September 25, 2018

Tipped or Stiffed: How Technology Can Raise Server Take-Home Pay in States That Don’t Tip Well

Written by
Kim Harris

Tipping in America is as customary as a seventh-inning stretch, as tasteful as a champagne toast. So common is adding a gratuity to the bill that people have been known to regard one another differently based on the generosity of the tip and whether they treat service industry employees with respect.

Case in point: “The Waiter Rule” is based on the idea that a person’s true character and personality are revealed when they interact with servers. You’re probably familiar with the popular quote by author Dave Barry, “If someone is nice to you but rude to the waiter, they are not a nice person.”

Working hard for the money

Politeness aside, if you’re an employee who depends on gratuity to supplement your hourly wage, regular tips are much more than a gesture — they can be the difference between barely breaking even and contributing to savings. Even in areas where tips are shared among the staff, also known as tip pooling, the minimum wage across the board has not kept time with the low employment rate and inflation.

For many hourly workers, tips are their bread and butter, and they depend heavily on them to get by in a highly competitive market where overqualified servers are competing for the best jobs in town. In the 2017 report, Mismatch: How Many Workers with a Bachelor’s Degree Are Overqualified for Their Jobs?, researcher Stephen J. Rose looked at the number of workers with college degrees who are overqualified for their jobs. He found, in 2014, there were nearly 230,000 waiters and waitresses holding Bachelor’s of Arts or Science degrees. The bar is high, and Americans have come to expect outstanding service.

Naturally, the success of a service industry worker has a lot to do with hospitality, skill, and the ability to adapt. But are some service employees at a disadvantage because they’re working in a state that doesn’t value their services? Could technology be the answer to increasing the earning potential of this segment of the workforce?

TSheets recently ranked the best and worst states to be a tipped worker based on average minimum wages for tipped workers and the average percentage of a bill patrons pay in tips. The study produced some intriguing results, including that the national average for tipped workers is 17.12 percent. Meanwhile, Connecticut, Maine, and Vermont ranked highest on the list of best states to be a tipped worker. Nebraska, Wisconsin, and Tennessee came in last.

Certain states have workers’ rights laws that set them apart. For example, in California, the average tip is over 16 percent, and employers are required to pay the full state minimum wage to every employee, landing California at No. 13 on the list of best states for tipped workers. In places like Idaho, on the other hand, employers claim a tip credit to bump their employees to minimum wage. In states like this, workers are paid as low as $3.35 per hour, with the tip credit bringing them up to the state minimum wage of $7.25. Idaho ranked 31 on the list.

How to use a POS system to increase employee tips

Wherever you might work or live, you’ve probably encountered a point-of-sale system (POS). At restaurants, cafes, food trucks, and other establishments where tipping is expected with your bill payment, we’re seeing more POS systems with built-in tip options to streamline the gratuity process.

If there is a way to make sure employees receive better tips, this is a smart way to do it. With these systems, businesses can prompt customers to leave a certain percentage tip — in some cases, a full dollar amount. With no math involved for the customer, the likelihood of receiving a fair tip gets a little bit better. And customers seem to find tipping on a tablet POS system to be both easier and more encouraging.

To use a POS system to the advantage of the business and the employee alike, employers can always configure their POS system to present amounts in percentages, which has been shown to be strategically more effective than asking patrons to enter dollar amounts on their receipts. At the sale, a POS system can also give a “no tip” option. Almost a third (29 percent) of respondents said having to choose the no-tip option makes them more likely to leave a tip.

Whether our tipping culture has anything to do with it, Americans enjoy high-quality service when we decide to dine out. States that rated lower on the list of best places to be a tipped worker may need to take a closer look at ways to improve wages and streamline the experience for their customers and employees.

Kim Harris is a copywriter and blogger based in Boise, Idaho, who has been putting her journalism background to good use telling true stories and helping businesses grow since 2008. When she’s not writing for TSheets by QuickBooks, you’ll find her queuing up entertainment and plotting her next escape.