause customers to tip less and actually reduce their take-home income.

The servers’ campaign against increasing the minimum wage was a blow to labor activists, who believed the Maine referendum could kick off similar votes in New York, Massachusetts and D.C.

Instead, some servers in those places are already mobilizing against a higher wage.

Here is the article, by Caitlin Dewey, the pointer is from Steve Rossi.  File under “Not from the Onion.”  At the link, there is a more detailed discussion of how tipping and legal minimum wages interact.  It is not easy to excerpt, but read through it for an explanation of the mechanisms here.

Elsewhere, Venezuela is raising the minimum wage for the third time this year.

1 Anonymous July 5, 2017 at 12:54 am

“The exception that proves the rule.”

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2 Jacob July 5, 2017 at 7:54 am

I’m not sure that phrase means what you think it does…

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3 Moo cow July 5, 2017 at 1:11 am

I probably made more money per hour Mothers Day brunch (at a 5 star hotel in 1985) than a doctor did performing surgery at the local hospital. It’s a little silly.

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4 Ann Ominous July 5, 2017 at 1:26 am

Causal Theory: Increased minimum wage -> reduced tipping -> restaurant customers pay less per meal -> restaurant customers go out more often -> restaurants hire more employees.

It explains the Card & Krueger anomaly rather neatly.

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5 TMC July 5, 2017 at 11:00 am

Card & Krueger was based on a phone survey. Follow up review of payroll data showed a reduction in employment, just like you’d expect.

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6 spencer July 5, 2017 at 11:26 am

The Card & Krueger study was of employees at fast food restaurants where tipping very, very seldom happens, not at restaurants withe table service where tipping is the norm.

It is generally standard practice and is included in the federal minimum wage that tipped workers have a lower minimum wage because tips and the lower minimum wage are greater than the standard minimum wage. That is why the Maine workers opposed the proposed law.

There is nothing unusual about the Maine tipped workers wanting a lower minimum wage for tipped workers.

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7 Bob July 5, 2017 at 3:04 am

Waitresses would be tipped even more if they were allowed to serve blowjobs along with meals. I guess that means restaurants should be allowed to serve blowjobs, and that waitresses should be campaigning to change the laws regarding restaurant blowjobs. Apparently maximizing tipping is Cowen’s idea of industrial policy, and fetching food and giving blowjobs is Cowen’s idea of industry.

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8 Just Another MR Commentor July 5, 2017 at 6:39 am

Yeah I don’t get why this is supposed to cheer me up. Tipping is a fucking scourge that needs to be stamped out.

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9 Art Deco July 5, 2017 at 7:02 am

ipping is a fucking scourge

For the sort of people who are rude to service personnel. Ordinary people have no problem with it.

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10 Just Another MR Commentor July 5, 2017 at 7:30 am

Why? Increasing your restaurant bill by 20 or 25% is a problem.

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11 adam July 5, 2017 at 10:15 am

The wait staff has to be paid somehow. It can be in the form of a tip, increased food prices, a fee for service or some other charge. But your bill isn’t going to be lower from getting rid of tips.

12 ConfirmationBiasIsAFemaleDog July 5, 2017 at 3:17 pm

Without tipping you have no opportunity to “punish” waitstaff for service problems that may not have anything to do with them.

13 Scott Mauldin July 5, 2017 at 11:05 am

I’m unfailingly polite and understanding with service personnel but concur with the opinion that tipping is a scourge. Your conclusion is non sequitur.

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14 a counterclockwise witness July 6, 2017 at 7:05 pm

Just because you inhabit the world of scaffolding and fold rather then ante up before the flop with a pair of fours. just because you keep a licorice lockbox ad a porelain snuffbox, Art Deco, it don’t mean your woman’s tears don’t grow rose petals. Tilsit. The lesser sturgeon will indeed go the standard bearer, a resignation fraught with negligence. This doesn’t mean Art Deco that your woman’s honey-hued hair isn’t esculent.

Just because you tried to table music, subtract the colors, let slip the doloures, yes you’ve lived a dead man’s dream, one not bittersweet but rather sour, rotten. It doesn’t mean Art Deco that your woman’s water don’t rise over the dam.

