Note to that the suggested tips are 20%-25%, not the 15%-20% norm that was around most of my life.
The purpose of the inflation fee is to trick consumers by trying to hide true prices so they make incorrect economic choices. It's a form of fraud.
These surcharges have become especially common in the travel industry. I booked a hotel the other day because there as a "killer sale" only to get to the checkout and find a huge set of "resort fees".
I would have little problem making these kind of hidden fees illegal. Give people transparent prices and let them make their own choices.
In general I consider nearly all low wage labor to not reflect market prices. If someone is doing something for you for minimum wage, your extra taxes to pay for their Medicaid, public school, etc are the hidden "resort fee" on top of the visible price.
I understood restaurant tipping to be customary in the US *for table service*. Now it is common for counter-serve restaurants to ask for tips also. A few days ago, an employee handed me a piece of pizza on a disposable plate, and the lowest multiple choice suggested tip amount on the credit card reader was 18%.
In some other countries, Australia comes to mind, the price on the menu is the price you pay. No extra taxes, surcharges, or gratuities on the bill; just one transparent price.
During the pandemic when all restaurant service was takeout service is became a kind of pro-social expectation that you would tip generously for take out since these were front line workers risking their lives so you could eat between zoom meetings.
Of course, once the norm took hold businesses wanted to continue it beyond the pandemic in the hopes of being able to pay their staff less.
A lot of these low wage jobs go to immigrants. If they weren't allowed to immigrate then they wouldn't be eligible for Medicaid, public school, etc.
There is a subsidized apartment complex in my town where the state pays part of their rent and I've seen free food getting passed out. The residents look to be almost entirely LatinAm immigrants.
This is why immigration is so destructive. As long as they stay in LatinAm they aren't eligible for western welfare states. If they are low productivity they have to get by on the lower standard of living in their country. but at least what they have is what they earned. Once they move to the West merely existing becomes a huge state burden and they need much higher productivity to pay for their own welfare. Most aren't productive enough. The people in that apartment complex probably cost society seven figures each over their lifetime. I basically view them the way I would view a bank robber, it just done over time via state violence.
With lower labor supply the wages of these jobs would increase to the point that state subsidy wasn't inherently built into them. At that higher wage rate some of the jobs would not exist or get automated, but what jobs existed would at least be unsubsidized free market prices. The structure of the economy would adjust, as it has in many places that don't allow mass low skill immigration.
"Doing the jobs Americans won't do" just means "willing to work at wage rates that make you a burden to the state".
I would reduce my tip by the size of the "inflation fee", unless it was printed in huge bold letters as you enter the restaurant. I don't mind fees but they have to be _extremely_ prominent to all customers, no exceptions. I would likewise leave a 2-star review for the establishment unless the tip was announced in big letters, as a matter of principle, even if the fee was 0.1%.
Paging Greg Mankiw! He wrote that the cost of changing menus was the source of macroeconomic friction. So this should get rid of macroeconomic friction, eh?
I'm not sure how far this has spread in the US, but in Japan, more and more restaurants are switching from printed menus to either electronic tablets or a QR code that you scan with your phone to open a web site where you place your order. This essentially eliminates menu costs, except the goodwill cost inherent to raising prices.
There's probably an interesting paper to write about how this has affected pricing behavior, although in Japan in particular the effect of adoption of electronic menus is likely to be confounded by the fact that this happened just as Japan was experiencing significant inflation after 25 years of net zero inflation.
It’s incredible to me how the government can get away with issuing paper dollars in the trillions backed by nothing. Honest businesses that can’t print their own money raise prices by 3%, and people go ballistic.
Why don’t people have that reaction against the cause of inflation? It’s not greed, it’s government.
If the dollar were backed by gold, every day of your life, your hard-earned money, your US $10 would buy more. A gold-based currency is the only way to keep your government from robbing you.
Without inflation, the original gold value of $10 would be worth $3,879. When you add the value of industrialization, it has to be many times that. In silver, which generally traded 15 to 1, the math is more complicated.
We still had silver conversion and silver coins circulating up to the 60s. A cup of coffee was a dime.
Your government is robbing you blind, and you blame the pancake maker? Give me a break.
The argument that random shortages were due to businesses being loathe to adjust prices and that inflation somehow solved these supply chain issues is nonsense. The truth is that as retailers quickly sold out of certain goods in waves of panic buying and massive shifts of demand among different types of consumer goods, they were unable to restock them at any price.
