The Implications of Eliminating the Tipped Wage, Part II: Server and Manager Attitudes

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Danny Meyer's restaurant The Modern is reportedly doing better than ever after eliminating tips.

Last week we published Part I of this three-part series on the elimination of the tipped wage. That article discussed the issues associated with such an action and lightly touched on some of the relevant information that has been disseminated on the topic. We pointed out that the existing information focuses primarily on the consumer and their attitudes and preferences. We found the dearth of information on the opinions of tipped servers and those who manage them to constitute a shortcoming in the data necessary to make informed decisions. We endeavored to do something about that.

The Rationale

We undertook our own research to get to the heart of the feelings of tipped servers and their managers. Asking these folks how they would feel about tip elimination and what they would be most likely to do should this change come to pass provides important information about how eliminating tipping might change the nature of food and beverage service, and perhaps even who would be most likely to provide this service moving forward. While our overall survey respondents provide for an excellent pool of data, we were careful to ask questions that allow us to segregate out the responses of tipped workers and managers of tipped workers. Their opinions and possible actions provide the best information about the results of future change.

The Method

In order to gather the necessary data, we devised a 10-question survey with the intention of distributing the questionnaire to professionals in and around the hospitality industry. The survey was posted on the Nightclub & Bar website, the Johnson & Wales University College of Online Social Media Site, and was shared on a variety of social media sites. Hard copies of the survey were distributed to attendees at select seminars at the 2016 Nightclub & Bar Convention and Trade Show in Las Vegas. We hoped for a large response. Perhaps demonstrating the significance of the topic to those within the industry, the response rate was overwhelming. In the end we collected 369 surveys.

The questions included on the survey were designed with two purposes in mind. First, we wanted some information about server attitudes toward the tipped wage and its elimination. We asked three questions in this vein. The first was in regard to the general favorability of tip elimination: “How favorable would you be to the elimination of tips?” The second addressed tips as a motivating factor: “If tips were eliminated at your establishment, you would be most likely to (keep working there or leave the establishment)?” The third was designed to predict future action if tips were eliminated: “If tips were eliminated, you would be likely to provide (what level of service moving forward)?”

Second, we were looking for some demographic information that might have a significant impact on the respondents’ attitudes. For example, would managers feel differently than tipped servers in general about the elimination of tips? Would highly compensated tipped employees be more likely to work for an hourly wage than tipped employees compensated at a lower rate? Would men be more likely than women to provide a poorer level of service if tips were eliminated? We therefore included seven questions on the survey designed to gather some characteristics of our respondents and how they answered questions concerning favorability, motivation and action. We asked about position type, establishment type, percent of compensation derived from tips, total compensation, age, hours worked, and gender.

With the assistance of Dr. Robert Gable and the Center for Research and Evaluation at Johnson & Wales University, we entered the data and ran a series of statistical analyses.

The Results

It wouldn’t be an exaggeration to characterize the results of the survey as being overwhelming. As in, the overwhelming majority of respondents to the survey, regardless of their demographic characteristics, have a strongly negative impression of the elimination of the tipped wage. It might be expected that people doing a thing might not like it if they couldn’t do that thing anymore. It might be unexpected that their feelings are so strong.

How favorable would you be to the elimination of tips?

Nearly 77% of total respondents indicated that they had a generally unfavorable opinion regarding the elimination of tips. Approximately 64% of respondents’ opinions were extremely unfavorable. Interestingly, the only statistically significant difference among different demographic groups for any of our attitude questions was within this category. Put in layman’s terms, tipped employees really hate the idea of eliminating tips (89% unfavorable), managers just hate it (72% unfavorable).

If tips were eliminated at your establishment, would you be most likely to (stay or go)?

We asked if the elimination of tips would result in our respondents “moving on.” One in four of our respondents indicate that they would stay in their current position if a tipped wage were eliminated. Forty percent indicate they would seek out an establishment with tipping while another one in four would simply leave the industry. The responses to this question hold significant information for operators who eliminate tipping, and especially for those who might choose not to. We’ll explore the ramifications of this set of responses in greater detail next week in Part III of this series.

If tips were eliminated, you would be most likely to provide (what level of service moving forward)?

The opinions of the tipped employees who responded to our survey were split in one regard…but they agreed in another. Half of these respondents indicated that the elimination of tips would have no impact on the quality of service they provide their customers. An almost equal number, 46%, indicated that the elimination of tips was likely to result in a lower level of service provided. The area of agreement? Only 3% of tipped employees indicated that the level of service they provide would be likely to improve. This is another significant finding that we will explore in greater detail in Part III.

The authors wish to acknowledge the support and guidance of Robert Gable, Ed.D and Felice Billups, Ed.D. at the Center for Research and Evaluation at Johnson & Wales University, and Kristen Santoro and Ashley Garceau of Nightclub & Bar.

Next Week: The Implications of Eliminating the Tipped Wage, Part III: An Assessment