The tip debate (5×8 – 10/4/11)

Should restaurants deduct credit card fees from server tips, the story behind ‘Occupy Wall Street,’ kids learn how to play in Duluth, cities in the gun business, and the real lesson from a Nobel Prize winner.


1) DIPPING INTO THE TIP JAR

Blip or trend? The Twin Cities “dining community” is watching what’s happening at Parasole Restaurants, where the management is taking 2 percent of the wait staff’s tips when they’re added by the customer to a credit card. Businesses pay swipe fees for each transaction based on the total amount, including the tip. The restaurants charge the wait staff by deducting it from the amount, City Pages says.


The workers are in a quasi-revolt because they’re making minimum wage already.

“People aren’t tipping as much because the economy is bad,” the server said. “Now they’re asking us to take a 2% cut in income.”

Vice President of Business Development Kip Clayton declined to comment.

Why not?

“Whatever we end up doing in terms of compensation for employees is between us and the employees,” Clayton says. “So there’s no reason for us to share it with the rest of the world.”

But Clayton responded to the local food website, Heavy Table.


Given the increased usage of credit & debit cards there is a restaurant industry movement to pass all or a portion of the credit or debit card fees on tips only (not the fees on the entire guest check) to the tipped employees. For example if the guest tips in the amount of $10 on a $50 credit card transaction, the tipped employee would pay between 2 & 3% or $0.20 ( Twenty cents) on their $10 tip. See state statute 5200.0080 Gratuities & Tip Credits for background on the topic.”

Local foodie Jason DeRusha does the math:


You can see from the restaurant perspective – if a table pays $100 on food, $20 on tip; they pay $2 on the food, and $0.20 on the tip to the credit card. So 9% of their credit card fee costs go to a line item that brings them zero revenue.

But, another commenter notes (in a very interesting discussion), the business has negotiated the swipe fees based on the convenience to the restaurant of accepting credit cards for payments. The server has negotiated no such deal and doesn’t have the option to dictate how his/her tip will be paid.

More food: A new study says both men and women appear to choose larger portions when they eat with women, and both men and women choose smaller portions when they eat in the company of men.

2) THE “OCCUPY WALL STREET” STORY

NPR ombudsman Edward Schumacher-Matos is defending his network against assertions it hasn’t properly covered the Occupy Wall Street protests in New York. In his column this week, Schumacher-Matos lists the stories that have been done so far. But he also offers a typical editor’s lament: “What’s the story here once you get passed the fact they’re protesting?”


I agree with editors that the lack of a clear purpose for the protests make it a hard story to give importance to. But the persistence of the protestors cannot be denied… The coverage seems about appropriate to me.

In the meantime, most of the stories surrounding “Occupy Wall Street” seem to be focus on complaints there aren’t enough stories surrounding “Occupy Wall Street.”

That’s not the protesters’ fault:

That interview didn’t air on FoxNews, the New York Observer says.

Here’s one specific story that could be done about the protesters’ general complaint: How politicians — especially those on the banking committees — took care of the banks and helped bring about the current freefall.

Barry Ritholtz, of The Big Picture, explains “mark to market” accounting, that allowed banks to show enormous profits on shady financial instruments. It helped banks hide their true balance sheets.

When the market collapsed and the depth of the banks’ woes started to become public, Ritholtz says, Congress moved in to help in the cover-up:


In the midst of the 2008-09 collapse, however, Congress was in a panic. They mandated that FASB accept Mark-to-Make-Believe accounting in the Emergency Economic Stabilization Act of 2008. It gave the Securities and Exchange Commission the authority to “Suspend Mark-to-Market Accounting.” In March and April of 2009, that is precisely what occurred.

It was yet another example of an industry lobbying Washington, D.C. to get precisely what they want — and then having that legislation blow up in their faces. (I detailed other examples of this in a chapter of Bailout Nation — you can see that chapter here: Strange Connections, Unintended Consequences).

The bottom line is this: Investors do not really have a clear idea of how healthy any of these banks truly are. We do not know the state of their balance sheets. We do not know what their exposures are to mortgages, to Europe, to Greece, etc. They could all be technically insolvent, as far as any investor can tell.