Free markets generally deal with risks of temporary disruptions of production by (1) mobilizing reserves of goods, (2) mobilizing redundant production capacity, and (3) hardening production capacity against disruption risks. The prospect of temporary increases in prices rewards speculators who make such investments in reserves, redundancy, and resistance, thus sustaining the flow of goods to those consumers willing to pay the higher prices in the face of random disruptive events.
What markets have a harder time dealing with are governments that consume savings and deter thrift to such an extent that such disruption-proofing investments become much scarcer, and with governments that issue unforseeable dicta that arbitrarily shut down large parts of the structure of production in spite of the desire of speculators to profit from higher prices.
America and most other Western nations have been deindustrializing via anti-thrift policies for half a century. The main symptoms have been a loss of productivity and stagnation of living standards of the productive classes (and actual population declines in Japan) coupled to a shift to "just in time" manufacturing that neglects the accumulation of inventories, minimizes spare production capacity, etc. This renders supply chains much more vulnerable to the risk of being broken completely when a disruptive event occurs. COVID of course also unleashed the madness of governments in using their administrative fiat to shut down anything deemed "non-essential" in the eyes of the bureaucrats, even if that had negative consequences in making goods available to the "essential" businesses that were still open too.
China is exceptional in having encouraged its people to save and to invest their savings productively over the past few decades, and it was Chinese businesses that rose to the occasion to vastly increase their exports of goods to America during the COVID lockdowns. They did so to such an extent that America's ports and railroads got hopelessly clogged, actually reducing their throughput and creating lengthy delays and more random disruptions in the restocking of certain goods. Chinese businesses were also victimized by arbitrary shutdowns by their own government. Even so, it was China and not the acceleration of the rate of price increases (which happened later, after the Russian aggression against Ukraine resumed), that eased the disruptions.
A second round of COVID lockdowns or a "climate emergency" (both of which our corporatist elites currently seem to be keen on threatening us with) could easily trigger another wave of random shortages; the fact that retailers have not been shy about raising prices lately won't alter the fundamental supply-side causes of these random disruptions. Our production capacity is just as fragile and our warehouses just as poorly stocked as they were three years ago, maybe even more so given the reductions of the supply of skilled labor in certain sectors. Maybe that is the reason why Western leaders have been nicer to China's government lately and eager to talk trade; they know that they'll need a surge of Chinese goods again when they inflict another COVID-like crisis on us.
I wonder if the restaurant would be better off putting little signs on the table to the effect of 'Due to continual inflation, please note that all checks will include a X% inflation surcharge. We do apologize." By the time people are sitting down there is probably a very low chance that will make them stand up and leave, but it gets it out there ahead of time.
Also, people saying to reduce the tip: do you think your server is getting any of that fee? Why are you punishing them because their employer is asking for more money?
If the fee is truly hidden (ie printed in small print somewhere it’s not intended to be seen) then the server is complicit, because they certainly know what is happening from previous customers and could’ve warned me. I would absolutely lower my tip if I was truly surprised by such a fee at the end of my meal, not with the intention of hurting the server, but because it would be my only recourse at that point and I wouldn’t feel sufficiently bad about harming the server due to the aforementioned reason. If the fee is clearly posted or the server warned me and I choose to eat there anyway that would be my choice and I wouldn’t lower the tip.
Well, consider: do you expect the server to talk to you about the tax on the bill? Presumably not because you always have to pay sales tax and everyone knows that. But what if the city has an additional sales tax that is less common? That has happened to me before; Herndon VA has an additional tax the surrounding area doesn't and I spent a fair bit of time trying to figure out if the restaurant couldn't do math or was scamming us (the tax wasn't clear on the bill), but I didn't blame the server, I called up the restaurant owner. It isn't generally the server's job to make sure I had been to a restaurant before, or specifically a restaurant in that town and so understand all the fee structure. It might be nice for her to ask if I was aware of the extra tax, but it would be sort of a strange conversation. Though honestly, if she said "Hey, just so you know, the local town here is going to steal an extra 1.5% of the tip from you in tax, the bastards" I probably would have tipped more out of appreciation, but I am probably an outlier :D
Note to that the suggested tips are 20%-25%, not the 15%-20% norm that was around most of my life.
The purpose of the inflation fee is to trick consumers by trying to hide true prices so they make incorrect economic choices. It's a form of fraud.
These surcharges have become especially common in the travel industry. I booked a hotel the other day because there as a "killer sale" only to get to the checkout and find a huge set of "resort fees".