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15 MyName July 6, 2017 at 9:22 pm

Baloney. There’s no tipping in Australia and people are just as polite (or not) towards waitstaff as they are in the U.S.

Tipping is a scourge from the customers’ prospective because you basically have made up prices on the menu that don’t actually reflect what you will pay. It works for restaurant managers in that it allows them to “staff up” at expected busy times with part time workers and keep a very small number of full timers. It works for the part time staff as well since they get very high pay relative to the number of hours they work.

What you end up with is an industry that underpays anyone who isn’t working during the busy shifts and has a very small number of people who can actually make a decent living at it full time compared to pretty much every other option. And people just assume that’s okay since it’s “always” been that way.

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16 ConfirmationBiasIsAFemaleDog July 5, 2017 at 3:16 pm

Whether or not the waitstaff are actually serving their best interests is immaterial. The story reinforces Cowen’s biases so it gets posted.

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17 A Black Man July 5, 2017 at 9:21 am

This means you think service work is degrading.

Funny how often people who think they are clever simply reveal things about themselves they would better off concealing.

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18 Axa July 5, 2017 at 10:09 am

Christians……..putting guilt in any pleasurable activity on Earth since 0.

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19 Bob July 5, 2017 at 2:53 pm

I think serving blowjobs for tips is degrading, and I have no reason to conceal this view. Perhaps you disagree. Or maybe you just have a really bad coke habit.

At any rate, the point of the example is to show the reductio ad absurdum of basing policy on tipping.

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20 Thomas July 6, 2017 at 12:06 am

This is so dumb it should embarass you. “I guess we should allow waitstaff to be tipped for contract murders too.”

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21 Bob July 6, 2017 at 4:15 pm

It is embarrassing that these sorts of dumb implications derive from Cowen’s “thinking” on this issue.

22 BC July 5, 2017 at 4:24 am

From the linked article: “I don’t need to be ‘saved,’ and I’ll be damned if small groups of uninformed people are voting on my livelihood,” Vallenza said. “You can’t cut someone off at the knees like that.” File this one under people responding, “Thanks, but no thanks,” to the nine most terrifying words in the English language [https://www.youtube.com/watch?v=xhYJS80MgYA].

Minimum wage activists, though, seem undeterred by the actual views of the workers that the activists say they are trying to help: “We do not believe what we see in Maine is representative of the majority of workers,” said…the managing director of…a national group of low-wage restaurant workers that fought for Maine’s referendum. “We have enough of a sense from our members around the country that this is important to them.” So, Maine workers are not representative, but these activists decided to push the referendum *in Maine* anyways.

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23 The Engineer July 5, 2017 at 8:08 am

Because… “minimum wage activists” are generally union funded stooges. They don’t care about minimum wage workers, they just want to jack up minimum wages as a negotiating ploy for union workers in their contracts.

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24 Troll Me July 5, 2017 at 3:14 pm

You got the part about “Maine workers are not representative” part right.

Probably there is some small group of highly tipped individuals that is convinced that they will earn less overall if the hourly portion of their takehome pay is larger. It’s not like the situations where some restaurants in Seattle banned tips and put wages up. There would still be lots of room for tips.

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25 Axa July 5, 2017 at 4:33 am

The article says tip income data is unreliable. Why not ask the IRS about tips?

If tax records show a lot of workers near or below poverty line, either tips are not a good income source, or workers don’t declare income.

If it’s tax evasion, it would be regrettable these workers apply for food stamps.

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26 Just Another MR Commentor July 5, 2017 at 6:37 am

They need to get rid of tipping it’s insane that I need to pay an additional (at least) 20% on top of my bill every time I go out to eat.

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27 Art Deco July 5, 2017 at 7:03 am

Call a whaaambulance.

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28 Art Deco July 5, 2017 at 7:31 am

Cucks like me have no problem paying the waiter to bang my wife in the kitchen

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29 Anonymous July 5, 2017 at 8:48 am

Then stiff them. If you are not going to return to a restaurant, there is absolutely no reason to tip. If you are a repeat customer, pay the minimum so that they do not spit in your food the next time. 15% is probably a good number

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30 ¯\_(ツ)_/¯ July 5, 2017 at 10:56 am

Can I ask, from my POV, why I have to do math at all?

