The Racial Tipping Point

A few years back, I got interested in taxicab tipping – and what influences how much people tip. So together with Fred Vars and Nasser Zakariya, I collected data on more than 1,000 cab rides in New Haven, CT and crunched the numbers. The study (published in The Yale Law Journal) found — after controlling for a host of other variables — two independent racial effects:

1. African-American cab drivers, on average, were tipped approximately one-third less than white cab drivers.

2. African-American and Hispanic passengers tipped approximately one-half the amount white passengers tipped.

African-American passengers also seemed to participate in the racial discrimination against African-American drivers. While African-American passengers generally tipped less, on average they also tipped black drivers approximately one-third less than they tipped white drivers.

Passenger discrimination against African-American drivers was not subtle:

African-American drivers were 80 percent more likely to be stiffed than white drivers (28.3 percent vs. 15.7 percent).

But as in all empirical studies, you have to ask whether the results are robust. Do black servers generally receive lower tips, and if so, why?

Our New Haven data did not have good information on the quality of driver service. We did a small amount of secret auditing of the drivers in our study to see if there were gross differences in the quality of service they provided. Our testers:

… subjectively rated the quality of service higher for black drivers than for white drivers (with an average rating of 4.5 out of 5 for black drivers versus an average of 3.3 for white drivers).

But we only succeeded in completing 10 audit rides with participating drivers — so at the end of the day, it was difficult for us to assess whether minorities received poorer tips because of providing poorer service.

However, a new study co-authored by the world’s leading number cruncher on tipping, Michael Lynn, has found a similar effect in a Southern restaurant. His article, “Consumer Racial Discrimination in Tipping: A Replication and Extension” is based on 140 surveys that he and his co-authors:

…collected during three lunch shifts (11:00 a.m. to 4:00 p.m.) at a [large national chain] restaurant located in the southern United States.

Focusing on just blacks and whites, the study once again found that:

Consumers of both races discriminated against black service providers by tipping them less than white service providers.

A cross-tab of the raw data (generously emailed to me by Lynn) shows that white customers tipped black servers almost four percentage points less than white servers and that black customers tipped black servers half a percentage point less.

But unlike my taxicab data, Lynn’s survey asked customers for their perception of service quality, food quality, and atmosphere quality. He also was able to control for the size of the group, the bill size, and a host of other variables.

Lynn emailed me:

After controlling for these other variables … the server race effect is comparable across customer race.

But as a law professor what is most interesting about Lynn’s article is his suggestion that an employer might be held liable under Title VII of the Civil Rights Act for establishing a tipping policy that has a disparate impact against African-American employees.

Lynn has a pretty good argument that restaurant policies are a “but-for” cause of at least some of the racial disparity. If the restaurants posted “no tipping” signs or instituted “service compris” (instead of putting a place on the credit card receipt for customers to write in the tip), the size of the racial disparity would almost certainly decrease.

But the harder question is whether the racial disparate impact of tipping is legally justified by the legitimate interest of businesses to enhance customer service. Not all employer practices that produce racial disparities violate Title VII. But the employer bears the burden of proving that the policy of promoting/allowing tipping is “consistent with business necessity.”

Today we think of tipping as beyond the scope of legal regulation. But in researching my Yale article I was surprised to learn that in the early twentieth century, progressives in seven states passed anti-tipping statutes that, to varying degrees, outlawed tipping.

Critics referred to the practice as “un-American” and incompatible with democracy. Former Yale law professor (and U.S. president) William Howard Taft was the “patron saint of the anti-tip crusade,” and Ralph Waldo Emerson roundly condemned the practice:

I sometimes succumb and give the dollar, yet it is a wicked dollar which by and by I shall have the manhood to withhold.

Tipping was attacked as bribery and as “the training school of graft.” In “The Itching Palm,” a 1916 manifesto against the practice, William Rufus Scott said that tipping is a form of “flunkyism” defined as “a willingness to be servile for a consideration.”

