Last year the Trump administration announced a proposal to amend a 2011 regulation prohibiting employers from collecting server tips and distributing them to anyone other than servers. If the new proposal is adopted, employers could theoretically use workers’ tips for any purpose, as long as the workers who received the tips were directly paid at least the federal minimum wage of $7.25 an hour. The restaurant industry opposed the Obama regulation, and argues that more freedom would allow employers to share the tips of waiters and waitresses with other workers like busboys, greeters, cooks and dishwashers.
Labor advocacy groups and former Obama administration officials counter that the regulation would legalize employers stealing income from workers, since they could theoretically pocket the tips.
Your Ethics Alarms Economics/Labor/Human Nature Quiz of the Day…..
Is the proposed regulation fair, responsible and ethical, or not?
How hard is it to write into the regulation that the restaurants must distribute tips to non-management employees? As a diner, I have often felt that my server was getting a large tip because the food was well prepared, attractively presented and the silverware and china shined. Why are the critics so alarmed by this proposed regulation change? From what I’ve read, it sounds like anti-management bias to me.
“There is a lot of wage theft, tip stealing in restaurants and other sectors where workers depend on tips,” the New York Times quotes Christine Owens of the National Employment Law Project as saying. This would be one more reason for employers to take workers’ tips and do whatever they want to do with them.” One response to the proposal was a study by the Economic Policy Institute, a progressive think tank, that estimated that the change would cost current tipped workers $5.8 billion a year in employer snagged tips, and used “standard economic theory” to predict that if the regulation took effect, and employers that share tips with the untipped workers, they would then reduce the base pay. I don’t know how something using “theory” to make a prediction can be called a study. What’s being studied?
“To estimate the transfer from workers to employers, we first estimate the total amount of tips earned in the U.S. economy, and then we estimate the total amount of potentially transferred tips (the amount of tips that employers could legally take as a result of the rule). Finally, we estimate how much will actually be transferred to employers by estimating the share of potentially transferred tips that would be pocketed by employers as opposed to being redistributed among workers (either workers who received the tips or other workers in a tip pool),” says the Institute. That’s a lot of estimating, more than enough to guarantee a worthless number built by biases and given false validity by the illusion of detail. I’d call the “study” an ideological exercise in bootstrapping a political agenda. I’d estimate that if customers find out that their tips are going to the owners, they not only stop tipping, the consider eating somewhere else. I’d estimate that establishments that cheat their workers out of tips end up with less desirable workers.
I remember how before going to a four -star restaurant D.C. for the first time, I researched what was expected regarding tips. One source I consulted said that I needed to tip at least four employees. Tipping is inherently chaotic and unfair, but this seems like a classic dispute over whether businesses should be allowed to work out better systems that include all workers through experimentation and the marketplace, or whether the government should dictate tipping policies under the assumption that business owners are crooks, using the kinds of rigged “studies” that make climate change models seem persuasive by comparison.