There is path dependence that gets us to restaurant tipping, but if countries without tipping do just as well, I would prefer the lazy, from my POV, solution.

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31 Art Deco July 5, 2017 at 11:11 am

but if countries without tipping do just as wel

The utterances of someone who has never dealt with French service personnel.

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32 ¯\_(ツ)_/¯ July 5, 2017 at 11:28 am

No worse than Brooklyn.

33 Art Deco July 5, 2017 at 11:45 am

I’m sure you get just the service you merit, regardless of the tip you leave.

34 Axa July 5, 2017 at 12:43 pm

hahaha, does the cause of French service personnel attitude is lack of tips?

Try a nice restaurant or a grand hotel some time, no tips and superb service.

35 ¯\_(ツ)_/¯ July 5, 2017 at 11:04 am

By the way, let’s note that while some like the option to pass judgement on the experience, tipping the bill, with uncertainty how the gratuity is or is not split, is very messy way to do it.

I am sure bad waiters get good tips for good steaks, and great waiters get bad tips for .. anything at Applebees.

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36 Art Deco July 5, 2017 at 11:46 am

What’s wrong with Applebee’s?

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37 ¯\_(ツ)_/¯ July 5, 2017 at 11:53 am

I prefer restaurants that cook better than we can do, I might accept less for convenience, but (I have given them 2 chances) Applebees is neither.

38 Slocum July 5, 2017 at 9:17 am

Why? Is it beyond you to anticipate that 20% and decide whether or not the meal is worth it with that included? Would you prefer the 20% VAT charged in much of Europe? Though, to be fair, they had to cut the rate for restaurants because so many were closing up shop:

http://www.nytimes.com/2009/07/01/world/europe/01paris.html

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39 Anonymous July 5, 2017 at 9:28 am

I don’t think it is insane. I am sure that without tipping the list price for meals would go up, and the attractiveness of servers would go down.

I just don’t like it because it is burdensome, rather than (in the near future) just walking out and letting facial recognition settle the bill.

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40 Art Deco July 5, 2017 at 7:08 am

Why is this limited to restaurant personnel?

While we’re at it, why not limit the federal minimum to multinational firms, companies which employ imported labor, companies which employ labor in multiple states, and companies which employ labor in a state different from one which issued their charter? Why are local proprietorships employing local residents subject to federal law in this matter?

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41 Rich Berger July 5, 2017 at 7:10 am

As long as the progressives believe that you can generally raise incomes by magic, no evidence will dissuade them.

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42 buddyglass July 5, 2017 at 9:39 am

You can. The magic of subsidies.

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43 Troll Me July 5, 2017 at 3:20 pm

There is also the aspect that atomized individuals who strictly need to pay rent in 1 to 4 weeks time are in a relatively poor negotiating position, and thus have a difficult time capturing a reasonable share of the surplus created through combinations of labour and capital.

Which is a good reason to have a wage floor. So that people who need that money to pay rent don’t have to compete with someone’s spouse who’s just looking for something to do and might literally work for $0 just to get out of the house. (Among other reasons …)

If you recall from econ 101, there are two aspects to supply and demand. Namely, in addition to demand, there is also supply. When there is a wage floor, this effectively bans people from low value activities in the workplace (which contributes to technical progress).

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44 rayward July 5, 2017 at 7:15 am

Of course, a good Austrian would prefer for all prices to be subject to the market, not just wages, and would oppose intervention by government, not just intervention in the form of a minimum wage but intervention in the case of a financial crisis when asset prices are collapsing. One either believes in the sanctity of markets or one doesn’t. Indeed, a good Austrian explains the depth and duration of the Great Depression as being partly the result of FDR’s policy of encouraging business not to lower prices or wages; if only prices and wages had been allowed to fall to the deep, business would have sold more goods (at much lower prices) and would have retained or hired more workers (at much lower wages), thereby spurring a much quicker economic recovery. That’s the theory a good Austrian lives by.

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45 The Anti-Gnostic July 5, 2017 at 9:27 am

It’s called letting the rich become poor, and it is just as valuable to a healthy economy as the obverse.

