When people don’t carry cash, tipped workers suffer

Rob Wile
Miami Herald

MIAMI – Julio Valdez, a valet at a major hotel chain on South Beach, has parked cars for more than a decade. But in recent years, a crucial part of his income has changed: fewer drivers are tipping him.

“Before, if you worked valet, you earned good tips. It didn’t really matter that companies paid little,” he said.

The culprit: Cash – and lack of it. It seems fewer and fewer customers are carrying bills in their wallets, he said.

As a tourist and hospitality destination, South Florida is home to an army of doormen, waiters, valets, hotel housekeepers, tour guides and drivers. Like Valdez, they rely on cash tips to help make ends meet.

But for these workers, getting by is getting harder as more people ditch cash for cards and apps.

Dwindling tips: Valdez said his current employer has not upped his pay, despite the fact that he and his co-workers can no longer count on tips to boost their hourly wage of around $9. (The employer declined to comment.)

Like many valets, he said, he now must work two jobs to make ends meet. His second valet job is in Fort Lauderdale.

“Sometimes I get out of here at 3 p.m. and I have to be in Fort Lauderdale by 4 so I can work until 11 at night,” he said.

Fontainebleau hotel housekeeper Gerdine Verssagne says she once got a few hundred dollars a year in tips – a significant amount for someone earning around $14 an hour. Now, the hotel management no longer puts tip envelopes in guest rooms, so she has to hope guests are conscientious enough to leave a tip on their checkout receipt.

It’s a roll of the dice. Often, she says, “they don’t give you anything,” she said.

Printing fewer bills: Evidence of cash’s disappearance goes beyond anecdotes. According to the Federal Reserve, only about 7 billion cash notes were printed in the U.S. in 2017. That was the lowest volume in four years and well below the 20-year high of 11 billion reached in 1999.

Last year, publicly traded U.S. Bank found that 50 percent of respondents to a survey said they now carry cash “less than half of the time.” When they do carry cash, nearly half of respondents said they keep less than $20 on hand. And 46 percent said they use cash fewer than eight days each month.

Publicly traded Total System Services, a payments processor, also found cash now ranks a distant third behind credit cards and debit cards as users’ preferred forms of payment. Those findings came from a 2016 survey.

In South Florida, table-service restaurants have long faced issues with tipping. Because many tourists come from countries where tipping is not customary, some restaurants now include automatic service fees on the bill. Many establishments make a point of letting customers know when tips are not included, and nearly all sit-down restaurants include a “tip line” on credit-card receipts – though it doesn’t always help.

Making up the difference: But the cashless quandary is new for the more than 200,000 leisure and hospitality workers in Miami-Dade and Broward accustomed to quick cash that plugs financial holes and – let’s be honest – isn’t always traceable by tax authorities. Most are paid by employers on the assumption that tips will subsidize their wages. In Florida, the minimum wage for tipped workers is only $5.23 per hour rather than the regular minimum of $8.25. By law, it’s up to employers to make up the difference if the $8.25 threshold is not being met through tips.

That doesn’t always happen.

“An employee needs to know enough, if they’re not represented by a union, to go the Department of Labor, file a charge, and then the Department, through the Fair Labor Standards Act, would investigate and prosecute to get the back wages for that employee,” said Wendi Walsh, Secretary-Treasurer of UNITE HERE Local 355, which represents 7,000 workers in South Florida, about a quarter of whom receive tips.

“You can imagine how rare that is,” she said.

Employers have no obligation to make up for tips that once may have far exceeded the minimum with higher wages.

Valdez, the valet, says his predicament has been further compounded by Uber and Lyft, which means fewer guests are renting their own cars.

Cashless economy: And those very app-based services are accelerating the transition to a cashless economy.

“Uber has … ingrained a culture of no tipping,” Harry Campbell, an Uber driver and author who blogs about rideshare services on The Rideshare Guy blog, said in an email. “So even though they now have the in-app tip option for passengers, it’s rare that I’ll get a tip on Uber, whereas taxi drivers are still tipped on most of their rides.”

When it comes to tipping in 2018, platforms matter. Drivers have told Campbell they are more likely to receive tips on Lyft than on Uber. And the Curb app, which lets riders call traditional taxis, includes the option for passengers to set a default tip amount for all their rides.

Another advantage enjoyed by some taxi drivers, as well as workers such as baristas at independent coffee shops, has been the arrival of tablets that let customers choose how much tip to leave. Walsh, the union rep, said this technology, which lets customers choose from pre-selected tipping amounts, has increased the likelihood of leaving a tip – and a good one at that.

“They help tremendously,” she said. “Anywhere where you have that option where a person can give a tip simply by clicking a button, it tremendously increases the likelihood for giving a tip.”

She estimated that 80 percent of customers leave 20 percent – even if they’re choosing between 15, 18, and 20 percent.

“You might think people would choose middle option, (but) most people give 20 percent gratuity when it’s easy to do so.”

But she said many Miami workers, like those who work at Starbucks, still don’t have access to this kind of technology.

“In South Florida, it’s still the overwhelming majority that are still under the old system, where you either give a tip or you don’t – there’s no tablet to encourage it.”

Adapting: Some Miami workplaces are adapting. When Genevie Jacomino opened the Art & Chemistry salon near Westchester in 2014, she had been in the haircare business long enough to know that cash tips were becoming a thing of the past.

“(Clients) would sometimes go, ‘Oh, I’ll get you next time. But they never really came through,” she said.

Like many other small businesses, she doesn’t allow tipping on a credit card because of the time required to separate out tips and declare them on tax forms, she said.

Now, she asks that clients download the Cash App to tip, even if they use a credit card to pay for their salon service. Each stylist has his or her own Cash App handle. If a customer is uncomfortable paying through an app, they can go to a nearby ATM machine to withdraw cash for tips, Jacomino said.

“Most (stylists) live paycheck to paycheck,” she said. “It’s super important to have take-home pay for daily expenses like gas or food. A lot of times people use their paycheck for constants, like their bills. Without tip money they don’t have much flexibility for other spending.”

Living wage: Some local unions have been proactive in addressing the tipping shortfall. Last month, Miami-Dade approved applying a living wage to all concession workers at MIA Airport, including tipped workers. Thanks to bargaining, that group will now earn $16.15 minus the state tip credit of $3.02, meaning a tipped worker will make $13.13 per hour (or $9.97 if they have qualifying health insurance).

The union also successfully lobbied some employers to move tip jars from the pickup counter to the cash register – a small change that Walsh said can make a huge difference.

Still, tips continue to dwindle, even at restaurants with table service. During recent negotiations at Miami International airport, the union produced dozens of restaurant receipts with the tip line left blank.

Carlos Caballero, a server at Miami airport’s Jose Cuervo tequilera, said the drop-off he’s seen in cash tips has been “incredible” since he started working there four years ago. He’ll see some relief when the new airport wage minimums go into effect. But that won’t happen until his employer’s lease is renewed. There is no current timetable for when that will happen.

In the meantime, he tries to take on extra hours. “Just having 18 percent makes an incredible difference in our lives,” he said.