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Tyler Poppe
ENGL 2010
Stacie Westbrook
July 19, 2015
The Gratuity System
As we I arrived at the buffet style restaurant the cashier that you pay before you
sit down to eat asked us if we would like to leave a tip for our bus boy. This made me
think, how do I know I will even need this bus boy? Will he even give good service?
How much should I tip someone that will likely pick up one plate from, if even that? As a
culture the giving and receiving of gratuities has become accepted and expected in most
service industries. It is an irrational system but it is in force and used in the service
industry, from hotels to restaurants and many other businesses. Tipping has become the
expectation for employees and businesses. With this expectation businesses have been
able to escape minimum wage laws and pay employees below the normal minimum wage
of $7.25 an hour. Employees in the service industry can be paid as little as $2.13 an hour.
Why is this? Gratuity workers should not have wages decreased because of gratuities
received. There are many facts that support this.
The History of Gratuities
It is hard to determine when and how the gratuity system began. Experts believe
that the system could have started in various regions and in a variety of ways. There are
some clues that help us understand how it began such as the word tip and words in
other languages that have that meaning. The history of tipping helps us understand why it
exists and what its purpose is.
According to the article A History of Handing it Over, tipping may have
began in 16th century English pubs (Cook). In these pubs it was common for customers to

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hang around for hours and chat among themselves (Cook). The pubs decided to put out a
box with TIP (to insure promptitude) written on the outside (Cook). This TIP box
allowed the customers that were in a hurry a way to receive prompt service if they put
money inside the box (Cook).
In the article Tip Jars and the New Economy it talks about other possible
origins. In the Middle Ages feudal lords threw coins to beggars on the side of the road in
order to insure safe passage (Conley). This was considered a tip at the time. Other
possible origins may have been in Holland or even from Latin (Conley). In Dutch the
word tippen means to tap on a table for service (Conley). In Latin the word stips
literally translates to mean gift (Conley).
These possible origins are interesting and there may be some truth to all of them.
It seems to be conclusive though that the trend started in Europe and then came over to
the United States through Americans that had gone to Europe and gained the custom
there.
The history of the gratuity system is more than just interesting though, it teaches
us something fundamental to tipping. Gratuities were never meant to be the primary
source of income for the workers that were giving the service. Gratuities were always a
way to receive extra service, something out of the ordinary. In England it was a way to
insure fast service. In the Middle Ages a way to make sure that the Lords traveled safe. In
Holland tippens was a way of hastening the service. The word stips sums up this
system best, gratuities are a gift for exceptional service. The expectation that the workers
have of receiving a tip is a flaw in the system; it should be a gift for exceptional service.
But this flaw comes from the business and government for making gratuities the primary

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income for the worker. Gratuities have been and should continue to be gifts for
exceptional service and workers should not expect it unless they give exceptional service.

Tipping is Illogical
The gratuity system as a whole is illogical. Customers should pay for the products
they desire and not pay the wages of the workers as well. It is the business responsibility
to pay their employees. It is completely illogical that the consumers are not paying the
wages of the employees, but in the gratuity system that is exactly what is happening.
There are various things that happen when the gratuity system is in place that can be
negative for the consumer and worker.
This system can be seen as Un-American. When the gratuity system first came
to America it was seen as Un-American that workers were receiving hand outs from the
upper class for not doing anything more than their job. The practice came over in the late
19th century and was continued my many not wanting to look unsophisticated (A
History Of Handing it Over).
Another negative is that relationships become fake when gratuities are at stake.
Have you ever felt that a waiter is not being genuine? Or a smile is being forced? This
can be caused by gratuities. Genuineness is lost when the worker is expecting his reward
at the end of an interaction.
It Makes the Income Inconsistent
Finally, the gratuity system causes the worker to have to live off an income that is
random and inconsistent. I had the opportunity to interview Phil Rosenthal who is the
most experienced bell captain at The Grand America Hotel in Salt Lake City. He has