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46 Art Deco July 5, 2017 at 9:49 am

not just intervention in the form of a minimum wage but intervention in the case of a financial crisis when asset prices are collapsing.

The federal government was content to let asset prices collapse in 1962, 1973-74, 1987, and 1999/2000. What they weren’t content to do was sit on their hands while an implosion in financial intermediation occurred. Had been tried during the period running from 1929 to 1932. Wasn’t beneficial to any sector of society.

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47 Slocum July 5, 2017 at 10:02 am

“What they weren’t content to do was sit on their hands while an implosion in financial intermediation occurred. Had been tried during the period running from 1929 to 1932. Wasn’t beneficial to any sector of society.”

You’re aware that during the 1932 election campaign that FDR bashed Hoover not for sitting on his hands but for raising taxes and being “the greatest spending peacetime administration in history”, right?

https://www.mackinac.org/4026

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48 Art Deco July 5, 2017 at 11:15 am

So what?

That aside, there is a distinction between fiscal and monetary policy. FDR and the Congress wasted no time in instituting a bank holiday, devaluing the currency, setting up the FDIC to rapidly process insolvent banks, and setting up HOLC to sponsor workouts of sour real estate loans. All of these acts were tonic. (FDR and the Congress also had some lousy initiatives as well, to be sure).

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49 Slocum July 5, 2017 at 11:25 am

So what? The point is that the Hoover administration definitely did not sit on its hands and let things go. The activist policies Hoover pursued may have been misguided and actively harmful (as were many of FDRs), but the idea that Hoover did nothing is a myth.

50 Art Deco July 5, 2017 at 11:39 am

The point is that the Hoover administration definitely did not sit on its hands and let things go.

From October of 1929 to March of 1932, they most certainly did. Insolvent banks were simply closed and their depositors referred to bankruptcy courts. The country was experiencing severe deflation in the context of real estate finance dominated by five-year balloon mortgages. Britain devalued its currency in September 1931 and began its recovery immediately, which is why the decline in annual production in Britain between 1929 and 1932 was 5% and that in the United States approached 30%. In the Spring of 1932, the Reconstruction Finance Corporation was incorporated and the Federal Reserve began attempting open market operations. It was at that point that production levels at least stabilized rather than careering downhill.

51 Art Deco July 5, 2017 at 11:43 am

The activist policies Hoover pursued may have been misguided and actively harmful (as were many of FDRs), but the idea that Hoover did nothing is a myth.

Again, Hoover presided over a 30% decline in production. FDR presided over rapid increases in production (averaging about 9% per year over the period running from 1933 to 1941). (The exception was the 18 month period from the beginning of 1937 to the middle of 1938. That contraction was modest in scale compared to what happened over the period running from the summer of 1929 to the spring of 1933). By about 1939, domestic product per capita had returned to 1939 levels and by 1941 it had returned to the long-term trend line. (The labor market remained sclerotic and injured).

52 Slocum July 5, 2017 at 12:27 pm

“In the Spring of 1932, the Reconstruction Finance Corporation was incorporated and the Federal Reserve began attempting open market operations. It was at that point that production levels at least stabilized rather than careering downhill.”

And, remind me — who was president throughout 1932?

53 Troll Me July 5, 2017 at 3:23 pm

By 2008, there was also lots of data which showed that financial crises are much cheaper to resolve sooner than later (although moral hazard issues still militate for doing nothing fairly often, aside from ensuring sufficient supports as to not lose to much human capital by a sector temporarily losing people to wherever they had to go during the downturn, and then never getting them back).

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54 rayward July 5, 2017 at 11:45 am

Of course, self-described members of the Austrian school are about as pure as self-described evangelical Christians. There are purists among the Austrian devotees, but like crazy uncles, the family must keep them hidden from public view. Yes Mr. Boettke, I am speaking directly to you, Boettke being the crazy uncle at the Mercatus Center. Monetary stimulus and fiscal stimulus are both redistributive, the difference being that monetary stimulus is redistributive upward (by inflating asset prices) while fiscal stimulus is redistributive downward (by inflating wages). To the Austrian purists, both are objectionable because they interfere with markets. That’s what the Austrians taught. To the Christian purist, loving one’s neighbor as one loves oneself is the second of the two greatest commandments (the first being to love God with all one’s heart, soul, and mind). That’s what Jesus taught. Being an Austrian purist is almost as difficult as being a Christian purist. That’s why hypocrisy is so popular.

