White House Chronicle

News Analysis With a Sense of Humor

The Invisible Hand Is in Your Pocket Now

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Adam Smith’s “invisible hand,” describing the efficient operation of markets, has morphed into a something else: an invisible hand in my pocket  and yours.

This woe comes now at every turn. Corporations — possibly egged on by the battalions of MBAs they employ — have discovered that they can con you by price legerdemain. They do this by imposing fees.

Airlines, banks and utilities play the fee game. Luxury resorts have joined in: You'll pay so much for the room, so much in taxes, and pay special fees if you want to do anything other than sit in it. Bottom line: You'll have pay more than you'd expect. The advertisements that lure you are disingenuous.

Take airline fees. You find an airfare and brace for the taxes. But — Oh, surprise, surprise! — you'll have to pay a hefty fee if you want more than one change of clothes at the other end. Want to board comfortably? Pay up. Want a seat where parts of your body don’t meet other parts of your body in unnatural ways? Pay up. Have to change your flight? There’s a change fee. Just pay up or stay put.

You could take the train, but you might not know that the only corridor of the national rail network that approaches international standards is the Northeast, running between Washington, New York and Boston. The trains aren’t bad at all, but the ticket pricing is predatory and opaque. It puts the airlines to shame.

Amtrak train fares are priced according to minute-to-minute demand. On the no-frills train, a ticket from Boston to Washington can cost around $100 to $400, depending on when you buy your ticket and who else wants to travel at that moment. The result: Amtrak – with a $1.3 billion annual subsidy from you and me –operates a railroad for the well-heeled. Between Washington and New York for corporate lawyers; ditto to Boston with the addition of academics plying the consulting trade.

If you just need to get around the Northeast, take a bus. Or play airline roulette, where the fare fluctuations are held down by JetBlue and Southwest.

Then there is the new trend of companies partially shifting the burden of paying workers from themselves to you. Hotels are urging their luckless guests to tip the chambermaids. (I've always tipped them. But I fear this corporate move is designed to reduce their responsibility for paying their workers a living wage.) Fast-food outlets now have tip jars (begging bowls, really), so the poor servers behind the counter can be paid less because it is becoming a tip-calculated wage.

Now, take a look at the unmitigated scandal of interns: free labor. The government and Congress, the media, think tanks, accounting and consulting firms, and many others, have found the best-and-brightest will work for free, primarily in the summer, to learn the trade.

Fair enough? Not so. Unpaid interns get a leg up in their careers on their peers who can't afford to take those great jobs. If you worked hard all summer, serving ice cream to pay your tuition, your resume will be deficient and you won't make the important contacts. Interns ought to be paid the minimum wage, so all can start resume-building at the same starting line.

We are witnessing a vast change in the way we pay for things with tipping subsidizing companies, fees fattening airlines, banks and hotels against the interest – and often the foreknowledge — of the customer.

Adam Smith — so beloved by the people who are changing the nature of commerce with fees, concealed charges, predatory pricing, tips and free labor — was a canny Scot who liked to know what he was getting for the money he was paying. He must be restless in his grave.  — For the Hearst-New York Times Syndicate

 

The Growth of the Tipping Culture and What It Says

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So you think the federal minimum wage is $7.25. Well that is for people who do not get tips, or rather for those who are not recognized to get tips.
 
If you are restaurant waitstaff, your minimum wage is just $2.13. That is because it is assumed tipping will make up the difference.
 
Now if you are tending bar at a top restaurant in a big, prosperous city, that is probably a pretty good deal — so long as you are healthy and can show up to work regularly. Cocktail waitresses in the right establishment can do even better. Gender counts here, and as out-of-town businessmen on expenses enjoy their beers, their affection for waitresses can grow and show itself in lavish tips.
 
That is the high end, where money and booze are at work. Likewise in expensive restaurants, waiters can make a passable living, even a good living, so long as they get to work the hours they want. Breakfast sucks, lunch is not what it used be in the days of three martinis, and dinner is still waiter Eldorado.
 
The rub (isn't it always?) is down the line, where there is less money sloshing about. So-called family restaurants, individually owned, or in chains like Denny's and IHOP, it is a different reality. No one gets rich bringing out the hamburger and fries or French toast.
 
In the world of tipping, taxis are incongruous. If tipping, as allegedly it was defined by the great wordsmith Samuel Johnson, means “to insure prompt service” then taxi drivers should lump it. They drive, you pay and there is no element of special service detectable in most cases. But tips are expected, even if the chap has been on the phone to God-knows-where at the top of his voice for the entire trip. The car is jalopy and he does not know the way. Hand over.
 
Barbers get a little extra and in beauty parlors, tips are very important. On pleasure fishing boats, well, as the sign, says “the mate works for tips.”
 
Not only do a lot of people work for tips, but they are, for the most part, the working poor and frequently the hours are bad.
 
It seems that the number of tipped jobs is growing. Or, to be more correct, the number of jobs where the employees are trying to supplement with tips, appears to be on the rise.
 
In all kinds of places, like bakeries, convenience stores, gas stations, glass jars with improvised signs seek your benevolence. More and more people who serve the public are trying to supplement meager incomes with tips.
 
The French, long ago, institutionalized tipping in restaurants by including it in the bill at 12.5 percent. But in Japan, tipping is not part of the culture. In the United States, 20 percent has become a kind of standard; while New York is higher at 25 percent. When I worked as waiter in Manhattan, the word was that men with brown shoes, and their female equivalents, were from the sticks and expected you to genuflect for 10 percent. Didn't happen.
 
Where the bulk of someone's income is from tips, there has been a transfer of wage responsibility from employers to customers. Some hotels, especially in resort areas, urge you to tip the maid. Of all the tipping, that is the one I do most willingly. Maybe it is because of my own aversion to housework, and especially to making beds, that drives me to open my wallet. It is also that no one who does housekeeping in an hotel is on an upward arc in their lives, methinks.
 
As tipping spreads, as it appears to be, so does the sense that, like much of the Third World, we have become a country that is for sale, one person at a time: low wages, low standards, low expectations. That glass jar on the counter soliciting tips tells a story, and not a pretty one. For “Tips” read, “need.” — For the Hearst-New York Times Syndicate