November 24, 2018

What Are the Best and Worst Places for Tipped Workers? (HospitalityNet) »

Tipped workers aren’t like big-name executives in the sense that they don’t typically have the luxury of deciding where to work, based on salary. Say you’re waiting tables in Utah, where the minimum wage for tipped workers is $2.13 an hour, and the average tip rate is about 16.49 percent. Not great, but it’s unlikely you’d apply for a similar job in Florida, just to make $5.23 an hour, plus an average 18.21 percent tip rate.

Earlier this year, TSheets by QuickBooks, a time tracking software company, set out on a quest to see if they could find the best and worst states to be a tipped worker. Surveying 208 tipped workers from each state, they found Connecticut to be the best place to be a tipped worker and Tennessee to be the worst.

These assumptions were made based on two significant data points: the state’s minimum wage for tipped workers and “the generosity of residents leaving a tip” (i.e., how big tips were, by percentage, on average).

But while these numbers certainly do tell a story, figuring out the best and worst states to be a tipped worker takes more than just these two factors alone. Here are a few other components to consider, whether you’re working for tips or leaving them on the table.

The bigger the bill, the bigger the tip

It makes sense, right? When you go to a cheap restaurant, the tip you leave behind is smaller. Fifteen percent of $100 is a lot bigger than 15 percent of $10, right? So it stands to reason that tipped workers living in states where food costs more might also make more.

In February 2018, Womply, a software company powered by transaction data, analyzed 26,000 independent restaurants across the U.S. to see which states had the highest restaurant bills on average. Here were the top five, not including Washington, D.C., which they counted as No. 3:

  1. New York — average ticket $51.44
  2. Hawaii — average ticket $48.46
  3. California — average ticket $41.19
  4. Florida — average ticket $40.23
  5. Vermont — average ticket $39.70

Now, let’s take that data and see how it fits in with the original TSheets findings.

Among those five states where eating out was found to be most expensive, only Florida and Vermont were counted among the top five best states to be a tipped worker. Based on the average tab per state, though, a New York tipped worker would make about $8.82 on average, per bill, while a California worker would make just $6.86 per bill. Florida and Vermont both ranked somewhere in the middle, at $7.33 and $7.27 respectively, and Hawaii tipped workers came in around $8.05 per tab.

You might think, then, that it’d be better to be a tipped worker in New York than in Hawaii, but would you say the same, knowing the minimum wage for tipped workers in Hawaii is $9.35, versus an average $1.75 for the state of New York?

Let’s put the math to the test. Imagine a server in Hawaii and a server in New York. They each work one table in one hour. The Hawaiian server makes $9.35, plus a tip of $8.05, for a total of $17.40 for the hour. The New Yorker makes $1.75, plus $8.82 in tips, for a total of $10.57.

Unless it’s a particularly dead hour, chances are good that each server will see more than one table, so let’s imagine they each serve 10. Now, the Hawaiian server has made $89.85 for an hour of work, and the New Yorker has made $89.95. That’s just a 10 cent difference, and from this point on, the New York server will continue to make more per hour than the Hawaiian server, assuming he or she serves 10 tables or more every hour.

More people, more money — until you consider the cost of living

Obviously, population size plays a huge role in determining where tipped workers are best and worst off. For instance, a restaurant in a highly populated place like Los Angeles (3.999 million people in 2017, according to the United States Census Bureau) is likely a lot busier than a restaurant in Cheyenne, Wyoming (63,624 people). That’s a good thing for servers, where the more tables you turn, the more tips you make.

But what about the cost of living? In general, higher populations tend to drive up prices. It’s simple microeconomics. So sure, that Los Angeles server — or even that New York server — might make more per hour in tips than a server from someplace less populated like Cheyenne, but at the end of the night, whose dollar will stretch further?

According to a 2018 article by USA Today, a dollar in California is worth about 88 cents, and the median home value for the state is $477,500. In Wyoming, a dollar is worth far more — about $1.04. Their median home value? Less than half of California’s, at $209,500.

Here’s what that means on a personal level: A waitress in Cheyenne makes an hourly rate of $2.13 with an average tip rate of 15.91 percent on every table she serves. At the end of the night, the $100 in her pocket is worth $104, and the rent she pays on her one-bedroom apartment costs her around $760 per month.

Likewise, an LA waitress earns an hourly rate of $10.50 with an average 16.66 percent tip rate. Working in a higher populated area, at the end of the night, she might take home $200. Unfortunately, that $200 is really only worth about $176, and the one-bedroom apartment she goes home to costs her $1,985 each month, plus utilities.

In all likelihood, despite making less per hour and less in tips, the Wyoming waitress may be better able to support herself. But if the question is, What is the best and worst state for tipped workers?, money isn’t the only factor.

Legislative protections that tip the scale

Legislation plays a key part in the equation as well. For instance, the average restaurant bill in California might be smaller than in Hawaii, but many California tipped workers are protected in ways other tipped workers are not.

Some cities in California, for example, including San Francisco and Emeryville, require certain restaurant owners to notify employees ahead of time, prior to making changes to the shift schedule. In San Francisco, employees may be eligible for predictability pay, should their schedule be changed less than a week before the first shift starts.

Additionally, California overtime laws are much more in-depth. While the Fair Labor Standards Actstates nonexempt workers must earn time and a half for any hours worked over 40 in a week, California employees receive overtime pay for any hours worked beyond eight in a day. Plus, workers also receive overtime for any hours worked on the seventh consecutive day and double-time pay for any hours worked over 12 in a workday.

With protections like these, California tipped workers have a lot more rights than tipped workers from states without similar legislation, and those rights have worth as well.

One question, innumerable variables

Trying to figure out which states are the worst and best for tipped workers isn’t easy. Written out in a mathematical formula, the number of variables at play might create an equation similar to those solved by Katherine Johnson and the NASA space team.

For many, though, the data isn’t truly necessary. The best places to work — for tipped and non-tipped employees — are the places we call home, in the company of friends, co-workers, and family, and, with any luck, some reliable, regular customers who tip well and often.

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