Tipping 101: Why Its Important to Tip Service Persons Fairly. 20% or More is Standard in 2009
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Tipping 101: Why Its Important to Tip Service Persons Fairly. 20% or More is Standard in 2009

Why service people need to be tipped well. What you should tip.

Today I will address a topic I feel most of you do not understand, tipping a waiter/bartender. And why it is so important to do so in a correct manor, I also will address the percentage of tip that is proper in today's market. I address this topic today as I have become aware that in these hard times some of us are still trying to live as we have in the past, but at the expense of others.

Times are hard for everyone! The service industry being hit the hardest. In the Dallas / Ft. Worth area alone some 3,800 + restaurants have closed since January. Countless bars, clubs, and neighborhood dives have just closed down, leaving thousands out of a job.

Many of the hotels have cut hours to less than half for their employees, and in some cases layed off as much as 50% of their staff! Banquets have all but ceased to exist, the Markets are smaller than usual at the "World Trade Center" thus the Hotels and Restaurants are struggling, and the people coming to town are spending less and less while here on business.

To say the least the service industry is being hit the hardest across the country, more than 75% of service personal have either been let go from their jobs or had their pay cut by up to 90% while still working as much as 40 hours a week if they are lucky enough to still have that option.

Some savvy restaurateurs have tried to hang on by offering unprecedented deals, many of them just trying to keep their staff from being on the streets unemployed, as well as to keep their life dream from going down the tank. To these business men and women I say "Good Show"!

However the truth remains, service people are among the poorest paid and most unappreciated of the working class. Many of these beautiful service professionals take pride in the services they provide day in and day out giving more of themselves than others would ever consider. I know this from being in the industry for many years.

Recently I ran across a Blog asking why the waiters of today don't offer service like in the past. Well I have the answers, and I also have the answers as to why you don't see service professionals any more over the age of 25 unless they haven't any other choice of employment. I am sure many of you will have a better understanding of the crisis that is being heaped on these service professionals if you just keep reading, and understand the desperate need for all of us to treat them fairly during this time of economic fall.


First of all I would like to address the way service people are paid and taxed by the government so as you will better understand the importance of properly tipping.

  1. Service professionals make $2.13 per. hour, an unfair rate seeing as the last few times the minim wage was increased these people were neglected. This is due to the strong hold the industry has in congress, while the service persons are neglected year after year.
  2. Out of this $2.13 wage the Tax imposed by the government is to be paid, this is a Tax on what they sell NOT THE TIP. You see for every $100 they sell they must pay $8.50 tax for selling the product. This means if you tip lets say a standard 20% they already only get $11.50, and if you tip only 10%, a waiter gets $1.50.
  3. Now if you pay with a Credit or Debit Card, the waiter is required to pay for using the device used to run the credit card, sometimes as much as 5%, so out of the $11.50 the waiter has after Tax he is left with $10.50. Most Restaurants & Clubs follow this practice, although it is questionable in ethic. Consider if you were charged by the place you work to use a Credit Card machine, and every time you sold their product it was taken out of your pay.
  4. Now we get to a sticky part of the Tip Distribution Process. Waiters are also required to Tip Out as it is called to other employees such as Bartenders usually a percentage of the sales so if a waiter sells $100 the amount taken out for a bartender is about 17%. And they must also tip out the bus person most likely another 20%. So if a service person has let's say a total tips for the shift of $100 he is left with a total of $51 for his take home.
  5. Now if you were the person who tipped only 10% , the amount left to the service person is only $1.50, but after the 40 cents is removed for the use of your  credit card we are down to $1.10, now take the 20% and the 17% off the total of the sale and you remove $3.75 leaving the waiter to pay $2.65 from their own profits of the day for you to enjoy the food, drink, and service, not to even mention the stress you have caused someone you do not even know from feeding their family. So you see if this is a practice of just half the patrons the service professional deals with out of that $100 he had to work 10 hours for he is left with only $24..50 profit for the shift of 10 hours!
  6. Yes it is true that he/she has more cash than that in their pockets....but here is the really unjust part of it...when they receive their check from the employer for the $2.13 per hour they are paid it is VOID! And they owe the restaurant for working there. No it is not taken out just then, but when they pay taxes at the end of the year they must pay the Good Old Uncle Sam! And yes they are forced to pay Tax on income they didn't even make! I ask you, is this fair?

You most likely do not realize that service persons in over 80% of the time are offered NO benefits of any sort, No Vacation, No sick pay, No Insurance, No Nothing! This is why anyone with any other option leaves the business. Now take into account how many Restaurants there are today with service persons to take care of you.


