At some businesses visited in the past 3 months, a 25% tip was implied as standard. This is getting out of hand.
But tipping service workers was essentially built into law by the 1938 Fair Labor Standards Act, which created the federal minimum wage that excluded restaurant and hospitality workers. This allowed the tipping system to proliferate in these industries.
Source: ‘Out of control’: No one knows how much to tip | CNN Business
Tipping is a way that businesses, usually restaurants, outsource their labor costs directly to the consumer. You pay twice: once for the product and then separately you are expected to make a donation for the labor service. Because restaurants don’t have to pay the standard minimum wage like other businesses.
The report, above, notes, that some restaurants use the labor law to pay workers a few $s per hour, with the expectation that tips will pay for the labor. Others pay regular wages – such as $15 to $25 per hour (with benefits). Should you be paying a 20% tip to the latter workers? Per this article, you should not feel obligated to do so. But how can a customer know what type of pay scale is in use?