Ritholtz says for all anybody knows, the banks are insolvent. “Bankers, enjoy your beds. You made them, now lay in them . . .” he says.

“The question is whether this ad hoc group of protesters – who feel they’re getting the short end of the stick while corporate America hoards money – could morph into a political movement, a kind of left wing Tea Party,” a BBC reporter says.

That’s not really the question, either. The question the protesters are asking is “why doesn’t the media reveal the systemic corruption that has contributed to the financial disaster?” It’s illogical for the media to wait for an answer from the protesters.

3) THE PLAY IS THE THING

If you’ve ever bought your kids an expensive toy, only to have them spend hours playing with the box it came in, then what happened yesterday in Duluth won’t surprise you.

An arsonist set fire to the playground equipment at the Lester Park Elementary School. But the students — and, perhaps, the adults — learned an important lesson kids once knew instinctively. They didn’t need playground equipment to play.


Students at Lester Park Elementary were crawling all over the asphalt parking lot Monday. They were using chalk to draw elaborate pictures or making simple body outlines around prone schoolmates.

A berm next to this make-shift playground became a grass-stain maker as students rolled haphazardly down its face.

Four-square. Hopscotch. Soccer. Hula hoops. Balmy fall weather.

“I didn’t know it would be this much fun,” second-grader Charlie Robinson said.

You think that’s fun, kids. Check out this box.

4) CITIES IN THE GUN BUSINESS

Should police departments sell guns they confiscate? There’s no state law regulating these questions so last night the Waite Park City Council voted to sell the guns the police department has confiscated in the last three years. They’ll only be sold to licensed gun dealers. Illegal or altered guns will be destroyed.

“The real issue has to do with — it’s rare — when a weapon is used in a crime of violence and it’s traced back to being in a police property room,” the police chief said. “It’s a controversial subject.”

Related (sort of): A man was so incensed by the volume of his TV in Grand Forks that he took out his .44 Magnum and shot it. He did so, the Grand Forks Herald reports, after three other people in the house wouldn’t turn it down.

5) A NOBEL PRIZE LESSON

Ralph Steinman apparently knew he was dying, his daughter says. Alexis Steinman says the family tried to keep him going by reminding him the Nobel Prize for medicine and physiology was about to be awarded. He had pancreatic cancer. His research was in pancreatic cancer.

“‘I know, I’ve got to hang on for that,’” she remembers her father saying. “They don’t give it to you if you’re dead.”

“After a few days it didn’t matter anymore,” his daughter said yesterday. “We all just wanted to be together. You think of these moments and all that really matters was he’s still with us,” she said.

She appeared this morning on The Takeaway.

Bonus: The “which came first: the chicken or the egg?” question has finally been solved. The chicken.

TODAY’S QUESTION

The “Occupy Wall Street” protests in New York have inspired similar demonstrations across the country. One such event is reportedly planned for downtown Minneapolis this Friday. Today’s Question: What do you think of the Wall Street protests?

WHAT WE’RE DOING

Midmorning (9-11 a.m.) – First hour: The rebranding of high-fructose corn syrup.

Second hour: Rebroadcast of Jonathan Franzen’s Talking Volumes appearance.

Midday (11 a.m. – 1 p.m.) – First hour: University of Louisville Law School dean Jim Chen previews the new Supreme Court term. The justices will hear controversial cases on health care, immigration, GPS tracking and more.

Second hour: An American RadioWorks documentary, “Don’t Lecture Me: Rethinking the Way College Students Learn.”

Talk of the Nation (1-3 p.m.) – First hour: The causes, and effects, of drug shortages.

Second hour: Fugitives. A look at life on the lam. Plus, some favorite recipes from French TV chef, Jacques Pepin.

All Things Considered (3-6:30 p.m.) - The Campaign Finance Board may release rules about public documentation of contributions in the same-sex marriage ban campaign.

Opening arguments may be held today in the trial of two Somali women charged with funneling money to a terrorist group in Somalia.