If you ask any Restaurant owner, they will always say there is little or no profit in the business, yet today a restaurant is most likely to cost over One Million Dollars to open. Many like a "Bennigans" cost in excess of 5 Million Dollars to open. If this were true that they make so little profits then why do they keep dominating the landscape?

I bet you don't know that many High End Restaurants opening today do not even pay the tips to the waiters, or in many cases take a percentage of the Tip to share among other employees like Hostess, Kitchen Staff, Chefs, even Managers take a cut. By the way this is Not Legal! However most service personal are quiet just so as they may have something at the end of the day to feed themselves and their family.

Service persons in America are the last legal Slave Labor, allowed by our Government. Every other Civilized Country in the world has a better policy in place to protect the service persons. This is the only place on Earth where Tipping is considered a Gratuity, yet Taxed by the Government based not on the Tip Amount but the Sales of the service person.

I know waiters who have worked for an employer for 20 years and have never had a raise, been offered benefits, or even told thank you for a job well done. Now don't get me wrong there are good business owners out there but they are few and far between....by the way did you know that service persons are not required by law to be paid holiday pay? Now you better understand why people get out of the business, they are treated badly and unjustly by owners, not to mention the fact many patrons abuse them on a regular basis.

You would not belive the stories I have witnessed myself, waiters being hit by managers/owners, waitresses being touched inappropriately by coworkers, managers/owners, and patrons. Abusive patrons who yell at them and physically abuse service persons are more common than you would think! I myself have been spit on, cussed out, yelled at, and even once a man attempted to assault me!

And if you are one of those people who thinks leaving a cash tip is the way to go....well it is not the tip that is taxed... it is the sale! And if you are one of those people who calls to see if a restaurant is open till 10 pm and show up at 9:55 pm expecting a waiter to stay with you for 2 more hours then expect to pay then an added $20 per hour besides the Tip!

Like all business have hours of operation so do Restaurants, and ladies if you plan on taking up a table for hours and hours just so you can visit, then expect to pay extra for the service; after all this table needs to turn for the service person to be able to make a living!

Most importantly service people realize the importance of giving good service, after all it is how they make a living, if the food is not right it is the restaurants fault NOT the waiter... Do Not take it out on them! Ask that the cost be removed from the check, but tip on the total bill, same as when using coupons or discount promotions! And by the way a 20% Tip is standard practice today, if the server has gone out of their way doing something special for you it should be jumped up to 30% or even more!

When enjoying a Holiday Meal such as Christmas, Thanksgiving, Easter, etc., Take into account the people who are being forced by their employer to give up time with their family so you may enjoy yours, and PAY UP! Recently I have been appalled by friends and acquaintances that have taken advantage of the service persons so as they may continue to enjoy life as it was in the past by tipping poorly and at times nothing at all. If you can't afford to tip STAY HOME!

Yes they do need your business but not at their expense, today's market is rough and I would hope you do go out and take advantage of the specials, especially at the independent restaurants as they are the jewels of our communities, but remember the service professionals and that they too must be able to survive these hard times. As an owner of a catering company I can tell you it is the service people that make the difference in my business, without these people I couldn't survive. I try to always make sure they are well compensated for their time and efforts.

However in the Restaurant and Club business there are so many people willing to take a position at this time of economic default that they are being taken advantage of by less than honest business owners, and just being beat down into submission like at no other time in recent history.  Be kind to them, and instead of having that extra $8 cocktail you really don't need, give that extra $8 to a service person it will be more appreciated than you could ever imagine. Just try to put yourself in the position of someone who makes only $2.13 per hour and has to depend on the kindness of others to survive, while being Taxed on their sales so unjustly whether they get the Tip or not.

I for one have never or will ever expect a person who provides a service for me to ever have to pay out of their own pocket for me to dine or drink! I know many of you are surprised that the rate of pay for service people is so little, and question the ethics of owners and companies who employee these people. I agree that the service industry has lost its edge in many cases, but it is of their own doing.

Over worked and unappreciated, the true professionals are leaving the industry just for the reasons I have touched upon today. So the next time you are unhappy with a server call a manager over to the table ask them what they pay a server? If they offer training? Ever considered a training program, and if they do have one if they pay the servers to attend?

Ask if any servers in their employment have ever had a raise, and what benefits they offer their employees? Ask them if the waiter has to pay to use the card machine, and how many people are paid out of the waiters tip...hell, even ask them if the waiter gets the tip in question or who exactly gets it? And after you ask them ask the waiter....I assure you the answers will differ, and the manager will turn white as a ghost.  The reason you get unsatisfactory service is not the server's fault it is the fault of the industry and the big wigs that line their pockets at the expense of servers nation wide.