Lynn’s small study of just 140 tips may illuminate another potentially unattractive aspect of gratuities — that they may facilitate a species of employment discrimination. There is a probably apocryphal story that the word “TIP” originated in British pubs, where signs with these three letters were posted on boxes as a reminder that gratuities were welcome. The letters were an acronym for the phrase “To Insure Promptness.” But the evidence from Lynn’s and my earlier studies are suggestive of a new acronym: “To Insure Prejudice.”


owat agoosiam

"...his suggestion that an employer might be held liable under Title VII of the Civil Rights Act for establishing a tipping policy that has a disparate impact against African-American employees."

Is it be possible that an employer can be held liable for the acts of their customers? I would never have considered this a valid arguement, but it seems to be the one this attorney is attempting to make.
At it's most outrageous, would an employer be liable if a customer used derogatory language to disparage an employees race, religon, age, etc.?
What response would be required of an employer under such circumstances to avoid liability?
I think that accepting this arguement could have a profound negative impact on how business is conducted in this country. Its impact on tipping, would be just the tip (pun intended) of the iceburg.

Dr.

They forgot to track service quality....by race; and obvious factor

and there is a difference

Justin

When I was a waiter in Savannah we got around this by having black servers wait on black patrons and white servers wait on white patrons. We all pooled our tips and split them evenly at the end of the shift. It was a great system and we all got paid.

Helen NYC

Here in NYC, most cab drivers seem to fall into the following categories in my personal experience: (1) Indians - I've found many of them to be nice and cordial but rather slower drivers; (2) Arabs - Many of them tend to drive very fast which is a good thing but some have made sexist remarks when I would request that they take a particular route; (3) Haitian - Some are super nice and have a relaxed caribbean aura while others seem angry and impatient and curse in French at other drivers; (4) East European descent (many with Russian or Slavic last names) - Most of them are quiet, serious, and regular speed drivers; (5) A few Hispanics - mostly happy, chatty speedsters; and seldomly Chinese - very quiet and cautious, steady drivers. Now that I stereotyped everyone to death (please bear in mind that this has just been my experience and mean no offense), I honestly don't think tipping is based on race... or I hope not.

For me, tipping depends on 3 factors:
(1) The final cent amount - if the fare is for example, $3.80, I don't want to give $0.20 as a tip so I would just give $5 (which means that I am tipping $1.20). But if the fare is $4.10, then I would still just give $5 (which means I am tipping only $0.90 even the fare was slightly higher but that is because I think tipping $1.90 would be excessive for a short ride).
(2) The duration of the ride and the final fare - if I take a long ride (such as a 20 minute $28 ride to LaGuardia, then I would just tip $6 or $7 plus toll because I like to tip at least around 20%).
(3) Service - If a driver is a maniac or too slow or gets lost or is rude, then I either don't tip or tip very little. On the flip side, if the driver is nice, helps me with my luggage, isn't blasting cacophonous music, isn't yelling on his cell phone, and isn't missing his turns or getting lost, isn't borderline crashing into other cars, isn't screaming at other drivers, then I like to leave him a big tip. Strangely, I like to tip well if the cab driver has NPR on (because I enjoy it and because the driver is educating himself on important issues). I get very annoyed when a driver is on the cell phone the entire time and misses a turn, which happens much too frequently.

So my question is, did the study actually have a control for all of these other factors that may influence the tip amount?

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Dena Davis

This is the kind of thing that Obama was trying to explain in his speech. It happens. Yet -- we dont want to acknowledge it. We want to say we have made up for years of slavery-- but inequality still exists.

From a white American.

Dwight

Horse and cart, or chicken and egg?

In an establishment that I frequent, I shifted my tipping strategy away from reward for service and toward uniform generosity (except in egregious circumstances) and got a nice surprise. Quality of service jumped far more than I expected. You (the customer) may think you're paying for service rendered, but you may in fact be treated according to your server's expectation of a tip. It might be better to prime the pump.

Another issue: What do we know about tipping and the size of the party? When I am dining with an amiable companion(s), I am less sensitive to the quality of service. When I dine alone, I am much more aware of the quality of service, and my tip will reflect that.

Sam

Based on an EXTREMELY non-scientific survey at the restaurant I work at, servers wearing baseball caps of local teams are tipped significantly better than servers wearing the rivals of the local team. [Other non-important teams are more or less neutral]

I wear a Wyoming Cowboys hat because I hate the local teams, but love their rivals... I figure I need to be as neutral as possible, and who in Texas could hate Wyoming?

