Some businesses change their tipping practices

Published: Sep. 14, 2021 at 11:57 PM EDT|Updated: Sep. 15, 2021 at 5:20 AM EDT
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ESSEX JUNCTION, Vt. (WCAX) - Is tipping an outdated practice? Some businesses are saying yes.

A handful of bars and restaurants are paying their employees more and divvying up gratuities in a new way.

The owner of Salt & Bubbles in Essex Junction, Kayla Silver, said most of her employees start at an hourly pay of $20. They still take tips, but 10% are donated to local nonprofits. Other businesses are doing the same and employees seem happy with the new model.

“I’ve been doing this for a total of about six to eight years,” explained Katelin Shevalier, who works at Salt & Bubbles.

Salt & Bubbles hasn’t been open that long, but she has worked front-of-house positions in other bars and restaurants.

“I really enjoy it because it just gives more consistent and sustainable income versus other jobs I’ve had where you’re in a feast or famine state,” Shevalier said.

Silver said the decision to pay their employees this way is a business and personal decision.

“Labor shortages are a massive conversation topic. With my staff, I wanted to make sure my staff was walking away with not just a livable wage, but a competitive wage,” Silver said.

It’s not just one restaurant. Caledonia Spirits in Montpelier takes a similar approach. The vice president of marketing, Harrison Kahn, said paying a livable wage is one way they retain employees. They donate 100% of the tips received.

“Business is seasonal to some degree. We’re just finishing one of the busiest times of year and we’re entering a slower time of year,” Kahn explained. “We want to make sure our staff can pay their bills all times of year.”

Sara Solnick, the chair of UVM’s Economics Department, said there are pros and cons to changing tipping methods. She says research shows consumers like to tip because they believe it motivates servers to do better.

“In general, people aren’t really calibrating their tips to service in a way that’s truly motivating,” Solnick said. “I don’t think getting away from that will mean bad services, it might mean we have better service.”

Solnick also said servers relying on tips as their primary source of income can also lead to inequity.

“There are stereotypes on what types of groups are more likely to tip well and tip poorly,” she explained. “At times, people have given bad service to people they don’t think are going to tip well.”

However, Solnick said the cost of products is likely to go up if establishments change their pay model.

Kahn and Silver both said the benefits of employee satisfaction and retention are worth working around that.

“We have been able to hire great staff throughout all of this,” Kahn said. “I think providing staff with that predictable wage does help.”

“I care about my staff and I care about my customers. I think we make choices that show we care about people across the board,” Silver said.

Solnick said the biggest challenge businesses would face in changing how tipping is done is on the consumer end. People go by what they know, so it could be hard to break those habits.

However, there is no clear answer on whether changing pay models would be beneficial across the board.

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