My mother spent many of her working years as a server in restaurants. Her experience, from the 1950s through the 1960s (she then did other jobs) did not make the transition to primary tips easy to understand. When she was working as a server, she often received a quarter as a tip. Buy a cup of coffee (probably 75 cents) and they put down a dollar leaving a quarter for her. Buy meals for a family of four and they left a quarter on the table for a tip. “To Insure Promptness” was not a basis for her income and she just appreciated anything she was ever given.
This ingrained experience did not bode well for restaurants in the 1970s and 1980s (I was out of the house by 1977 and no longer had much direct experience with her behavior). She had only ever received quarter tips. Why should she be paying 10% or even 15% of the bill to a server when she had never received such? My brother and I often went back to the table to supplement, what she had left on the table, out of guilt and embarrassment.
Who gets what?
IF every restaurant paid their employees at least a living wage (which would always be greater than minimum wage or the sub-minimum wage the loopholes allow) then TIPs (it really was an acronym originally) would serve their original purpose. That was an EXTRA amount to thank the server for being very good, or even excellent, at their job.
But, we don’t know that. As a patron of the restaurant, I don’t know how much the staff earns, including what the server earns. I certainly want the server, and all the staff, to earn enough to live healthily. But restaurant prices continue to escalate and those prices, once again, hide how they are distributed.
As patrons, we just don’t know. We do know that it would be fair, and reasonable, to have prices calculated with living wages incorporated. But, in the U.S., that is very unlikely to be true. So, we tip. We may vary the percentage based on how much service we get (self-serve, full service, order and receive, …) but most of us will add it on. A sad part (I was going to say “saddest part” but that probably isn’t really true) is that the tip no longer is for good service. Good, bad, mediocre service and we still pay the tip. Perhaps, if the service is memorably horrible, we won’t pay but that has only happened to me once or twice in my lifetime.
How about other situations?
There are quite a few national, state, and local laws that protect consumers when real estate is purchased or some other expensive purchase such as a car. You can look at the sales history of a house, or a used car, to see how much the price has fluctuated. For real estate, the house should meet certain standards or the exceptions should be declared openly. I say “should” rather than “must” because people sometimes do illegal, and sneaky, things and often get away with them.
Medical costs, in the U.S., are a travesty. We recently received the official detailed invoice for a 2 1/2 hour in-office procedure done for my wife. She received excellent care but the bill was either silly or obscene. The official gross amount reflected about $1700/hour. The negotiated (by the insurance companies and government) amount was about 40% of the “official” amount. So, about $680/hour charged to the insurance company and then we had to pay the deductible.
My wife and I are “retired” and on Medicare so we came out of the situation without too much duress. But how about someone with poor, or no, medical coverage? The detailed breakdown of the costs looked like a defense contractor’s bill in the U.S. for $3,000 toilets. (Actually $50 dressings.) What are the REAL internal, and supply, costs for the doctor? We don’t know although I have heard that malpractice insurance for doctors ends up adding perhaps 40% to their charges (I don’t have verifiable knowledge of that).
And what about work for the rest of us?
The social acceptability of asking someone their salary (in the U.S.) is about the same as asking someone’s weight or age. I understand that, in some areas of the world, it is not such a secret, sensitive, subject. But, in the U.S., it is.
Why is that? Probably embarrassment. What do you do when you find that you are paid worse than someone else whom you evaluate as doing less, or worse, work than you are? What do you do if you find out that it is more? You start inventing excuses and reasons to justify it. And sometimes there are no good excuses and reasons.
I once worked for a company that did not give standard “cost of living” adjustments to most of the staff. So, people who had been there for very long often had lower salaries than newer people.
The company HAD to be competitive for starting salaries in order to attract people looking for positions. As a manager, I thought that was very unfair. So, when hiring I gave the least I could to the new hires to make it more equitable. After a few hires, however, I recognized that I was just bringing everyone’s salary down to a lower level. I couldn’t do much about the longer-term employee’s salaries but I COULD, at least, start off the salaries at a reasonable level. So, I did.
Another reason for U.S. companies to not be open about salaries is that, statistically, some comparisons COULD be explained. And the explanations are not always “fair”. On average, for “comparable” work (and that is sometimes hard to do but, statistically, it SHOULD average out), women (in 2023) in the U.S. earn only 83.6% as much as men. Non-white people earn (in 2023) between 75% and 82% of what “white” people earn. One can guess (didn’t find the statistics) that non-white women are in even worse shape.
Companies do not want this exposed, for obvious reasons.
Solutions
For restaurant workers, the solution is simple (not necessarily politically simple). Close the loopholes. Require restaurant workers, and everyone else, to be paid a living wage as a minimum. Let tips fall back to their original purpose which is the same as the purpose in other countries that require a living wage.
For other workers, it is not as simple. Opaqueness of salaries and compensation is definitely useful to companies. But it is of mixed effect for employees. Salaries are NOT always explainable. It may be due to subconscious (or conscious) bias or prejudice but it also may be an effect of real perception of value. I know that the ability, and willingness, to negotiate for more pay and benefits is not a skill that everyone has. And such does make a significant difference.
A real range should not be difficult to publish. It is easily available. The highest wage for a position and the lowest wage for the same position as taken from payroll statistics. Such should always be of use to the employee and it might cause the company to reevaluate wages.
And so …
In the U.S., where we are not used to transparency for some subjects, transparency can be uncomfortable. Lack of transparency makes company decisions less open to objections. Transparency would also make ridiculous, or non-justifiable, things obvious. But it is not always for the best.
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