Tip-reliant workers say slowdown cuts into tips

updated 4:11 p.m. ET June 23, 2008

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 tips make up the majority of her income, but they’ve been dwindling for months amid rising gas 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, hair stylists, cab drivers 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 entirely.

The pinch can come from many sides, as 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 to tip on.

How much it’s hurting is hard to tell, since agencies like the Internal Revenue Service and the U.S. Census Bureau that collect employment information don’t break out tip data. 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 are from before the economy hit the skids.

The tipping point AP The latest employment and earnings estimates for employees in some occupations that often receive tips. Because the U.S. Bureau of Labor Statistics surveys only every six months and publishes the data just once a year, even these figures released last month are from before the economy hit the skids. They include but don’t separate out tip income in the overall wage estimates. By occupation, the number employed and their median hourly wage, including tips: — Waiters and waitresses: 2.4 million; $7.62. — Bartenders: 498,090; $8.22. — Hairdressers, hairstylists and cosmetologists: 343,320; $10.68. — Taxi drivers and chauffeurs: 165,590; $10.01. — Manicurists and pedicurists: 52,730; $9.60. — Barbers: 12,110; $11.31.

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’s hearing from its members, tips are down.

Association President David Craver said the economic pressure on bars and restaurants now is high, especially in very 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.

MORE FROM U.S. BUSINESS

U.S. business Section Front

Jackson’s luxe lifestyle aided by Wall Street Report: Feds looking at AT&T, Verizon policies   Downloading defendant asks award be cut   Chicago family buying Cubs for about $900 M Economists point to rising debt as next crisis Marshals seize Madoff’s $7 million penthouse Hot dogs replace steaks this Fourth of July McDonald’s passes, Taco Bell scores with NBA Trustee: $231 million so far for Madoff victims Stanford exec makes plea deal, attorney says U.S. business Section Front   Add U.S. business headlines to your news reader: