Tipping Is Out of Control. It's Also a Serious Labor Issue

A tip jar at a coffee shop in the Union Market district in Washington, DC, on Sept. 8, 2023. Credit - Al Drago—Bloomberg/Getty Images

To tip or not to tip? It’s a simple question with a deeply complicated answer, at least in the U.S. Here, the practice of tossing a few bucks to a service worker when you pay your total bill is not only common, but expected in many industries, from grocery delivery to coffee shops. And while European tourists may famously struggle to decipher the rules, Americans are all too aware of how it works. And it’s more than likely they have a very strong—probably negative—opinion about it. You’d be hard-pressed to find someone who likes the American tipping system, from the customers who resent paying more to the workers who are often paid too little in the first place.

However, tipping culture and all of its attendant discourse is really just a means of obscuring the real issue: The continuing existence of the sub-minimum wage, and the ensuing expectation that consumers (and their tips) will make up the lost wages that employers avoid paying.

For many workers, tips often make up a significant portion of their take-home pay. While some—like servers and bartenders at high-end restaurants, for example—do manage to make good money off tips, someone else always suffers; deprived of that same opportunity, back-of-house kitchen workers like dishwashers and cooks, who are already at a financial disadvantage, fall even further behind. Other workers who rely on tips may find their own earning opportunities restricted by vindictive employers; for example, after dancers at North Hollywood’s Star Garden strip club unionized, their angry boss instituted new rules that made it nearly impossible for them to earn more than a few dollars a night.

Read More: How Much Should You Tip? Five People Share Their Habits

The only people who truly benefit from this custom are those at the top: the people who own the restaurants, hotels, delivery apps, and other businesses, and take home the lion’s share of the profits. Under federal labor law, employers are able to get away with paying tipped workers only $2.13 per hour; if the tips workers receive don’t add up to the hourly federal minimum wage of $7.25, their bosses are required to make up the difference. Unfortunately, this does not always happen. In 2017, the Economic Policy Institute found that workers in the 10most populous states were robbed of more than $8 billion annually thanks to minimum wage violations, and the issue’s only getting worse. In 2023 alone, the Department of Labor’s Wages and Hours Division recovered over $29 million in back wages and damages for restaurant workers.

It’s not just about the money, either. The practice of tipping in the U.S. is deeply rooted in racism, sexism, and ableism. As civil rights advocate and author of The New Jim Crow, Michelle Alexander wrote in a 2021 New York Times op-ed, “A nation that once enslaved Black people and declared them legally three-fifths of a person now pays many of their descendants less than a third of the minimum wage to which everyone else is entitled.”

Alexander also noted that the tipped workforce, which skews 70% female, is disproportionately made up of Black and brown women. This is no coincidence. When President Franklin D. Roosevelt signed the Fair Labor Standards Act of 1938 into law, it established the nation’s first minimum wage, but conspicuously excluded several classes of workers—including domestic workers, agricultural workers, and restaurant workers—who at that time in history were predominantly Black. Racist employers who resented being told to pay their Black workers properly began encouraging customers to tip them instead as a means of control.Then as now, tipped workers are obligated to accept bad behavior from customers and perform extra emotional labor in order to avoid being financially penalized.

Read More: It’s the Legacy of Slavery’: Here’s the Troubling History Behind Tipping Practices in the U.S.

Appreciating the financial boost, workers despised the system itself. When the Brotherhood of Sleeping Car Porters, the first Black-led labor union to be recognized by the American Federation of Labor, fought for higher wages, they succeeded in 1937—and kept their tips. It was a major victory, but the Pullman maids, who were all Black and Asian women who also relied on tips, were excluded from the union contract. Even then, women were expected to bear the brunt of the burden of the tipping system, and continue to bear its most negative effects.

The Fair Labor Standards Act of 1938 also gave employers the right to pay workers in certain categories even less than the newly-established minimum—a subminimum wage. As I mention in my book, FIGHT LIKE HELL: The Untold History of American Labor, included among them were disabled workers “whose earning or productive capacity is impaired by age, physical or mental deficiency, or injury.” That subminimum wage remains in effect, and continues to be a source of economic discrimination against disabled workers employed by corporations like Goodwill, Walmart, and others. “I think it’s horrible,” Frances Mablin, a young Black woman with cerebral palsy told Saru Jayaraman, author of One Fair Wage: Ending Subminimum Pay in America. “People with disabilities should be treated as equal to other people. We should get the minimum wage.”

The rise of the gig economy—a tidy term for the app-driven atomization of the modern workforce—has only exacerbated the problems with tipping. It’s not just workers in the restaurant and hospitality industries who depend on tips now; delivery drivers, rideshare app drivers, and other app-based workers who work for companies like Uber, Doordash, Lyft that refuse to acknowledge them as employees (and have poured millions into crushing proposed labor laws that sought to change that). As workers continue to be pushed out of stable employment and into the wilderness of independent contracting and gig work, tips will become more important to even more people—until we do something about it.

Clearly, something’s wrong here, and it shouldn’t take a labor historian to tell you that far too many of the U.S.’s most vulnerable workers are being exploited while their employers skate by scot-free. Until our outdated labor laws are finally updated to reflect the realities of the modern workforce and profit-hogging employers lose their ability to pass the buck (both figuratively and metaphorically) to the customers, tipping will continue to cheat workers out of a fair wage. While some restaurants and cafes have experimented with tip-free models and cities like Chicago have led the way towards abolishing the subminimum wage for tipped workers, there’s still a long way to go before American workers are finally free of the subminimum wage (and even further before we finally get the living wage we really need!). One thing is for sure, though; as activists, organizers, and legislators continue pushing towards this necessary goal, we must ensure that workers aren’t left holding the bill.

Contact us at letters@time.com.