I recently came across an article in The Washington Post about an intriguing new trend: Restaurants are charging a set 17 or 18 percent service charge in place of voluntary tips from customers. Why? To improve wages for their workers.
Having never worked as a waiter myself, I only learned a few months ago that Maryland’s minimum wage, as of Jan. 1 of this year, is $8 per hour, and yet, for people in jobs that commonly receive tips — such as wait staff — the tipping minimum wage is only $3.63 per hour.
This longstanding policy operates on the notion that employers must pay the difference when their employees’ earned tips fall short of the $4.37 per hour needed to make up the difference in wage standards. However, this does not always occur; in practice, because many tipped workers have difficulty proving when their tips are insufficient, especially when customers tip in cash, as opposed to credit.
Moreover, a common misconception is that tips are supposed to reward waitstaff for good service and that waiters who provide poor service should not be tipped at all. Personally, I have always found it disrespectful to not leave a tip, but I have been known to tip less generously in the past for, shall we say, less than satisfactory service — but little did I realize that my tips actually mattered because they supplement waiters’ minimum wages.
According to a 2011 Economic Policy Institute report, tipped workers are more likely to live below the federal poverty level. Newly implemented service charges at restaurants hold promise for improving the lives and well-being of tipped workers because they are put towards providing healthcare and other benefits to employees.
When an additional charge appears at the bottom of your bill, you may be off-put as a customer, but in reality, you are paying around the same amount that you would have if you had left a tip instead.
The staggering disparity between minimum wage standards and tipping minimum wage standards in Maryland — and the majority of states across the nation — not only affects waiters, but also impacts barbers, bartenders, car valets and other tipped workers.
Switching over to a service charge-based system holds promise for improving wages for restaurant workers. I, for one, am excited to support restaurants who undertake this innovative approach to raising wages for their workers.
