Recently, a well-organized public relations campaign was launched to convince the public that the practice of tipping is “wrong.” The source of the moral authority that has proclaimed this practice to be “wrong” is fuzzy to say the least, but let’s examine the issue.
Several motives are present in the campaign to demonize tipping.
First, the presence of union affiliated entities in these campaigns is telling. In particular, these entities are targeting the restaurant industry, an industry in which to date they have enjoyed very little success. Having achieved very little success in their attempts to convince restaurant employees to become union member, they are trying an alternative approach, making all restaurant employees’ compensation the same across the board. This makes the individual less important in the structure of that employer’s workforce and gives more importance to collective action.
Unions favor a one-size-fits-all approach to compensation because it makes their jobs easier. Unions fiercely oppose pay based on merit, but rather advocate pay on the basis of time spent in the job. Convincing employees to give up control over their work lives is difficult under most circumstances. If those employees presently enjoy the ability to directly control the level of their compensation, then that job becomes much harder. If you are a hard-working individual, why would you give up control over your compensation to a third party?
If, however, the individual’s ability to directly control their compensation is not present and compensation is the same for everyone across the board, then some degree of the hesitancy to union representation fades.
A second motive is the liberal notion that outcomes for all should be equal. The goal is to move us away from the idea that we should all have equal opportunity to succeed and replace that with equal outcomes regardless of the effort and skill required by a given task.
Tipping is an economic incentive.
Humans respond to incentives. Remove those incentives and part of the drive to succeed dies. Tipping allows those with higher drives who work harder to achieve higher levels of success than those with lower drives who don’t work as hard.
This we should encourage. Basing compensation on hard work benefits everyone. The individual whose hard work results in greater success certainly deserves to reap the benefits of that hard work in the form of higher compensation. Similarly situated individuals observing the success and resulting increase in compensation are spurred to achieve greater success for themselves. All benefit here. Employees benefit in the form of higher wages and the employer receives the benefit of a more efficient workforce. This efficiency frees up employer capital enabling them to reinvest in the workplace and increase employee compensation.
In many areas of life, the difference between success and failure often comes down to the level of drive an individual possesses. Those who hustle win races while those who loaf do not. Those who study hard obtain good grades while those who party instead do not.
The same is true in the workforce. Unless we desire to become a nation of participation trophy winners, we should allow employers to continue to use incentive programs to spur their employees to greater success.
Removing the economic incentive tipping provides may please a few special-interest groups and help to fatten their bottom lines, but will not benefit those who currently receive tips nor the customers they serve.
This is a guest post by Nathan Mehrens President of Americans for Limited Government Foundation and previously served in the U.S. Department of Labor.