I would have little problem making these kind of hidden fees illegal. Give people transparent prices and let them make their own choices.
In general I consider nearly all low wage labor to not reflect market prices. If someone is doing something for you for minimum wage, your extra taxes to pay for their Medicaid, public school, etc are the hidden "resort fee" on top of the visible price.
I have noticed "tip percentage inflation" also.
I understood restaurant tipping to be customary in the US *for table service*. Now it is common for counter-serve restaurants to ask for tips also. A few days ago, an employee handed me a piece of pizza on a disposable plate, and the lowest multiple choice suggested tip amount on the credit card reader was 18%.
In some other countries, Australia comes to mind, the price on the menu is the price you pay. No extra taxes, surcharges, or gratuities on the bill; just one transparent price.
During the pandemic when all restaurant service was takeout service is became a kind of pro-social expectation that you would tip generously for take out since these were front line workers risking their lives so you could eat between zoom meetings.
Of course, once the norm took hold businesses wanted to continue it beyond the pandemic in the hopes of being able to pay their staff less.
A lot of these low wage jobs go to immigrants. If they weren't allowed to immigrate then they wouldn't be eligible for Medicaid, public school, etc.
There is a subsidized apartment complex in my town where the state pays part of their rent and I've seen free food getting passed out. The residents look to be almost entirely LatinAm immigrants.
This is why immigration is so destructive. As long as they stay in LatinAm they aren't eligible for western welfare states. If they are low productivity they have to get by on the lower standard of living in their country. but at least what they have is what they earned. Once they move to the West merely existing becomes a huge state burden and they need much higher productivity to pay for their own welfare. Most aren't productive enough. The people in that apartment complex probably cost society seven figures each over their lifetime. I basically view them the way I would view a bank robber, it just done over time via state violence.
With lower labor supply the wages of these jobs would increase to the point that state subsidy wasn't inherently built into them. At that higher wage rate some of the jobs would not exist or get automated, but what jobs existed would at least be unsubsidized free market prices. The structure of the economy would adjust, as it has in many places that don't allow mass low skill immigration.
"Doing the jobs Americans won't do" just means "willing to work at wage rates that make you a burden to the state".
I would reduce my tip by the size of the "inflation fee", unless it was printed in huge bold letters as you enter the restaurant. I don't mind fees but they have to be _extremely_ prominent to all customers, no exceptions. I would likewise leave a 2-star review for the establishment unless the tip was announced in big letters, as a matter of principle, even if the fee was 0.1%.
Paging Greg Mankiw! He wrote that the cost of changing menus was the source of macroeconomic friction. So this should get rid of macroeconomic friction, eh?
I'm not sure how far this has spread in the US, but in Japan, more and more restaurants are switching from printed menus to either electronic tablets or a QR code that you scan with your phone to open a web site where you place your order. This essentially eliminates menu costs, except the goodwill cost inherent to raising prices.
There's probably an interesting paper to write about how this has affected pricing behavior, although in Japan in particular the effect of adoption of electronic menus is likely to be confounded by the fact that this happened just as Japan was experiencing significant inflation after 25 years of net zero inflation.
My reaction when I ran into this at https://www.eatzen.com/ was that hey, le service et compris; no reason to tip twice.
A 'culinary fee', they called it.
It’s incredible to me how the government can get away with issuing paper dollars in the trillions backed by nothing. Honest businesses that can’t print their own money raise prices by 3%, and people go ballistic.
Why don’t people have that reaction against the cause of inflation? It’s not greed, it’s government.
If the dollar were backed by gold, every day of your life, your hard-earned money, your US $10 would buy more. A gold-based currency is the only way to keep your government from robbing you.
Without inflation, the original gold value of $10 would be worth $3,879. When you add the value of industrialization, it has to be many times that. In silver, which generally traded 15 to 1, the math is more complicated.
We still had silver conversion and silver coins circulating up to the 60s. A cup of coffee was a dime.
Your government is robbing you blind, and you blame the pancake maker? Give me a break.
FYI lots of restaurants in NYC also imposed "covid recovery surcharges," but these came with the blessing of the state: https://www.nyc.gov/assets/dca/downloads/pdf/businesses/FAQs-COVID-19-Recovery-Charge-at-Restaurants.pdf
Fees in Chicago are common and there's lots of discussion about them:
https://chicago.eater.com/2023/8/9/23826538/chicago-reddit-restaurant-service-fee-spreadsheet-google-doc-minimum-wage-panedemic
The argument that random shortages were due to businesses being loathe to adjust prices and that inflation somehow solved these supply chain issues is nonsense. The truth is that as retailers quickly sold out of certain goods in waves of panic buying and massive shifts of demand among different types of consumer goods, they were unable to restock them at any price.