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worked there since 2002 and has had plenty of experience in the service industry. The
thing that stood out most to me in the interview was the question What advice would
you give to a new Bellman? his answer was Dont get discouraged during the bad
times. This answer was interesting to me because in what other jobs are there bad
times? The fact that employees in the service industry receive their income off variables
that they cant control and can have their wages decreased because someone is in a bad
mood seems is incredible to me.
The Gratuity System Creates a Conflict of Interests
It is obvious that the gratuity has negatives for the employees. But it also has
negatives for the businesses. In spite of the money that they save in not paying the
workers higher wages, the employee loses some incentive to be loyal to the business.
In the article The Economics & Etiquette of Tipping the Principal-Agent theory
is discussed. In this theory the principal is the business and the agent is the employee that
is working for tips (Videbeck 39). This theory is one that the employee will always do
what is in his best interest (Videbeck 39). The gratuity system in theory is one that forces
the employees to work hard and give good service with the incentive of receiving a tip at
the end. This is good for the principal, or agent, because it is impossible for them to
follow their employees around and make sure that they are giving good service (Videbeck
39). But the incentive of receiving a tip makes the agent, or employee, give good service
(Videbeck 40). This in theory is good but it also may be counter-productive because the
employee will always do in what is in his best interest (Videbeck 40). Consider a worker
at Baskin Robbins that has the opportunity to receive tips. He may give out more ice

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cream in order to get better tips. Acts like this cut into the bottom line and can be a
negative to the business and the principal-agent theory (Videbeck 40).
In my Interview this was discussed even more. Bellman may have the opportunity
to provide service that may not be necessary but may get them a better tip. They can give
out bottles of water, macaroons, take away charges on certain items. This is a problem for
the business that may be avoided if their employees were not so dependent on the tips.
As the employees need this money they continually will do what is in their best interest to
receive these tips.
It is Unfair to Employees and Customers
The gratuity system is one that is unfair and biased. This is the livelihood for
many people and can be determined based off random attributes. Studies have shown that
race, gender, posture, and many other factors can determine how much someone tips.
This is completely unfair to the employees as they split the tips among all of the other
employees. According to The Economics & Etiquette of Tipping some peculiar tipinducing behavior includes squatting at the table, drawing a smiley face on the bill,
forecasting good weather, telling a joke, and wearing a flower in your hair. This shows
just how random the tips may be and how they may in fact not have anything to do with
the service provided. Also, employees that are giving the effort to receive tips receive just
as much of the tip as those that are being lazy or have a bad attitude in their service
efforts to the customer.
In the article 15 Things You Didnt Know About Tipping there are many
statistics given about how some people tip and others dont, and what determines how
much someone will receive. The titles of these studies include; Some stereotypes about

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tipping appear to be true., Millennials are bad tippers too., Dads tip babysitters,
moms stiff them. These studies show just how unfair this system can be. For example, in
the study, Some stereotypes about tipping appear to be true, it talks about just how
unfair and tipping can be. It states in this article, One recent study found that Hispanics
tipped less at restaurants than whites after controlling for factors such as bill size and the
customers personal feelings about the quality of the service and food, while the
conclusion in another survey declared restaurant servers and their managers can expect
below average tips from black customers regardless of their social class. Only 11% of
Italians in a recent survey, meanwhile, said that they always tipped for service on
vacation, compared with 60% of Americans. As this information shows this system can
is often very random and it is unfair for the livelihood of many workers to be determined
by these random variables.
The gratuity system may also be unfair as it gives some employees the
opportunity to be lazy. The incentive for workers to give good service may be counter
productive as the tips are split. The hard workers will naturally work hard and the lazy
workers will naturally be lazy. This makes it unfair for the hard workers as they split the
money that they have earned.
Conclusion
I believe that gratuity workers should not have wages decreased because of the
receiving of gratuities. The gratuity system has many flaws and seems to be a system that
requires change in order for it to be fair for the workers that are now dependent on this
system. In 15 Things You Didnt Know About Tipping it states, Sometimes even
experts have no clue how much to tip or if you should tip at all. When Marketplace asked

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Cornells Michael Lynn earlier this year about the norm for tipping the barista at
Starbucks, or any coffee shop for that matter, he paused and sighed before giving the
honest answer: I dont know. The fact is that must be people would reply I dont
know when asked about tipping. It is a system that is illogical and requires change in
order for the workers in the service industry to be compensated properly for the work that
they provide. And if they provide service that is exceptional, they should receive a tip;
but this should not be expected and should be seen as a bonus.

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Works Cited
Conley, Dalton. "Tip Jars And The New Economy." Chronicle Of Higher
Education
49.17 (2003): B15. Academic Search Premier. Web. 5 July 2015.
Cook, Stephanie. "A history of 'handing it over'." Christian Science
Monitor 23 Oct.
2000: 14. Academic Search Premier. Web. 5 July 2015.
Videbeck, Steen. "The Economics & Etiquette Of Tipping." Policy 20.4
(2004): 38-41.
Business Source Premier. Web. 5 July 2015.
"15 Things You Didn't Know About Tipping." Time. Time. Web. 6 July

2015.Rosenthal, Phil. Personal interview. 11 July 2015.