Restaurants in New York are eliminating tipping?! Will this blasphemy ever come to Las Vegas?
Although some New York restaurants previously experimented with tip-free dining, Danny Meyer recently announced that his Union Square Hospitality Group — featuring fine dining spots like Gramercy Tavern, will eliminate tipping and significantly raise menu prices come November. It is unclear if this will spread to Meyer’s Shake Shack chain, which has a Vegas outpost at New York-New York.
Meyer counterintuitively claims that eliminating tipping will lead to better service thanks to higher wages. For some, perhaps. Others will likely earn less, and those top tip earners (and, we can assume, the best at guest service) will likely abandon their posts rather than suffer a pay cut under the new tip-free system. Even if Meyer’s approach takes hold in the ever-shrinking “fine dining” genre, in order for service to improve, eliminating tipping must be accompanied by a new restaurant culture in which management holds employees accountable and rewards them based on performance, rather than leaving that to the customer.
A critical yet hardly discussed factor in Meyer’s plan has to do with geography. New York state has long permitted restaurateurs to apply a “tip credit” to their minimum wage obligations. Today, that tip credit is $3.75 per hour. After December 31, the hourly wage credit shrinks to $1.50 while New York’s minimum wage increases to $9. In one swoop, New York restaurants will pay $5200 more per year for each full time employee. Conveniently, Meyer will raise prices and eliminate tipping just a few short weeks before all this happens.
As for the tip disappearing in Las Vegas, I doubt it. Not only are our state laws different (Nevada employers do not get a tip credit toward minimum wage), but our culture is different, and not just in restaurants. As I’ve written before, cash is the great equalizer is Las Vegas, the method by which anyone can command the moment as in no other city. We also have the Culinary Union which, at least in regards to resort employment, is the mechanism through which most service industry wages are negotiated. I’m guessing their members would be none too thrilled with a tip-free service environment, and I wonder how long New York servers will put up with one.