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55 Andrew M July 5, 2017 at 7:22 am

Are there any other industries where tipping ought to be more common? Scott Adams poked fun at the idea of engineers working for tips, a long long time ago:

http://dilbert.com/strip/2000-11-20

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56 Art Deco July 5, 2017 at 7:34 am

Engineers are cucks like me anyway.

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57 Art Deco July 5, 2017 at 8:33 am

Cucks like me cuck like me cuck like me cuck like me cuck like me cuck like me

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58 buddyglass July 5, 2017 at 9:38 am

Is it actually *worse* than 1-for-1 swap, i.e. they lose tips but gain more in wages? Or is the problem that the wage increase is gradual, over time, but once it’s in the news some customers will start tipping less immediately?

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59 Brian Donohue July 5, 2017 at 9:59 am

The culture that is America. I like it.

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60 Crikey July 5, 2017 at 10:02 am

Venezuela’s inflation rate was around 740% at the start of this year.

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61 Floccina July 5, 2017 at 10:43 am

How much FICA do servers usually pay?

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62 Axa July 5, 2017 at 2:17 pm

Temporary workers don’t declare tip income to minimize taxes. People on the long term declare tip income to get better loans.

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63 Boonton July 5, 2017 at 11:00 am

https://www.indeed.com/salaries/Server-Salaries,-Maine It seems like Servers in Maine are already close to $12 an hour ($11.27)….which the Maine law would have taken until 2024 to hit. So what exactly is going on here?

It seems to me less about min. wage and more about tips (what would the servers have felt about a law that required $12/hr but would allow employers to count tips against that min.?). So what exactly is the deal with tips?

Well wait, what exactly does a ‘good server’ do? Well to be honest with you not much. Get the order right, bring the food to me, be polite and perhaps ask if I need anything else but not be pushy about it. OK upscale places I may ask about the dishes, ask for recommendations but 90% of us, 90% of the time we eat out at a place with a server do not need any great expertise about the day’s specials or wine or to explain dishes we have never encountered before. The tip is expected and almost mandatory in the US unless your waiter did something really bad. On the upside, though, there’s a limit to what a server can do to innovate or improve his/her output. Aside from the top end, all you can do is get it right.

So…

This leads me to suspect that servers are basically an informal welfare system for the able bodied. You are obligated to show support for someone who is ‘down on his luck’. Namely the poor waiter or waitress who is ‘doing it only for tips’. This is not actually producing an economic good, it is effectively a tax and transfer except it’s being done by social stigma rather than an explicit use of the gov’t. And it’s not a very efficient welfare system if you think about it. On the plus side it does reward people who are in the labor market. On the negative side is rewards people for simply being better looking, younger. It doesn’t really reward hard work (dishwashers, for example, don’t get to share the tips). It also doesn’t necessarily support those who need the most help. Tipping, I suspect, is less about a free market ideal labor market unhampered by the min. wage and is more related to occupational licensing….which is a type of working class entitlement program that rewards those ‘in’ the right spot at the expense of those who aren’t.

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64 Art Deco July 5, 2017 at 11:16 am

This leads me to suspect that servers are basically an informal welfare system for the able bodied.

Yeah Low margin retail enterprise are running charities.

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65 Boonton July 5, 2017 at 11:19 am

The customers are, not the enterprise. But now that you mention it if you think of retail as being about stores rather than serving food note we do NOT tip people who work at clothing stores, Wal-Mart, grocery stores etc. Only those who serve food. Why?

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66 Art Deco July 5, 2017 at 11:34 am

Only those who serve food. Why?

And taxi drivers, moving men, and barbers.

It’s a appreciation. Perhaps your problem is that you don’t appreciate much of anything but the sound of your own voice.

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67 Bob from Ohio July 5, 2017 at 11:54 am

Bell boys and valet parkers too.

68 Boonton July 5, 2017 at 12:03 pm

“It’s a appreciation”

We appreciate the moving man, but not repair man? We appreciate the server but not the seater or dishwasher?

