This data tells more of a story than I expected. Firstly, New Zealand has not been catching up with the USA. Japan stopped catching up with the USA in 1990. Canada has been drifting away from the USA for a good 30 years now in labour productivity.
Australia has not been catching up with the USA much at all since 1970. It has maintained a pretty consistent gap with New Zealand despite all the talk of a resource boom in the Australia; you cannot spot it in this date are here.
Germany and France caught up pretty much with the USA by 1990. Oddly, Eurosclerosis applied from then on terms of growth in income per capita.
European labour productivity data is hard to assess because their high taxes lead to a smaller services sector where the services can be do-it-yourself. This pumps up European labour productivity because of smaller sectors with low productivity growth.
This is a rather frank admission of what drives gender bias in Hollywood casting decisions. Its customer preferences – customer discrimination. It was not nasty producers and directors choosing not to hire women.
It was producers and directors casting a movie that might sell at the box office given what the box office wants. The great majority of box office sales is outside of the USA and US cultural values, interests and concepts of humour.
Hollywood is a cutthroat market where producers and directors do do whatever it takes to make their movie sell at the box office. But would not last very long if they indulge their personal preferences at the expense of the box office.
Not every movie has the merchandising potential of action films but they still have to pay careful attention to what audiences want to avoid having produced a run of flops and never get financing again.
That is not made any easier by the first law of Hollywood economics, which is nobody knows nothing. Audiences have a constant demand for novelty but they do not know what they want delay see it.
Joe’s Crab Shack tested a no-tip model in 18 of its 130 restaurants. A 12-15% service charge replaced tips. Joe’s Crab capture is the first major restaurant chain to experiment with a tipping policy to experiment with abolishing it. The tipping minimum wage is far less than the federal, state and local minimum wages.
Joe’s Crab Shack had high hopes. The aims were customers would pay less, get a greater value experience, reduce labour costs and increase profits. The reactionary left represented by Salon and Huffington Post have quite strong views on tipping. Salon says
Tipping is a repugnant custom. It’s bad for consumers and terrible for workers. It perpetuates racism. Tipping isn’t even good for restaurants, because the legal morass surrounding gratuities results in scores of expensive lawsuits.
Tipping does not incentivize hard work. The factors that correlate most strongly to tip size have virtually nothing to do with the quality of service. Credit card tips are larger than cash tips. Large parties with sizable bills leave disproportionately small tips.
According to a 2000 study, a customer’s assessment of the server’s work only accounts for between 1 and 5 percent of the variation in tips at a restaurant.
Salon adds that federal and state law requires restaurants to ensure that tips bring employees up to minimum wage, but few diners know that.
Huffington Post managed to marshal 9 reasons why tipping should be abolished arguing that it was in no one’s interests either employers, employees or customers. The old efficiency at wage argument was rolled out arguing that employers gain in terms of diligent motivate employees by paying a straight wage rather than leaving it up to customer judgements of the services tended.
Not surprisingly this sounded like a business opportunity to Joe’s Crab Shack. Better customer service, better motivated employees and lower labour costs were promised by abolishing tips. You wonder why tipping survived in competition against alternative forms of restaurant service formats for all these decades?
Well, Joe’s Crab Shack got more than it bargained for when it abolished tipping. The pilot restaurants lost an average of 8-10% of customers during the test run.
The restaurant’s research showed that around 60% of customers disliked the policy because it took away an incentive for good service and that they don’t necessarily trust that management is passing along the money to workers.
The no tipping structure worked at four restaurants and will continue to work out why it succeeded there but failed at 14 other places.
What is even more interesting that the abolition of tipping lead to some workers quitting. This outcome at Joe’s Crab Shack is inconsistent with the notion that tipping is a by-product of the inequality of bargaining power between workers and employees. Turnover is supposed to reduce when tipping is abolished rather than increase with the employer losing their best workers.
Lazear found in data for Safelite Glass that average productivity will rise and the firm will attract a more able workforce will rise when it shifts to piece rates. The 44% increase in output per worker suggested the firm previously had a suboptimal compensation system. Half of the increase in labour productivity came from workers quitting when piece rates are introduced and being replaced by workers motivated to apply by the lure of piece rates. The average worker received a 10% increase in pay as a result of the switch to piece rates.
The only economic analysis of any value on tipping was written in 1985 by David Sisk at the Federal Trade Commission. He wrote a paper about both tipping and commissions. Sisk approached tipping not as a motivational device but a form of contracting.
