Should We Abolish Tipping?

Tipping is controversial. Some people think it should be outlawed; others think individual restaurants should ban tipping and simply pay their servers enough to live on. The analysis below suggests the question is more complicated. For one thing, it points out that servers (the people who would be “rescued” by laws or rules forbidding tipping) actually like tips, and would only voluntarily give up tips in exchange for a level of pay that is frankly unimaginable in the restaurant industry >>>

LINK: Should Tipping Be Abolished? (by Richard McKenzie for the National Centre for Policy Analysis)

…Overall, the various arguments labor advocates make for abolishing tipping are probably well-intended, with the welfare of servers at heart. The arguments certainly sound good, but they are divorced from the key economic realities of the server-labor and restaurant market economics they have highlighted. An industry that is as rapidly changing and competitive as the restaurant industry needs to retain as much of its flexibility in service and labor markets as it can. It needs continued labor-market freedom to experiment with different combinations and levels of meals and with different combinations of compensation packages. While some restaurants might find that a “hospitality included” pricing plan works best for them, it will not necessarily work for others.

What do you think?

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