The American tipping system benefits employees, customers, and restaurants
Despite these benefits, there is much confusion about how the tipping system works. Watch this informational video to learn more.

Tipped Employees Support Tipping

The most important aspect of tipping, is that servers support the tipping system. When the existing tipping system was threatened by ballot initiatives or legislation in Maine, Michigan, Washington DC, New Mexico, and Maryland, hundreds of tipped employees rallied in opposition and urged the public not to change a system they strongly support. Tipping provides an incentive for exceptional customer service that creates unlimited earning potential for servers. Typically servers earn between $19-25 per hour but many earn significantly more.

About the American Tipping System

The tipping system is an essential part of the American culture of hospitality. Unlike Europe and elsewhere, servers in the United States are incentivized to provide excellent service to customers. Because of the culture of tipping, tipped employees in many cases earn the most of all employees in the restaurant.

How the Tip Credit Works

No server can ever legally earn less than the minimum wage, period. In every state and city in the United States, servers must earn the minimum wage, and most earn significantly more. 43 states and the District of Columbia allow restaurants to take what is called a “tip credit” where servers are paid a certain amount as a base wage and then earn money in tips. If the combination of the server’s base wage and tips does not meet or exceed the local minimum wage, then the restaurant must make up the difference to guarantee the server makes the minimum wage.

In reality, many servers make much more than the minimum wage and typically earn between $19-25 per hour with some earning significantly more. The tip credit system incentivizes servers to deliver excellent service, enables customers to reward servers for great service, and allows restaurants to keep labor costs in check.

The Bottom Line

The existing tipping system works. It is supported by tipped employees, customers, and employers alike. All tipped employees are guaranteed at least the applicable minimum wage, and the overwhelming majority make significantly more.

The Impact
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