Friday, January 29, 2010

I Learned An Important Lesson About Government By Waiting Tables

There is a story about a college professor who challenged his students to put their faith in Socialism to the test by agreeing that everyone in the class would receive the same grade, to be determined by averaging the individual grades earned in the class. You can read the whole story here. Of course, this story is apocryphal. I doubt any school would allow a professor to make such an arrangement with his students.

I have however seen this dynamic play out in the workplace before. While in college I worked in several restaurants and bars as a waiter and sometimes-bartender. Places like these handle the tips their employees make differently. Most place I worked allowed you to keep the tips you earned. Naturally, you had to claim tips as income at tax time. One place though, used what is called “tip pooling”. Tips went into a pool each day and were doled out to each server who worked during that day as a percentage based on the number of hours worked. I say that only one place I worked did this, and I say this because once was enough.

The goal of tip pooling is to encourage everyone to work hard and make the pool as large as possible. Paying out from the pool based on the hours worked is supposed to be “fair”. In reality, tip pooling is quite the opposite. Rather than encouraging workers to build the pool up, it encourages laziness. Like in the story of the “socialist college class” above, there were always people that did the bare minimum they could get away with, knowing there were people on the floor working hard and building up the tip pool. At the end of the day there was always grumbling when the tips got divided up.

Over time, there was a marked decrease in the service as the harder workers realized they were working not only for themselves, but also for their lazier peers. Some left for other jobs. Some stayed behind and grumbled. I wised up and joined the first group.

The lesson is one I’ve kept with me to this day. If you put people in a situation where they are forced to support others with their labor, their effort will slacken in more or less direct proportion to how much they perceive they are being exploited. Let them keep what they earn, or most of it at least, and most people will work hard to build a bigger pool.

(Crossposted from Say Anything)

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