Service Charges Can Alleviate Income Inequality

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Staff Editorial

In recent months, a number of restaurants in San Francisco have banned tipping from their premises and have instead introduced a fixed service surcharge. The surcharge rate has been settled to be twenty percent of every bill.

Many restaurants in the city have added the automatic surcharge as a response to the increase in minimum wage in San Francisco that will be in effect in May 1, 2015. Restaurants implementing the surcharge are doing so in order to match the wage increase and continue to have economically viable businesses. With this new mandate, restaurant customers now have to pay the automatic surcharge and cannot decide how much they want to tip or if they want to tip at all. Restaurant owners say that this new surcharge will help create a more equitable distribution of income among waiting staff and kitchen staff. 

The Foghorn Staff has considered this concept of mandated surcharge and despite acknowledging several problems with this new restaurant billing policy, we support its implementation because it addresses the serious issue of service industry workers not making enough wages to meet standard costs of living.

For members of the service industry who earn their wages with a strong, dedicated work ethic, this surcharge is a great method to ensure they receive the tip they deserve. However, this may create a lack of incentive for workers to provide better service if they know they are receiving compensation for service regardless of how well they work. This raises concern for the experience of the consumer at restaurants that follow this policy, as a mandated twenty percent tip may not be indicative of service that is worthy of a twenty percent tip. There should be a way to ensure that the service customers are receiving is satisfactory and up to standard. Many people tip according to the service they receive, and never a standard amount.

Considering a mandated service surcharge requires one to think about why it has to be enforced in the first place. Why are servers’ wages currently low enough that they have to depend on optional gratuity for income? The current disparity between the fixed wages of servers and how much they have to earn through gratuity in order to make up for their lack of income is disturbing and we hope that this new service surcharge will shed light on this issue.

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