According a recent article in the Chicago Tribune, (click here to read the article) tipped workers across all walks of life are beginning to feel the impact of what is more and more being called a “recession.”  With tips accounting for as much as 25% of many salon professionals take home earnings, this news could translate into a big hit to your pocketbook - even if bookings remain even with last year.

To give a sense of just how a shift can impact you, consider the following example:

Assumptions: 

1. Mary averages $30,000 before taxes and not including tips.  This translates into an average of $600 per week (assuming ten days during the year of unpaid time off). 
2. Her service bookings averaged $1,000 per week - or a total of $50,000 for the year.
3. Mary average $180 per week in tips - or 18% of service dollars. This adds up to 
   $9000 in tips for the year bringing her total pay to $39,000 (before taxes).  In this example, tips represent 23% of Mary’s total pay before taxes.

Now let’s change just one assumption - and bring overall tips down to 12% - or a reduction of $60 per week - or $3000 for the year.  This is a change in total compensation from $39,000 to $36,000. 

Translation - overall take home pay went down by 8% - at a time when the price of milk has gone up 12% since Christmas and gas prices are topping $4 a gallon in many markets.

We’d like to hear from you.  Are you noticing a shift in tips?  What’s your take on the overall economy and its impact on business?  Do you find yourself reducing tips to other service workers in recent months?  And most importantly, how are you working to offset any declines in your revenue?

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