It seems a more likely possibility is that these are social customs that are relatively random rather than an economic relationship where we are buying ‘appreciation’ from tippers and tippers are buying things they appreciate from those that provide services to them.

69 Boonton July 5, 2017 at 2:14 pm

“And taxi drivers, moving men, and barbers. ”

Except for barbers, these examples share the ‘ceiling on quality’. All of them do a job for you but aside from spoiling it by making errors, how good can the job get? A taxi driver, for example, usually isn’t directly responsible for the quality of his cab (if he’s working for someone else). He can get you from A to B by choosing the best possible route but there is usually a finite number of possible routes and how good that ride is depends upon factors outside his control. I suppose you can tap him for local knowledge but that’s a minority of taxi trips AND it isn’t that easy to base your tip on quality (if you ask for the best steakhouse in town, he’s already gone by the time you have eaten there).

The tips in these examples do seem to stem from social pressure that creates a ‘guilt trip’ based on a narrative that these are poor people struggling to get by. Tipping is essentially ‘makework’ and ‘social welfare’.

70 Boonton July 5, 2017 at 11:17 am

Better idea, IMO. Up the EITC enough to effectively guarantee an income of maybe $24K-$30K per year to anyone who works full time. In exchange lower min. wages and try to eliminate as much occupational licensing barriers as you can.

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71 Art Deco July 5, 2017 at 11:32 am

Better idea, IMO. Up the EITC enough to effectively guarantee an income of maybe $24K-$30K per year to anyone who works full time.
,
Cash compensation per worker is currently running at a mean of $54,000 per year. So, no, that isn’t happening.

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72 Boonton July 5, 2017 at 12:01 pm

Cash compensation per worker is currently running at a mean of $54,000 per year

Source? Are you confusing the median or average with ‘every worker’?

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73 Art Deco July 5, 2017 at 4:33 pm

The source is the Bureau of Economic Analysis. Annual cash compensation is currently running at $8.2 tn a year with a working population of 150 million. The Bureau of Labor Statistics data suggest annual cash wage payments of $27,500 a year put you at the 25th percentile of the wage and salaried workforce.

74 Boonton July 5, 2017 at 8:50 pm

So what would be the issue?

75 Art Deco July 5, 2017 at 10:59 pm

It would require the imposition of a marginal tax rate of 37% just to finance it, that’s why.

76 Boonton July 6, 2017 at 6:13 am

How do you calculate that?

77 Bob from Ohio July 5, 2017 at 11:53 am

Its about not capping their wages at the “minimum wage” which would be the de facto maximum.

Restaurant owners who think like you are never going to pay their servers more than the minimum.

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78 Bob from Ohio July 5, 2017 at 11:49 am

The noted economist Matt Ygelesis thinks we can raise the minimum wage to $150 all at once without any real consequences.

Maybe Maine should try that?

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79 Boonton July 5, 2017 at 12:03 pm

Source?

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80 Daniel Weber July 5, 2017 at 2:32 pm

https://twitter.com/mattyglesias/status/881692457636855808

This is why the concept of “moving the Overton window” is so stupid. Posting extreme views feels good, so it’s easy to come up with a rationalization for it. But it makes people in the middle think you are an idiot.

When I’m looking for reasons not to vote for a candidate, I find a forum for fans of said candidate and just read.

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81 Boonton July 5, 2017 at 2:43 pm

That tweet doesn’t strike me as a serious policy proposal but instead simply a snarky comment on monetary policy.

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82 Boonton July 5, 2017 at 2:44 pm

Kind of akin to saying Einstein was not serious because he talked about trains approaching each other at the speed of light and passengers observing each other bouncing balls as they zip by each other.

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83 Ricardo July 5, 2017 at 12:37 pm

Fortunately he is not as influential as his doppelganger, Matt Yglesias.

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84 Bob from Ohio July 5, 2017 at 1:25 pm

Source is Twitter.

OMG I spelled his name wrong.

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85 terry richards July 5, 2017 at 1:31 pm

The problem with minimum wage increases for servers is that it effects how owners can spend money on labor.

