Tipping income is slipping

The economic skid is cutting into a vital slice of earnings for the service industry.

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A tip is left by a customer at Linda's Place Restaurant in St. Clair Shores, Mich. Workers who depend on tips say the slumping economy is contributing to a decrease in gratuities.

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 are the tips that make up the majority of her income, but they have been dwindling for months amid rising gasoline 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, hairstylists, cabdrivers 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.

The pinch can come from many sides: 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 bill on which to base a tip.

How much it is hurting is hard to tell, because agencies such as the Internal Revenue Service and the U.S. Census Bureau that collect employment information do not break out tip data.

Poll

Have you been tipping less than you normally would?

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, even the statistics it released last month predate the economy's hitting 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 is hearing from its members, tips are down.

Association president David Craver said the economic pressure on bars and restaurants was high, especially in 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.

Hairstylists at Chappies Hair Design in Crescent Springs, Ky., say they have not seen a cutback in individual tips, but see people waiting longer between appointments.

Michael Lynn, a consumer-behavior professor at the Cornell University School of Hotel Administration, has studied tipping behavior and is not surprised workers are reporting that it is declining. Because 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.