Should Tipping Be Banned? (Ep. 129)

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(Photo: Aaron Stidwell)

Our latest podcast is called “Should Tipping Be Banned?” (You can download/subscribe at iTunes, get the RSS feed, or listen via the media player above. You can also read the transcript; it includes credits for the music you’ll hear in the episode.)

As we all know, the practice of tipping can be awkward, random, and confusing. This episode tries to offer some clarity. At its center is Cornell professor Michael Lynn, who has written 51 academic papers on tipping. A few examples:

Because Lynn has largely built his career around tipping, it came as a bit of a surprise when Stephen Dubner asked him what he would change about the practice:

LYNN: You know, I think I would outlaw it.

Why ban tipping? Lynn has found that tipping, as currently practiced in the U.S., is in fact discriminatory. If that’s not enough to make you dislike tipping, consider what Magnus Torfason, from the Harvard Business School, has to say:

TORFASON: The more tipping you see in a given country, the more corruption you generally see in that country as well.

You’ll also hear from a New York lawyer named Justin Swartz on the legality of tipping; Jay Porter, the owner of the San Diego restaurant The Linkery, where tipping is forbidden; and from people from all over the country who work for tips — as they dish on their strategies to make more money. (Thanks to radio producers Marc Sanchez, Colin Weatherby, Avishay Artsy and Kaitlin Prest for recording.)

Finally in this episode, you’ll hear how Steve Levitt and Stephen Dubner dole out their dough.

Magnus Torfason’s research shows the association between tipping and corruption in 32 countries.


If tipping were banned I would seriously need an increase in the minimum wage.


If tipping were banned waiters' wages would increase regardless of the minimum wage. If wages didn't increase, no one could afford getting a job waiting tables. The lack of supply would dry up and restaurants would have to start paying more.

That's simple economics. No need to have the government intervene (further).

Phil Persinger


Would that it were so: that simple economics take care of a issue like this. The absolutely flat median wage in this country over the past 40 years says it might be otherwise.

Without government regulation/oversight or strong union representation, minimum wage workers are at a distinct disadvantage in individual wage negotiations w/ their respective employers.

That said, I would prefer that staff wages did not depend on tips.


Yes, if tipping were banned, us servers would need to make more than the national pay of $2.13 an hour. Which after paying taxes leaves us with a zero paycheck. Did you know that the $2.13 an hour has not been raised since the early 1970s?


It is impossible for you to have a zero paycheck after taxes. Taxes are a percentage, which never totals 100.


Servers are taxed with the assumption that they make some %(10?) of their bill in tips, so that is added to their taxable income. So the paycheck could be close to zero, while their take home pay would not be


@Samantha, of course there would be an increase. Right not it is a reduced minimum wage for servers b/c of the presumption of tips.


But the supply of waiters won't necessarily dry up depending on the location. Some locations with a high rate of unemployment will still pay the same wage and the people won't be able to simply change jobs because they want to...

John Patrone

What I find offensive are businesses that count tips as wages and pay their employees less than minimum wage so that tips have to make up the difference. I wouldn't mind doing away with the practice tipping altogether, but I don't trust businesses not to find a way to further screw their employees in favor of their own self interest if such a change were to occur.


I am an Asian immigrant and because I look different I feel I am forced to tip more.

I always tip about 20% no matter what. If I were white, I would probably tip less and tip based on the service and food.


When I took a trip to Japan, I found there is no tipping custom and insulting for the worker.


Whenever anyone suggests that service would decline if tipping were eliminated, I point to Japan, where you're likely to get better service in any setting that normally requires tipping in the States.


Right, the Japanese worker finds Americans who try to tip them insulting, because they are paid well to do the job well. They don't need any other incentive than the pride of their work. At least, what I found on my trip, which you're right- best customer service everywhere I went there.


What's worse than tipping itself is the practice of tip-outs, i.e. requiring staff to distribute their loot to non-tipped positions.

Commonly, restaurant waiters either pool their tips into a single pot or take a cut of their own tips, so they share their earnings with busboys, hosts, etc. It's another fun way for management to avoid paying their service staff.

Though the worst case is strip clubs. Strippers don't earn a salary, and their income depends entire on tips (though the money ends up being good if you can hack it). But before they can earn a single cent, they have to tip out to bartenders, bouncers, DJ, makeup and house mother. Which means they're often $100 or more in the hole before they start their shift.


Most strip clubs are egregious business models, many of which are probably illegal. "$20 cover! Oh, and once you're inside, we're going to enforce a drink minimum we didn't tell you about. And that cover only covers getting you in the door, not a table or a seat, despite what the doorman told you. And if you don't tip, we'll quickly escort you out for mistreating the ladies." It is a bait-and-switch scam.


Ummm, Torfason's statement is ridiculous. I'm a Canadadian waitress and I don't believe my country is more corrupt then say, uh I don't know, Italy or Turkey. Give me a break. Tipping is a Western way of life now. If you don't want to tip, then stay home to eat.


Tipping is *not* the Western way of life. As a widespread practice, it's more or less limited to North America. And you might be missing the point of Freakonomics, a bit.


I think it would be ok to ban tipping as long as those who work in tipping heavy jobs also received additional pay to offset the tipping ban. I wouldn't mind paying $3 more for my cheeseburger if tipping was banned. The way I see it it is six of one, half a dozen of another.