Believe it or not, the restaurant industry is actually HIGHLY competitive for managerial and culinary talent. There is an enormous shortage of highly skilled cooking professionals and a lot of that has to do with the fact that EVERYONE WANTS TO WAIT TABLES.

To me, tipping should be abolished. Menu prices should reflect the total cost of the dining experience and not the partial cost.

What kind of business has two classes of employees whereby one class is paid exclusively by the owners and the other class is mostly paid by the customers? How is this sustainable? How does it make sense to have cooks making 14 dollars an hour and servers in the same restaurant make 25-30? The owners facing this cooks crisis can largely do nothing about it because at the end of the day there is only so much money to go around.

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86 Boonton July 5, 2017 at 1:57 pm

Indeed, as I pointed out above there seems to be a ceiling on how good a waiter you can be. Get the order right, be able to answer questions about the menu when asked, don’t be too pushy or too absent and you got the job right for 90% of serving places. In higher end places maybe you can exceed that by developing the ability to recommend dishes and wines but there’s a limit to how good you can really be.

On the other hand a chef has a lot of room to aim for more greatness. If chefs worked for tips but waiters were paid like dishwashers this structure might make sense but instead it feels to me like a social custom that has created a virtual ‘license profession’.

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87 Mark Wylie July 5, 2017 at 4:25 pm

Rather than rely on the opinions of a few people, why not look at the issue systematically. There are currently seven states which currently require tipped employees to be paid the full minimum wage. Compare those states with the rest. Are tipped employees in those seven states worse off?

In fact, empirical research has been done, which found exactly the opposite. In states where tipped employees are paid the federal minimum of $2.13 per hour, they have a poverty rate of 18%. In states where they are paid over $2.13 per hour, but less than the full minimum in that state, they have a poverty rate of 14.4%. In the seven states where tipped employees are paid the full minimum, they have a poverty rate of 10.2%.

So systematic evaluation shows that the idea suggested here by Tyler, that requiring employers to pay the full minimum to tipped employees will somehow hurt those employees, is empirically false.

The study I reference is here:

http://www.epi.org/publication/waitstaff-and-bartenders-are-less-likely-to-be-in-poverty-when-they-are-paid-the-regular-minimum-wage/

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88 terry richards July 5, 2017 at 6:22 pm

And that data proves what exactly? If we say that Mississippi is a dirt poor state they would be a dirt poor state whether their servers are making a federally mandated 10 dollars an hour or 2.13 an hour. There is nothing in that data that proves that paying a higher min wage to servers makes any sort of socially optimal micro economic sense. I am sorry.

By your logic, the trick to curing the poverty rate would be to simply raise the minimum wage. The trick to curing poverty in Africa or Venezuela would be to make the minimum wage 15 dollars an hour.

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89 Mark Wylie July 5, 2017 at 9:05 pm

Let me walk you through this:

-The article Tyler quoted suggested a specific impact of requiring employers to pay tipped employees the full minimum wage: “it would cause customers to tip less and actually reduce their take-home income.” This is what social scientists would call a hypothesis.

-As an economist, my natural response to a hypothesis like this would be to think about testing it. We have several states that do require employers to pay tipped employees the full minimum, so it should be possible to compare outcomes in those states with others. While good, systematic data on tipping practices themselves are going to be extremely hard to collect, we can use other indicators to identify the impact of these legal requirements.

-For example, if requiring tipped employees to be paid the full minimum really did reduce their take-home income, we would logically expect employees affected by such a requirement to have a higher poverty rate, other things being equal. The Economic Policy Institute study I linked to, however, found exactly the opposite.

-So what we have is a hypothesis that logically implies that we should observe a specific outcome in the real world. But when we look at real world data, we observe exactly the opposite of what the hypothesis implies. That kind of observation leads social scientists to a conclusion that the initial hypothesis is false.

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90 Thomas July 6, 2017 at 12:24 am

This is daft. You control for nothing in your ‘experiment’ and find your evidence for the conclusion you already had.

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91 This is no place for a pizza boy July 5, 2017 at 6:33 pm

In my 20’s, I worked for five years as a driver for a large pizza-delivery chain. I’d guess that during that time, tips amounted to about one-third of my income; my hourly wage was barely above the minimum.

