Thursday, August 19, 2010

To Tip Or Not To Tip

Why does one tip a waiter/waitress, hair dresser, masseur/masseuse, cab driver but not a clerk at the window, or a person who rings or bags your groceries. What makes some professions/professionals eligible to be tipped and the others not. I have not got a straight answer from any one on this. May be there is none. One reason I have heard often enough is that the people who are tipped are not well paid, so it is somehow imperative on the customers to tip them as if to take pity on them.

If that is so, then there are many such professions which may not pay as well. What about the worker in a Walmart ? We do not tip them on the shop floor. In fact the situation at Walmart could be worse and everybody knows the Walmart story so well these days that it has become a national political agenda. If genuinely someone is being exploited then the right way is to organize and protest or a market based solution would be to move to a profession which would pay you well. Then, with the decline in the supply of particular professionals would increase their wages in order to pump up the demand for such positions.

Another argument is that if we removed the tipping altogether then the employers of the people who are tipped would have to give the employees enough salary, which in turn would increase what they charge for their services. Somehow to say that to keep things cheap we do not pay our employees. So either ways we would have to pay for that. So it is like a chicken and egg problem. Is the salary for the "tipped" professionals less because they are tipped, or they are tipped because they earn less.

Another reason I think could be that it is like a reward system, a bonus, for the employees. So, if they do a good job they earn their perks through the customers. So it could be a direct feedback and bonus for the employees rather than the employer incentivizing and keeping track of their employees' performance. Plausible but unlikely. But even then it is unfair that for exactly the same type of service, two people could be paid very differently. Unless they believe that it evens out in the long run. But again there are many other customer touch point positions where the performance is hard to judge but the employees are still not tipped.

Isn't each one of us doing our job and getting paid for that ? Can I compare my self to an actor for example and say that they get paid well so I should somehow be compensated. Wouldn't that be ridiculous ? Each profession has its own pay structure and I think it depends on the supply and demand of the people working or applying for that profession, to a large extent. I tip because that is the norm although I do not like to. But why is it the norm ? Tips bring ambiguity to things. Should I pay 15% or 20%. If I pay less what would the person receiving the tip think. Would I get a good treatment if I visit them again ? The price for the same service offered at the same place by the same person for two people, could be completely different. I would rather pay a higher price and have tip completely abolished than have ambiguity. But until that time I would continue to tip albeit hesitatingly.

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