Jeffrey

whoever mentioned NBA and WNBA sexism is wholly wrong. people do not watch NBA (thereby increasing the players' wages) more than WNBA because they are sexist and don't like the idea of women playing basketball. it's because women aren't as good, so it's not as fun to watch on television or in person.

Barney Mergen

I'm glad professor Ayres discovered that tipping has a long and complex history. Among the opponents of state anti-tipping laws was the Pullman Company, which employed African American men as porters on railroad sleeping cars. The company called the anti-tipping laws "an absurd interference with the natural rights of man," and in 1918 offered facetious advice to its employees on how to say thank you depending on the size of the tip. "For a nickel, no thanks shall be given; just a mean look. For a dime, a gruff 'Thank you,'...For a quarter, 'Thank you,' accompanied by a right-hand salute...For a dollar bill there is no set rule; most porters fall dead."

Needless to say, tipping was opposed by A. Philip Randolph, General Organizer of the Brotherhood of Sleeping Car Porters, in demanding a minimum wage in 1925 of $150 a month, based on an estimate that a porter's average monthly wage was $78.11 while his tips came to $58.15. The gender issue in tipping was explored by the sociologist Frances Donovan who worked as a waitress in Chicago in 1919. Her conclusion, that "tipping is the gambling factor in the life of the waitress. It redeems her work from dull routine and drudgery and puts into it the problematical...to get a tip is like winning a game."

Tipping is obviously a form of social power, but the tipper may not always be in control.

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Lenny Timons

It is refreshing to see evidence of what I encountered as a waiter. I often wondered if I wasn't imagining the bias. Apparently, I was not.

Andy

Here in Toronto, Canada, there's a significant Asian population, with two separate parts of the city known as Chinatown, and a third Asian section, Koreatown.

My Asian friends have told me that when they eat in regular Asian restaurants, they never tip more than 10-11% (they'll tip more in high-end places, or sushi joints). Apparently this is just the rule throughout the Asian community.

Phil

>"If the restaurants posted "no tipping" signs or instituted "service compris" ... the size of the racial disparity would almost certainly decrease."

How about sex discrimination? WNBA players make less money than NBA players. That's because sexist fans don't care as much about women's basketball as men's. If only the NBA sold tickets in pairs -- you can't buy a $100 Lakers ticket unless you also buy a $100 Sparks ticket -- the size of the sex disparity would almost certainly decrease!

Or if white car salesmen sell more cars than black salesmen, due to the racism of the buyers, must dealers do away with commissions entirely?

Aside from the law of unintended consequences -- would the WNBA even exist if the salaries had to be comparable to the NBA's, and would women athletes really be better off without it? -- how would an employer know in advance if his business practice is legitimate or not? How would he know what he has to do and how far he has to go to combat unseen biases in the thousands of strangers who offer him their business?

The fact that a person may offer you his business does NOT mean that you take liability for his prejudices, nor should it mean that you are responsible for correcting their behavior.

Sue the customers, not the employer.

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Erik the Red

The tradition of tipping is demeaning to front-end restaurant staff, because it is considered optional and it allows the client to decide how much of a sop to throw to the lowly foot-servant after his or her service has already been rendered.

You don't pay your lawyer or your contractor an optional but customary amount, according to the lever of your satisfaction and after service has been rendered. So why wait-staff?

Colin from posting #11 apparently hasn't been to Europe much. He apparently thinks that when you treat wait-staff as if their services are purely optional, and make it clear that they have no right to demand a decent living wage, that this is going to somehow improve service.

In Europe, waiters and waitresses are considered professionals, and they are properly paid a regular wage. There, not everyone in this profession simply "ended up" there because their plans to become a doctor, a lawyer, or a rock star didn't pan out.

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John

#17 - You're right, your anecdotal evidence surely invalidates a scientific survey conducted in another city.

I wonder if the study was controlled for price rounding? It seems to have become common to round tips when paying with credit cards; often I will tip a little more or less to reach a round number, independent of the service rendered. This could be anywhere from a 2-4% point swing, depending on how I round.

