Do you tip less in a tough economy?, from Queercents.com, which is apparently a queer personal finance site.
It seems that at some restaurants, the average tip has gone down from the old 15 to 20 percent neighborhood to more like 12 percent. The author of the post comments that this is a "3 to 7 percent" cut in pay.
First, 20-12 is 8, not 7.
Second, that's all wrong! Let's say that before the US economy went all funny, servers made $2.50 an hour in pay, and $7.50 in tips. ($2.50 is somewhere near the federal minimum wage for servers; $7.50 was chosen so that the figures would add up to $10.) Let's say that the $7.50 was back when tips were an average of 18%. If tips average 12% now, then only two-thirds as much tip income will come in -- so $5 an hour.
So our hypothetical server now averages $7.50 an hour instead of $10, a twenty-five percent cut. There's a big difference there. I would not be happy if my income were cut by "3 to 7 percent", but I wouldn't have to make huge changes in my lifestyle. But if my income were cut by 25 percent, there are quite a few things I'd have to cut back on. I suspect this is true for many people.
For my international readers who are not used to the silly system we have here in the US: restaurants typically pay their servers between $2 and $3 an hour, and the rest of their income comes in tips; this is as opposed to the more civilized system I understand you have in much of the rest of the world, in which tipping is reserved for extraordinary service and restaurant owners actually pay their staff a decent wage.
(Thanks to dan for pointing me to this.)