Sisk points out that tipping takes the place of reputation as a way of guaranteeing good services are at a restaurant. Many do not plan to return to a restaurant so an alternative form of contracting emerges to ensure good service because the threat of taking future custom elsewhere does not work.
In the case of a tip, the buyer (or customer) is provided with a final means of automatic redress which serves to prevent unsatisfactory performance on the part of the seller.
The possibility of unsatisfactory performance arises when the brand-name, repeat purchase mechanism is not effective or because employees of the seller are too costly to monitor.
An example is tourists. They are protected from inferior service relative to the locals because they pay tips too and are well able to judge good and bad service.
Sisk argues that once a customer sits down at a restaurant, the customer commits ever increasing amounts of time and the restaurant commits ever increasing amounts of physical resources. As one commits more irrevocable resources, the greater is the incentive of the other to renege on the contract.
A tip allows the customer to withhold a portion of the price without further negotiation. The tip serves to protect the customer from bad service and to protect the restaurant from bad service by an errant employee
The system of tipping provides the motivation for the waiter to properly identify and accommodate the individual desires of customers subject to the profit maximizing constraint of the restaurant owner…
The tip protects the buyer from exploitation by a seller (when the brand-name mechanism is insufficient) or from exploitation by the shirking employees of the seller
The worst tippers are single males; the best are couples and groups. The biggest tippers are single males on a date.
Medical progress contributed more than people realise to women’s liberation. The key area of progress was far fewer deaths in childbirth as the chart below for Australia shows. Deaths from childbirth disappeared from mortality statistics in the 1940s and 1950s.
The next key area of medical progress was fewer disabling injuries subsequent because of childbirth that kept women out of the workforce for several years if not permanently. In Gender Roles and Medical Progress, Stefania Albanesi and Claudia Olivetti say
Consider a typical woman born around 1900. She married at 21 and gave birth to more than three live children between age 23 and 33. The high fetal mortality rate implied an even greater number of pregnancies, so that she would be pregnant for 36% of this time.
Health risks in connection to pregnancy and childbirth were severe. Septicemia, toxaemia, hemorrhages and obstructed labour could lead to prolonged physical disability and, in the extreme, death. In 1920 one mother died for each 125 living births. At a rate of 3.6 pregnancies per woman, the compounded risk of death from maternal causes was 2.9%.
For every death, twenty times as many mothers were estimated to suffer different degrees of disablement annually. Many maternal conditions had very long lasting or chronic effects on health, hindering women’s ability to work beyond their childbearing years.
Death in childbirth and serious complications from childbirth been forgotten in modern memory. So much so that there can be an entire year in New Zealand when no child nor mother dies in childbirth. When that does happen, there is a coroner’s enquiry.
The implications of medical progress around childbirth for female life expectancy has been equally forgotten as Albanesi and Olivetti explain
The development of bacteriology, the introduction of sulfominydes and antibiotics, and the diffusion of blood banks dramatically decreased the death rate from sepsis and hemorrhage. More specific interventions, such as the standardization of obstetric practices and the increased availability of pre-natal care, reduced the incidence of hypertensive disorders of pregnancy and obstructed labour, a causal factor for many forms of post-partum disability.
These developments lead to a stark decline in maternal mortality and a rise in the female-male differential in life expectancy at age 20 from 1.5 years in 1920 to 6 years in 1960.
At the beginning of the last century, the burden of childbirth and breastfeeding simply made it impossible for married women to work in any significant number as Albanesi and Olivetti explain
In addition, due to the lack of reliable alternatives, most infants were exclusively breast fed. Women would then be nursing for approximately a third of the time between age 23 and 33.
Since the average time required to feed one child ranges between 14 and 17 hours per week, with a 40 hour workweek, mothers would be nursing for 35%-43% of their potential working time in childbearing years.
Not surprisingly given this burden, few married women worked. Only 5.4% of married women aged 25 to 34 were in the labour force in 1900.
There was an extraordinary reduction in the number of years lost in disablement after childbirth in the early and mid-20th century as Albanese in Olivetti’s explain
…the years lost to disabilities associated with maternal conditions declined from 2.31 per pregnancy in 1920 to just 0.17 in 1960.
Medical progress around childbirth is the most important force driving the rise in the participation of married women during childbearing years and post-childbearing between 1935 and 1965. The health burden of giving birth is now measured in weeks rather than years.
Why Evolution is True is a blog written by Jerry Coyne, centered on evolution and biology but also dealing with diverse topics like politics, culture, and cats.
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