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The Tipping Debate Turns to the Tip Credit, and Whether Banning It Is Bad for Business

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Could abolishing the tip credit force tons of restaurants to close? Hospitality Alliance director Andrew Rigie thinks so.


As the should-we-tip/shouldn't-we-tip argument continues to putter along, more voices are joining the debate. Today Andrew Rigie, executive director of the New York City Hospitality Alliance, adds his two cents in an op-ed in the Post arguing against a campaign to abolish "tip credit."

Here's how front of the house service is paid now: Servers are paid $5 an hour and are expected to make up the difference between that and the minimum wage with tips. Salaries that don't reach the minimum wage this way, are required by law to be supplemented by the restaurant's owners. (However, that doesn't always happen).

If that tip credit is eliminated, Rigie argues, "then labor costs to employ restaurant servers would nearly double. Local jobs and both new and existing restaurants would be placed on the chopping block." Restaurants would be forced to up their prices, which restaurateurs fear will simply drive away business. As an alternative, Rigie says, many are considering eliminating tipping altogether, and replacing it with a mandatory "administrative fee" added to a diner's bill. But doing so, Rigie argues, would mean "Thousands of hard-working New Yorkers would keep their jobs, but with considerably lower incomes," since tips can so often add up to much more than an hourly minimum wage.

Needless to say, it's a complex issue, but he and other pro-tippers are up against a growing group of people, like Dirt Candy's Amanda Cohen, who oppose tipping, saying it is a poor way to compensate people. Cohen recently wrote: "If you do a job, you should be paid a fair salary.... Tipping is unfair to servers. If you do a job, you should be paid a fair salary."