Recently on social media, I’ve seen lots of complaints about how tipping culture in the US is out if control, with people aggressively demanding tips.
Here are two examples:
The internet seems to be in disagreement with who is wrong. Is it the customer for not tipping, or is it the worker for demanding a tip.
I’m going to go with a third option that accurately addresses the problem.
The bad guy is the business.
As a buddy of mine put it so succinctly, the gig economy was just another way for the wealthy to fuck over the workers.
What most people don’t understand is that from DoorDash drivers to the stylist at SuperCuts, these people are effectively subcontractors.
They don’t have a wage. They get a percentage of the service price.
You go and pay $24 for a haircut, and the franchise gets a cut off the top and the stylist gets the rest. Technically, the stylist is renting the booth space.
Here is the kicker.
As inflation has made everything more expensive, these businesses are not increasing prices, or are not increasing prices as much as they need to to cover costs.
What they are doing is taking a greater percentage off the top.
In days gone by, the franchise take of a $24 haircut would have been $12. Then it goes to $16, then $20.
Some places, like implied by the massuse and DoorDash driver above, the house cut is 100%.
The business expect the customer to make up the difference in tips.
This system fucks over both the worker and the customer.
The customer is enticed by the low advertised price. Then the customer gets fucked when they feel strong-armed into paying another 20% or more for a generous tip.
The worker gets fucked because if they don’t get a generous tip, or even tipped at all, they don’t get paid.
The $24 you paid for a haircut that took 20 minutes just paid the stylist $3. If they manage to do two haircuts an hour, they made $6 without a tip.
Yes, your unhappy that you got guilty into adding a $10 tip.
But, how happy would you be working for $6 an hour?
This is absolutely one of those times when, “There aught to be a law” is appropriate.
I see three potential solutions.
1. End the gig economy like this, pay these people a wage like normal workers. This is probably the most drastic approach.
2. Establish a minimum percentage that workers are entitled to for services. The worker must get, say, 50% of the cost of the service with no additional fees to nickel and dime them to a lower percentage. If you pay $24 for a haircut, the stylist gets at least $12, guaranteed. If that isn’t enough for the house to operate, they need to raise prices accordingly. Businesses would also be forced to compete for good workers by offering above minimum percentage wages. This is my preferred option.
3. The advertised price must reflect the house and worker cut. If the business advertises an $80 massage, they must say:
Massage – $80, parlor $70/masseuse $10.
Then the customer knows that they should tip so the masseuse makes more than $10 per hour, or customers refuse to patron a business that pays its gig workers a shit percent. This is probably the least intrusive option.
Anyway this is dealt with, something has to be done.
The current situation is unfair to workers and customers, and is unsustainable.
The next time you see someone complaining that, “Tipping culture in America is out of control.”
Look at them and say, “Yes, franchise owners and tech bros are absolutely out of control fucking their workers.”
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