Marketing Thought

Tipping And Discrimination

In the US servers’ tips are often treated as part of their pay. Although technically voluntary the servers rely on the tips so one needs an astonishingly good reason not to tip. Despite it being a social obligation different servers do get different levels of tips so what do we know about tipping and discrimination?

Tipping In America

I confess to not really understanding tipping. It is so hierarchical, medieval almost, as to be borderline offensive. As an English person, I believe the best course of action to take if you receive bad service is to grumble about it under your breath and say everything is great if asked how it is going by anyone other than your spouse. That said, I can just about understand the argument for tipping. Namely that the prospect of larger tips might motivate good service.

To complicate the general idea the US has a weird patchwork of federal and state minimum wage laws. Many states allow tips to be counted against the minimum wage. Here in Georgia, a server can be paid as little as $2.13 an hour if they receive tips. (I’ll just repeat that in case anyone thinks it is an absurdly low typo — I really meant $2.13). The point this emphasizes is that tips are a crucial part of people’s pay. Hence why tipping isn’t really voluntary, or at least shouldn’t be seen that way.

Tipping And Discrimination

So if tipping is part of pay an obvious question arises: “do all servers at the same establishment get tipped the same amount if they deliver the same level of service?” There is good reason to think a whole host of biases might be involved in decisions to tip. Many of these biases will not be covered by law. For example, I am pretty sure more attractive people get more tips. (That makes me angry as I wouldn’t have made much as a waiter in America. To be honest, this wouldn’t have been all appearance-based as I’d have done a terrible job too. The only thing I was good at when working at McDonald’s as a teenager was the kid’s parties).

Still, when people think of bias they rightly wonder about more socially destructive problems. The authors in a Journal of Applied Social Psychology article tested a very socially relevant bias — racial bias.

Challenges In Testing Bias

There are any number of challenges testing racial bias in tipping. The researchers want to see monetary amounts but can’t go swooping onto tables before the servers to pick up the tips. Questionnaires also tend to be challenging, e.g., people aren’t honest, especially when they know what is being tested. In general, it is reasonable to worry that the very act of observing the customers changes the results.

Furthermore, you test in a specific location, the US south in this article. Is any finding generalizable? I.e., does the finding apply beyond the south? Does it apply to other restaurants in the south? Or does it even apply to the same restaurant on a different shift?

Still, the topic is critical and the authors make a good-faith effort to find out what is going on so it is worth having a think about. The authors give a survey to dinners asking about the service they received and the tip they gave which was dropped off when the customers left the restaurant.

The Finding On Tipping And Discrimination

Before the test, the authors thought that patrons might be more willing to punish bad service from black servers than white servers. They found something different. The customers rewarded good service by white servers but it didn’t matter how good the black server was; the black server still got the baseline tip either way. In essence, they expected racial discrimination and found it, but found it in a little different way to the way they expected.

The findings indicate that consumers of both races discriminate against black service providers by tipping them less than white service providers.

….

For white servers, tips increased from 16.8 percent of the bill size when service was rated less than perfect to 23.4 percent of bill size when service was given a perfect rating, but for black servers, tips were 16.6 percent of bill size for both perfect and less than perfect service ratings.

Lynn et al. (2008) pages 1045 and 1054
Tipping And Discrimination: Great Service Didn’t Benefit Black Servers

Public Policy

There is an obvious challenge for public policy. If servers’ tips are effectively part of their wages then black servers are being paid less than white servers for the same work. I have no understanding of US law, e.g., why anyone thinks $2.13 is okay as a minimum wage in the first place, still this disparity would seem to be a significant question to address.

For more on public policy see here.

Read: Michael Lynn, Michael Sturman, Christie Ganley, Elizabeth Adams, Mathew Douglas, and Jessica McNeil. “Consumer racial discrimination in tipping: A replication and extension.” Journal of Applied Social Psychology 38, no. 4 (2008): 1045-1060.

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