Free markets generally deal with risks of temporary disruptions of production by (1) mobilizing reserves of goods, (2) mobilizing redundant production capacity, and (3) hardening production capacity against disruption risks. The prospect of temporary increases in prices rewards speculators who make such investments in reserves, redundancy, and resistance, thus sustaining the flow of goods to those consumers willing to pay the higher prices in the face of random disruptive events.
What markets have a harder time dealing with are governments that consume savings and deter thrift to such an extent that such disruption-proofing investments become much scarcer, and with governments that issue unforseeable dicta that arbitrarily shut down large parts of the structure of production in spite of the desire of speculators to profit from higher prices.
America and most other Western nations have been deindustrializing via anti-thrift policies for half a century. The main symptoms have been a loss of productivity and stagnation of living standards of the productive classes (and actual population declines in Japan) coupled to a shift to "just in time" manufacturing that neglects the accumulation of inventories, minimizes spare production capacity, etc. This renders supply chains much more vulnerable to the risk of being broken completely when a disruptive event occurs. COVID of course also unleashed the madness of governments in using their administrative fiat to shut down anything deemed "non-essential" in the eyes of the bureaucrats, even if that had negative consequences in making goods available to the "essential" businesses that were still open too.
China is exceptional in having encouraged its people to save and to invest their savings productively over the past few decades, and it was Chinese businesses that rose to the occasion to vastly increase their exports of goods to America during the COVID lockdowns. They did so to such an extent that America's ports and railroads got hopelessly clogged, actually reducing their throughput and creating lengthy delays and more random disruptions in the restocking of certain goods. Chinese businesses were also victimized by arbitrary shutdowns by their own government. Even so, it was China and not the acceleration of the rate of price increases (which happened later, after the Russian aggression against Ukraine resumed), that eased the disruptions.
A second round of COVID lockdowns or a "climate emergency" (both of which our corporatist elites currently seem to be keen on threatening us with) could easily trigger another wave of random shortages; the fact that retailers have not been shy about raising prices lately won't alter the fundamental supply-side causes of these random disruptions. Our production capacity is just as fragile and our warehouses just as poorly stocked as they were three years ago, maybe even more so given the reductions of the supply of skilled labor in certain sectors. Maybe that is the reason why Western leaders have been nicer to China's government lately and eager to talk trade; they know that they'll need a surge of Chinese goods again when they inflict another COVID-like crisis on us.
I wonder if the restaurant would be better off putting little signs on the table to the effect of 'Due to continual inflation, please note that all checks will include a X% inflation surcharge. We do apologize." By the time people are sitting down there is probably a very low chance that will make them stand up and leave, but it gets it out there ahead of time.
Also, people saying to reduce the tip: do you think your server is getting any of that fee? Why are you punishing them because their employer is asking for more money?
If the fee is truly hidden (ie printed in small print somewhere it’s not intended to be seen) then the server is complicit, because they certainly know what is happening from previous customers and could’ve warned me. I would absolutely lower my tip if I was truly surprised by such a fee at the end of my meal, not with the intention of hurting the server, but because it would be my only recourse at that point and I wouldn’t feel sufficiently bad about harming the server due to the aforementioned reason. If the fee is clearly posted or the server warned me and I choose to eat there anyway that would be my choice and I wouldn’t lower the tip.
Well, consider: do you expect the server to talk to you about the tax on the bill? Presumably not because you always have to pay sales tax and everyone knows that. But what if the city has an additional sales tax that is less common? That has happened to me before; Herndon VA has an additional tax the surrounding area doesn't and I spent a fair bit of time trying to figure out if the restaurant couldn't do math or was scamming us (the tax wasn't clear on the bill), but I didn't blame the server, I called up the restaurant owner. It isn't generally the server's job to make sure I had been to a restaurant before, or specifically a restaurant in that town and so understand all the fee structure. It might be nice for her to ask if I was aware of the extra tax, but it would be sort of a strange conversation. Though honestly, if she said "Hey, just so you know, the local town here is going to steal an extra 1.5% of the tip from you in tax, the bastards" I probably would have tipped more out of appreciation, but I am probably an outlier :D
Restaurants should call them "Bidenomic Recovery Tax" or, maybe, "Virtue Signaling Tax." Or, "Altruist Tax."