Posted: Mar 15, 2017
In Washington, D.C., a waiter working at a Denny’s restaurant would have to serve six customers an hour on average to make the area minimum wage of $11.50. That is, if those customers leave at least a 15 percent tip.
In D.C., as in most states, servers, bartenders and other workers who receive tips don’t have to be paid the full minimum wage. Instead, restaurants are allowed to pay these workers a tipped wage, or an hourly rate lower than the minimum wage, because most of their income comes from tips. That doesn’t matter much at the pricey steakhouses where lobbyists wine and dine their clients — waiters at those restaurants can make hundreds of dollars a night in tips. But at more modest establishments, it can take most or all of servers’ tips just to get their earnings up to the minimum wage — if they get there at all. (Legally, if a server’s wages and tips don’t add up to the minimum wage, the restaurant is required to make up the difference. But in practice, that doesn’t always happen.)
To get an idea of how hard servers at different types of restaurants have to work to earn minimum wage — and how volatile tipped incomes can be — we modeled the hourly wages for servers at four restaurants from publicly owned companies based on average check costs per customer, as disclosed in the companies’ securities filings. (These averages were noted as “average check per person” or with similar descriptions in each company's financial filings. We used the most recent annual reports available for each company, from either 2015 or 2016.) Each brand represents a different restaurant tier characterized by average cost. For example, Eddie V’s, a premium seafood restaurant chain owned by Darden Restaurants, is representative of fine-dining restaurants, with an average check per customer of $91. At the other end of the spectrum, an average guest check at Denny’s is only $9.69. (The average check size is $25.42 at Joe’s Crab Shack and $17.50 at Olive Garden.) Using the check averages from each restaurant, we calculated how many tables an hour a waiter or waitress would have to average to make at least the minimum wage in every state. (Our model defaults to two customers per table, but users can adjust that.)
A few things jump out right away. First, waiters earn a lot more at pricier restaurants. In many states, a server at Eddie V’s working one table an hour earns more than a waiter at Joe’s Crab Shack working three tables or than a Denny’s waiter working eight tables. (Tables do tend to turn over faster at less expensive restaurants, partly but by no means entirely mitigating this effect.)
Another big takeaway: Don’t stiff your waiters! Etiquette guides generally recommend tipping wait staff 15 percent to 20 percent of the bill. At those rates, a waiter at the Olive Garden needs to work at least one two-person table an hour to earn the federal minimum wage of $7.25 an hour (assuming that the state also uses the federal minimum for the tipping minimum wage of $2.13 an hour). But cutting the average tip amount down to 5 percent means that the server needs around three tables an hour just to earn minimum wage. Keep in mind that these are averages over a waiter’s entire shift — if business is slow early in the night, a waiter will have to work even more tables later on just to get back to minimum wage for the night.
Important Interactive Graphic by State here at FiveThirtyEight
Low tips have a greater effect on servers at inexpensive restaurants
Geography matters too. Seven states don’t have a separate minimum wage for tipped workers and require that all workers be paid at least the state minimum wage. In California, where the minimum wage is $10.50 an hour, a server working at a restaurant similar to Eddie V’s can make nearly $40 an hour from one table of two if they still receive a 15 percent tip on top of the hourly rate. But a waiter at an Olive Garden would have to serve around five tables of two an hour to make the same amount. In states where there is a gap between the minimum wage and tipped wage, servers at more modest restaurants have to wait two or three tables just to earn the minimum wage. In Massachusetts, servers at Denny’s would have to average 2.5 tables of two an hour to earn the state’s minimum wage of $11, but only if they are collecting a 15 percent tip from each table.
D.C. is a particularly interesting example because of its big disparity between the standard minimum wage and the minimum wage for tipped workers. D.C., like cities and states across the country, has raised its minimum wage substantially in recent years, to $11.50 an hour. But its minimum for tipped workers has remained $2.77 since 1993. D.C.’s tipped wage will increase to $3.33 in July and make gradual increases to $5 in 2020. But in many other parts of the country, the wage floor for many tipped workers remains around $2 or $3 an hour even as the standard minimum wage has increased.
Our model may overstate how much money servers are taking home. That’s because servers don’t always walk away with 100 percent of the tips they receive. Federal labor law allows for restaurants to pool tips from servers to share among other tipped staff — such as hosts, bussers or bar staff — a practice generally referred to in the industry as a “tip out.” There is no maximum contribution imposed for tip pooling under federal law, and there is no set standard among restaurants, so tip out percentages can vary widely: 2 percent of beverage sales for a bartender, for example, or 12 percent of total sales to each busser. So even if a server earned $100 in tips in a night, some of that money may be distributed among other employees.
Our model is also based on averages. In practice, servers’ earnings often vary widely from shift to shift based on how full the restaurant is, how much customers spend and, of course, how much they tip. (Research has found that tipping behavior can be affected by factors such as a server’s race or physical attractiveness and even by the day of the week.)
“The variables are really broad,” said Christopher Muller, a professor at the Boston University School of Hospitality Administration, adding that it’s difficult to find a standard for how much servers generally earn in tips.
Muller said there is no universal standard for how many tables a waiter can reasonably handle at once. In a fine-dining restaurant, wait staff often serve several courses to a meal and visit a table frequently, meaning that they might be able to handle only three to four tables at a time. At a diner, meals are generally less complicated, and the service is a little quicker, which means that servers can typically have slightly larger sections. However, juggling too many tables or tasks at once can be difficult and ultimately may affect what a server earns in tips.
“There is a lot of mental judging that a waiter does,” Muller said. “They have to visualize all of the people in their station and what their particular needs are. One reason the job is considered so stressful is because there are so many things going on at once.”
CORRECTION (March 12, 10:37 p.m.): An earlier version of the interactive graphic accompanying this story misstated Michigan's minimum wage. It is $8.90 per hour, not $9.80.
CORRECTION (March 13, 12:38 p.m.): An earlier version of the interactive graphic accompanying this story misstated Iowa's minimum wage for tipped workers. It is $4.35 an hour, not $4.25.
By Kathryn Casteel and Charlie Smart
March 9, 2017
Source: Five Thirty Eight
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