As customers cut back, workers who depend on tips suffer
CINCINNATI – At the Corner Pub on Cincinnati’s west side, bartender Melissa Metz can count the cost of the economic hangover in the stack of bills she has at the end of a shift.
Those tips make up the majority of her income, but they’ve been dwindling for months amid rising gas prices and other economic woes. Right now, her weekly income from tips is down about 25 percent.
“Some people are coming in less and maybe not staying as long when they do come in,” Metz said. “And normal customers who would normally tip $5 are tipping about $2 now.”
Bartenders, waiters, hair stylists, cab drivers and other workers who depend on tips for much of their income are among those who say they are seeing decreases as customers feeling the economic pinch trim their gratuities – or sometimes omit them entirely.
The pinch can come from many sides, as customers are also cutting down on how often they eat out, have their nails done and get other services that typically involve tipping – or spend less each time, meaning a lower total to tip on.
How much it’s hurting is hard to tell because agencies like the Internal Revenue Service and the U.S. Census Bureau that collect employment information don’t break out tip data. While the U.S. Bureau of Labor statistics includes tips in its wage estimates for professions that involve tipping, the information supplied by employers is not broken out separately. Because the government surveys only every six months and publishes the data just once a year, the statistics it released last month are from before the economy hit the skids.
At the state level, some efforts have been made to help workers dependent on tips for part of their income. The Delaware Senate approved a bill this month that would raise the minimum wage for service workers and others who depend on tips. Supporters say it would help low-wage workers struggling in the current economy. In April, the Missouri House of Representatives rejected legislation that would have lowered base wages in the state for tipped employees.
The National Bartenders Association says the amount of tip income can vary by type of bar, but tips across the board probably make up about half of many bartenders’ income – and based on what it’s hearing from its members, tips are down.
Association President David Craver said the economic pressure on bars and restaurants now is high, especially in very competitive markets.
“There is less overall business to begin with, and then on top of that, people are a little tighter with their money,” Craver said. “Someone who might have tipped $5 may only be leaving $3 now. The next thing you know, everybody’s making 25 to 30 percent less on a monthly basis than they normally do.”
Waitress Jewell Cundiff, 24, is trying to pick up extra days at the Anchor Grill in Covington, Ky., to make up for it.
“We used to get tips of about 20 percent of a bill, but now it may be 15 percent or less,” said Cundiff, who says 75 percent of her income at the diner depends on gratuities.
“People just aren’t eating out as much either,” she said. “If you don’t serve as many people, you don’t get as many tips.”
Hair stylists at Chappies Hair Design in Crescent Springs, Ky., say they haven’t seen a cutback in individual tips, but see people waiting longer between appointments – cutting down the amount of times people tip.
“Some who might have come in every four weeks for a haircut are trying to stretch it out and come in every six weeks,” said general manager Carla Frazier.
Michael Lynn, a consumer behavior professor at the Cornell University School of Hotel Administration, has studied tipping behavior and isn’t surprised workers are reporting that it’s declining. Since his studies show that people with high incomes tip more than people who earn less, he said, it follows that people tip less when the economy sours and their income drops.
“Paying $80 to fill up your gas tank can really put a chill in people,” said Anthony Townsend, a professor in the College of Business at Iowa State University. “And people react to more apparent times of economic distress by tending to economize around other issues.”
Cincinnati cab driver Dawit Medhane said the tips he usually received had made up only about 15 to 20 percent of his income, but helped cover some of his gas costs – which have tripled compared with last year. Customers who previously gave 15-20 percent are now more likely to give 5-10 percent, or nothing.
“People are using cabs less, too,” he said. “Some companies have cut corporate travel, and that means less business and less tips.”
Business customers who fly into Cincinnati haven’t reduced their tips, said Sam Brown, who has been driving a cab for 34 years, but many others who take a cab to the grocery, work, or a doctor’s office aren’t tipping at all now.
“I understand they just don’t have it, but that cuts into my income,” said Brown.
Anna Duran, a nurse from Grand Junction, Colo., who was visiting Boston, admits she doesn’t tip any more than she has to when she eats out.
“Sometimes I feel cheap,” said Duran. “I try to give what I can because I am not the only one trying to save.”
Neil Tibbitts, of Boston, a former waiter, said he has been trying to dine out in less expensive places but always tries to leave at least 20 percent.
“If the service is good, that should be rewarded.”
That should be good news for Metz, who is trying to make up her lost income the only way she knows how.
“I was working a 40-hour week. Now I’m working 50,” she said.
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