Would I have preferred a system under which the hourly wage was higher and I didn’t have to grovel for tips? Emphatically not. Tips gave me a way to increase my income through my own efforts. I could earn more by providing better service to customers (e.g., by running up the three flights of stairs to somebody’s dorm room instead of paging them from the front desk and waiting for them to come down), and by moving more pizzas per hour. This not only gave me more money, but gave me a sense of being more in control of my destiny. The customers were happier, the company was happier, and I was happier.

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92 Barkley Rosser July 5, 2017 at 9:25 pm

Just two comments to correct several erroneous statements, this based on my having probably eaten more times out of the US than Tyler, if not in quite as many nations.

Indeed, in the vast majority of nations outside the US, there is no tipping in restaurants, or very little and sporadically so. However, despite claims that service is better in the tipping US, this is not my observation, and that includes even famously grumpy France. Yes, once upon a time one got snotty and slow waiters in some establishments in Paris, but that is pretty much gone now, and I see plenty of snotty and slow waiters in the US. Frankly, I see little difference, and I was just in Paris again fairly recently. To the extent there are differences they are not tied to tipping, they are tied to other national differences and history. Thus one finds not so good service in Russia, but aside from a lot of general grumpiness there, they still have a remnant left over from the command socialist economy that the producer/server is the boss, and the customer is lucky to even be served.

The other matter, I think only brought up by one person, was the false claim that one does not find restaurant chains in Europe. One most definitely does, including both local ones as well as famous American ones like MacDonald’s and KFC. Sure, people there do tend to eat at home more than Americans do, but there was a far exaggerated statement about how little they eat out. They eat out fairly regularly, and there are restaurant chains.

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93 Art Deco July 5, 2017 at 11:01 pm

Indeed, in the vast majority of nations outside the US, there is no tipping in restaurants, or very little and sporadically so. However, despite claims that service is better in the tipping US, this is not my observation, and that includes even famously grumpy France. Yes, once upon a time one got snotty and slow waiters in some establishments in Paris, but that is pretty much gone now, and I see plenty of snotty and slow waiters in the US.

Did it ever occur to you that you’re just an offensive individual and people react accordingly?

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94 Barkley Rosser July 6, 2017 at 1:48 am

You have trouble reading, don’t you, Art Deco. What I said is that in general service is about the same in non-tipping foreign countries as in the tipping US. I noted that in the past in supposedly grumpy France one ran into bad service more, but not to much now, not obviously worse than in the US. In general I get pretty good service, even if you are annoyed with me for pointing out your multiple hypocrisies and stupidities. I even mostly get decent service in Russia, although it seems less good than in other places.

Oh, and my time series on France is very long, now dating over 60 years, although I was not paying that much attention to the quality of the service 60 years ago. But I was 50 years ago, which was when I saw some bad conduct. But then a half century ago the French were really anti-American partly due to Vietnam, although also because they were still having trouble getting over their replacement at the top of the heap by the leading English-speaking countries. They are largely over that now, and generally treat visiting foreigners quite decently, including even the most obnoxious of American tourists.

They might even treat you decently, Art Deco.

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95 Thomas July 6, 2017 at 12:30 am

In the US one can eat out for <$10 plate, which is about 1/8500th of the annual household income for two full time employed adults. These prices don't exist in Europe, so you are comparing different classes of restaurants. Show me the French full service steak dinner at a cost of less than 1 hour of work to the customer.

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96 Boonton July 6, 2017 at 6:17 am

Show me a ‘full steak dinner’ in the US for <$10.

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97 JWatts July 6, 2017 at 3:13 pm

He didn’t say that.

“$10 plate, which is about 1/8500th of the annual household income for two full time employed adults.”

“Show me the French full service steak dinner at a cost of less than 1 hour of work to the customer.”

That would translate to around $40 or $20 per person.

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98 efcdons July 6, 2017 at 1:58 am

what’s surprising about sales people in a small part of their industry where goods are relatively high priced wanting to be able to make a commission on their relatively large sales even though a higher base wage would help the greater number of sales people who work at jobs where the average sale is much, much lower?

A small “elite” lobbying on their own behalf for a policy changes which would help them at the expense of the majority is a tale as old as America.

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