Why Do We Tip (Redux)

I'm a big fan of NPR's Planet Money Podcast.  It's my go-to selection on my iPod while I'm cooking dinner.  So, I listened with great interest this weekend when Planet Money delved into one of my long-standing favorite topics: why do we tip waiters in restaurants?  I've weighed in on this subject on multiple occasions, including this hoary blog post from five years ago which lays out my general party line.

My opinions have not changed much in a half-decade, and I still continue to be bemused by how most people who delve into the subject of tipping look at it primarily from the customer's point of view (e.g. Steve Buscemi's Mr. Pink character in Reservoir Dogs) and not the waiter or restaurant owner's.  Planet Money, though, does a pretty good job, I think, of looking at it from all angles, and their piece turns up a couple of interesting points.

First, they wonder why it is that, even though so many people express frustration at tipping, we still do it:  "How do you undo five hundred years of custom and expectation? . . . No one wants to be the first guy who starts stiffing all the waiters because they feel like tipping is illogical."  As I go into in more depth in my old post on tipping, I think this is primarily because the real decision-making power on the topic is in the hands of the waiters and restaurant owners, not the customers.

We can see that in cases of other occupations that over the course of a decade or two have transitioned away from a tip-based compensation scheme.  Take grocery store bag boys, for example.  Interestingly enough, the Planet Money commentators ask during their piece how come we don't feel compelled to tip workers in grocery stores.  Perhaps they are a little younger than me, but when I was a teenager you always tipped the bag boys in grocery stores who took your bags out to your car for you, as my high school friends who worked as bag boys were prone to discuss ad infinitum.  These days, that custom is all but extinct (as is, I suppose, the term "bag boy").

And how did it happen?  In many of the grocery stores I frequented it was due to an active decision and campaign on behalf of the store's management, who posted big signs on the wall saying something to the effect of, "Carrying your bags out to the car is a service we perform free of charge.  Please, no tipping."  After a few years, everyone began feeling comfortable not tipping that nice kid who helped with the cart, and these days I not only don't recall anyone tipping bagboys anymore but I don't even remember seeing those signs saying "please don't tip".

I'd be curious to hear from someone who was behind those management decisions why it was they decided to actively discourage tipping, but I bet it was because as the economy changed they found that they could attract better employees if they offered them a more fixed, reliable wage.

But that still leaves unaddressed the question of why tipping persists in the restaurant industry when it's on the outs in supermarkets.

That's where the second interesting point from the Planet Money piece comes in.  During their interviews, the reporters found that when they asked waiters and waitresses if they would trade making the same money guaranteed through a fixed service charge rather than through tips, the answer was almost always no.  And why?  "They like it.  They like the excitement, and for every bad tip there's a good one around the corner."

And why is that?  I think it's because, as I said in my original post on the topic, "Waiting tables is very much a customer-facing sales position, and any waiter who has figured out how to upsell tables with appetizers and drink specials understands that tipping is essentially a slightly-unstable commission system."

And that optimistic willingness to forgo the guaranteed moderate income in favor of the uncertain upside chance for a really big score is a characteristic I've seen in all sorts of salespeople, from the waiters and waitresses hoping to move a little extra liquor and charm a few extra percentage points out of a check to the high-end software sales guys angling to land a six-figure commission on an enterprise deal.

And I still don't think tipping in restaurants is going anywhere anytime soon.