Interesting work, though I find the case of making it the employer's fault a little flimsy.

Samskara

These observations seem to call for additional study. I strongly suspect that Anshu is correct, that physically attractive servers are tipped at a higher rate than less attractive -- but this might be open to studies based on gender of customer as well. It's easy to believe that a male would give a higher tip to an attractive female, but would a female customer adjust her tip?

Similarly, in the discussion of race, what would customers consider usual and customary? People in one subgroup might consider an appropriate tip to be 15%, while others believe that 20% is standard. Is the tip calculated on the total bill, or on the food bill exclusive of them bar bill and tax? This may have less to do with race as such than regional variations. Would people living in a fully integrated community tip according to racial divisions or a uniform community standard? It seems as if then first step would be to look at the data already collected and determine whether the tips might be calculated on the total bill or the food bill only. That might explain some of the most basic disparities.

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serving veteran

I don't see how it would help anyone or anything to get rid of tipping. Everyone is away of the way in which tipping incentivizes good service directly, but this is actually not, in my opinion, its primary benefit (at least in the context of food service). Business in sit-down food service is very unpredictable; it's very difficult to guess, ahead of time, whether you will have more or fewer customers than average. If servers were paid a straight wage, the manager would either have to risk losing money on slow days by scheduling enough servers to handle an unexpectedly busy shift, or risk losing business and giving poor service by scheduling the fewer servers, who will get swamped if there is an unexpected rush.

In a tipping system, however, the business owner exposes himself to relatively little risk by over-staffing; at worst, he or she will have to pay the sub-minimum wage of a handful of superfluous employees (who often leave early on slow nights anyway). Since the risk is therefore passed on to the employees, tipping would seem to be least advantageous to them. However, tipping allows them to generally make more total money than they would otherwise be able to make in such a job. So, as I see it, in a tipping system everyone wins: the owner is insulated from the risks over over- and under-staffing, the customer gets reliable service and the server gets more money. The only losers I can see are servers who aren't secure enough to handle the risk of making less money than expected on a given shift and customers who would be willing to get inferior service by paying less, who have the option of going to non-tipping fast-food or deli-esque establishments anyway (as do risk adverse workers, for that matter).

Of course, I'll be the first to complain about the psychological cost of dealing with people who think their tip enables them to treat the server as their slave, but this is an entirely separate argument and rarer than one might think.

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David

@Colin (#11) You imagine the service in Paris is worse than here in the U S of A?

You have a VIVID imagination.

Americans who get treated rudely in Paris are typically those who "know" that, being American, they need make zero effort to learn five words of French or the basic politeness expected in another culture. Wandering into a shop without a word to the shopkeeper and then braying loudly and slowly in a foreign language to a human who communicates JUST FINE in the vernacular may get you a cold shoulder there. Here, you're lucky if equally rude behavior doesn't get you a thrashing.

Michael

I do not feel either of these studies is worthy of appearing in the New York Times (even if only online).

Pooling tips and inclusive gratuity reduces the incentive for a waiter to work hard and provide exceptional service.

In response to Jason above about "evaluating someone else's performance": how do you like asking for a wine recommendation and getting a dull "huh"?
It takes little effort to calculate 20% of your bill; and if your server sucks you should pay less for his/her (black or white) services. If you become a regular at a good restaurant, you'll find that your generocity and loyalty pays off.

In a good (not necessarily expensive) restaurant tipping works. As much as some might cringe to hear it, this is capitalism working too.

Mr. Pink

And as for this non-college [stuff] you're giving me, I got two words for that: learn to... type.

Leth

There's nothing wrong with the service in Paris. It's just not the same as here. In France, the meals are an event, and normally can take several hours. Therefore, a waiter won't be at your table every ten minutes to check on you and make sure everything is going well, as he doesn't want to impose upon your good evening with your companions. Americans go over there and shout in English, which of course annoys the waiters, and the Americans proceed to get annoyed when the waiter isn't constantly there checking on them. Forgive my brief diatribe (and yes, I'm American, if you're wondering), but I wanted to make this point about the French restaurant culture.