ABSTRACT
Low wages in addition to other factors such as bad working environment and poor management could be the highest causes of labor turnover in hospitality organizations. Tipping in the increasingly service-oriented American culture has become almost omnipresent in the restaurant industry. Many hospitality employees rely on tips rather than on their wages to earn a decent income. From an economic perspective, the tipper and tippee interact in a market for tips. A challenging issue that may arise is the discrimination during service transactions that tends to rely on “cues and categorizations” in which stereotypes are often used to profile undesirable individuals. Employers as different as restaurants have been shown to hire workforces that approximate that of their customers. In fact, servers are nearly three times as likely as other workers to experience poverty. The increased wage will not only affect employees and the organizations in the hospitality industry but also consumers.