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Comments (4)

This is a very opening article!!! I had no clue that waiters and waitresses had to share their tips. I must admit I've been the queen of the $2 tip. After reading this and taking into consideration my own past financial hardships I wll definately begin tipping appropriately. Good article, very informative. I will be passing this info on.


The vast majority of your argument for tipping is based on pity. Poor fellas get paid so little, whole industry is suffering, therefore, they must deserve handouts from everyone else. It's terrible, this the entitlement generation they've been talking about, people who think it's society's responsibility to compensate for their own woes. And it's funny when people say "If you can't afford to tip, don't eat out!" like it's the law or something. Guess what, I don't tip, and I eat out all the time, who's going to stop me? I think people need to take a good, hard look inwards and hear themselves say "Wow, that total stranger is a DICK for not giving me money."

After reading your article.. I hear nothing but a cry.. Industry is suffering.. workers are not treated well.. all your arguments are not arguments but an attempt to justify something which is wrong. If waiters are paid $2.5.. is it anyhow our fault? Restaurant food prices are overly expensive. Have you ever compared the food prices of the western world to that of any other country. The margins on food items are usually 100 to 300%. If you say that restaurants are getting shut down.. how are the restaurant owners getting millions of dollars every year in Canada? I wonder if you know the truth what goes behind those closed doors. I don't and I don't want to comment on it. But it is certain that it is not what you would expect it to be. Anyhow, my point is pretty simple. Paying workers is a management responsibility and customers should not be punished with their incompetence. On another note, with due respect, if the pay is so bad, waiting tables is not the only option in the world. It is a brainless job and the compensation demanded is not deserving. If you wish us to pay all waiters and bartenders 20% tip.. the least we expect is a wonderful service where we feel delighted.. which I am sorry to say is not the case (in my experience) ever. Why don't we tip our bus drivers, McDonald's cash counter guys or Starbucks coffee makers? I have heard a lot of horror stories about many people in various professions and how is a waiter's horror story any different? Employees at Foxconn in Taiwan appeal and warn regarding mass suicides and stuff every other month. So many air hostesses get physically harassed in many airlines.. Have you tipped her ever? Let alone tipping her.. we expect the best of the service from them as if we are doing a favor to them travelling in that airline. It's sad how you tried to use emotional pressure to prove your point. It is simply the system's fault and it can be fixed. But the thing is.. nobody wants to fix it. The restaurant owners don't want to fix it as they are making a lot if they manage well and waiters are happy as they make a lavish $100 - $200 every single day for a part time job in tips. Regarding your points on the taxation and other stuff.. I have plenty of friends as waiters and they have never mentioned about sharing tips with anyone. Sharing tips with the kitchen workers is definitely not wrong if you say waiters deserve tips for any reason. My last point should be the final nail in the coffin. People living in this world, get paid on the kind and the amount of work they do. They do not get paid on the basis of miserable lives they are living. Just cuz some of them are single moms and have to take care of their kids or college drop outs who wasted their youth doing drugs and bullying others, it does not give them any right to take what they have no earned. If they would have made better choices growing up, this would not have been the case. I also understand that some of them faced issues beyond their control, but don't we? Everyone faces a challenge of certain things they have control over and certain not. This does not give them any right to earn gratuity for a brainless work. Show me some creativity in your job and earn those tips. Being a lousy waiter, picking up my food from the kitchen and bringing it to my table should earn you $20 for a $100 meal. I am sorry. I'd rather donate this money to the people in the developing world where software engineers working 18 hours of a day are making less than $2.5 per hour for a 8 hour shift. They do not even get paid for their extra 10 hours they put in daily. An average salary in India for a software engineer is around Rs 16,000. Which per hour comes out to be $2. Yes! $0.50 less than what a waiter makes without a tip and trust me they have more responsibilities to take care of than a sore loser in America who waits tables cuz he messed up in school.

This is not a pity party for the servers in the industry. This article is explaining the cons that goes in on the business and unfortunately there's nothing managers or owners can really do to change it. servers work very very hard at what they do, and no it's not "brainless work"

You try to memorize every guest detailed order everytime, or try to remember the hundreds of regulars that come in week after week, try to memorize the whole food menu and drink menu that has all of the ingredients. Brainless work? Not so much!

Many servers are in school trying to pay their way through college to better themselves. There are servers today who do have their degree but the economy is bad and they are looking for jobs but have bills to pay so they have to work.