Amazon's Jeff Bezos Is Still The World's Best CEO By One Measure

Jeff Bezos had a bad week.

Calls to rein in the ambitious Amazon chief executive grew loud on Thursday after the e-commerce giant reported its biggest quarterly loss in 14 years, driven by the anemic sales of its Fire Phone, the company’s first smartphone. The losses were seen as proof of Bezos’ reckless obsession with prioritizing growth over profitability. The 50-year-old tech mogul was lambasted as a megalomaniacal “Grinch” who stole Christmas from a company so bad at making money that it’s “not a real business.”

Yet, according to the November issue of the Harvard Business Review, Bezos is the best-performing CEO in the world. Despite the latest bad news, the venerable magazine stands by that assessment.

“People have bet against him over the years, and historically they’ve been wrong,” Daniel McGinn, the senior editor who profiled Bezos, told The Huffington Post on Saturday. “He definitely has a set of shareholders who have faith in him because of his ability to deliver despite a lot of doubt over the last 20 years.”

The Harvard Business Review compiled its list of top CEOs by comparing shareholder returns for S&P Global 1200 companies from each executive’s first day in office until April 30 of this year. Bezos won by a wide margin. Even if Amazon’s stock price -- which plummeted nearly 9 percent to $287.06 on Friday -- fell to $250, he still would have beaten runner-up John Martin, the CEO of biotech giant Gilead Sciences.

“He had quite a bit of leeway,” McGinn said. “He had such a big lead over everyone else.”

Amazon's stock tumbled after a disappointing earnings report on Thursday.

Profitable quarters are rare for Amazon, but the company generates strong revenues. Bezos’ strategy, which both befuddles and inspires investors, is to reinvest money to continually grow Amazon. A small online bookseller thereby became a video streaming service, a cloud-computing behemoth, a grocer and, most recently, a smartphone maker.

But the Fire Phone, unveiled in June, has flopped. A study published in August by the ad network Chitika, which measured web traffic from Fire Phones, found a paltry number of the devices were in use. In a conference call with analysts on Thursday, Amazon’s chief financial officer, Thomas Szkutak, admitted that the dearth of people buying the phone had cost the company $170 million in losses “primarily related to the Fire Phone inventory evaluation and supply commitment costs.”

“It’s not unusual for them to lose more money,” McGinn said. “It is unusual for them to miss a growth target.”

That doesn’t seem to worry Bezos, however.

“Even though we have significant revenues, we invest in so many new initiatives that in some ways we’re still a startup,” he told McGinn sometime before last week’s earnings report. “Volatility is part of being a startup.”

Bezos may be alone in thinking of the company as a nascent venture. Since going public in 1997, Amazon has grown so large and powerful that some have called it a monopoly ripe for a regulatory crackdown.

Still, even as Amazon stock takes a hit, the company is a lucrative investment by the Harvard Business Review’s methodology.

“If you could go in a time machine and go back to 1997 and you had the chance to buy stock on that day, would you do it?” McGinn asked rhetorically. “In financial terms, you’d still be many thousand percentage points ahead today.”

Amazon did not return a call requesting comment.

Lululemon Partners With Dalai Lama, Enrages Critics

Lululemon can't even donate to charity without miring itself in controversy.

The yoga-wear retailer is getting slammed after announcing a partnership this week with the Dalai Lama Center for Peace and Education. Lululemon will contribute $750,000 to the Tibetan spiritual leader's nonprofit organization over the next three years to expand education initiatives and for "researching the connection between mind-body-heart," according to the company's press release.

Some critics say the alliance is hogwash. They don't think the Dalai Lama's name should be associated with a money-making enterprise and complain he's been "hijacked" and turned into a mere corporate marketing tool.

A mob flocked to Lululemon's official blog, lighting up the comments section with accusations of hypocrisy.

"As he believes that luxuries are not necessities, you believe in $100 yoga pants," one commenter pointed out.

"It is offensive that you have sunk so low as to use the Dalai Lama and his image as part of your branding," another wrote.

"I am put-off by Lululemon’s bizarre effort to hijack the Dalai Lama for brand-building and commercial gain," a third added.

A few who spoke out against the partnership claimed not to like the Dalai Lama, with one calling him "cruel" and another calling him "greedy."

Lululemon appears to disagree. "Both organizations share a common vision for developing the next generation of compassionate leaders in the world and are committed to engaging and empowering healthy communities," the company said in its press release.

Lululemon and the Dalai Lama Center did not respond to requests for additional comment.

Lululemon has a lot on its plate. Last spring, quality control issues sparked a recall of too-sheer yoga pants. Then, last fall, co-founder Chip Wilson irked many customers when he said Lululemon's pants "don't work" for some women's bodies. Earlier this month, Lululemon managed to offend the entire city of Buffalo, New York, by making fun of its NFL team.

One commenter summarized: "Dear Lulu, your product is still in question, don’t get me wrong. Great marketing, done! Now get back to improving your product and winning clients back."

Company Finds Out The Hard Way It's Illegal To Pay $1.21 An Hour In America

This takes egregiously low wages to a whole new level.

A Silicon Valley company that digitizes images said Thursday that an "administrative error" led to it paying eight workers flown in from Bangalore, India just $1.21 an hour to work 120-hour weeks installing computers in the company's headquarters.

Electronics For Imaging paid the workers $40,000 in back wages and overtime and a $3,500 fine after the U.S. Department of Labor investigated the payroll violation based on an anonymous tip, a department official told The Huffington Post.

"These folks were not only not getting time-and-a-half when working extremely long hours, they weren't making the basic minimum wage," Michael Eastwood, assistant district director for the Labor Department's San Francisco division said.

In a statement, the company said it didn't realize it was illegal to pay workers temporarily in the United States the same wages they earn in their home countries. The $1.21 was equivalent to what the employees made in Indian rupees.

“We unintentionally overlooked laws that require even foreign employees to be paid based on local U.S. standards,” the company said in a statement.

Eastwood said the company also failed to keep documentation of the hours worked by the Indian employees. Though the workers were only owed $20,000 in back pay and overtime, regulators doubled that amount to $40,000 in the settlement to compensate for damages.

The company blamed an “administrative error” and said it took steps to ensure it would not occur again.

David Lindsay, a spokesman for the company, told HuffPost the labor violation occurred last year, and that the back wages, overtime and fine had already been paid. Eastwood confirmed that all dues were paid in August.

Electronics For Imaging earned a total net income of $109.11 million last year, up from $83.27 million in 2012. The stock price has climbed steadily over the last five years:

Wage theft is nothing new in the Silicon Valley region. Last year, Bloom Energy Corporation was forced to pay out nearly $64,000 in back pay and damages to 14 workers from Mexico who were paid just $2.66 an hour.

"Unfortunately, we do see a high level of wage theft violations," Eastwood said. "But we want to send a clear message that the Department of Labor is here and we are vigorously enforcing the Fair Labor Standards Act."

This story has been updated with a quotes from the U.S. Department of Labor

Sears Reportedly Closing More Than 100 Stores, Laying Off 5,457 Workers

Sears Holdings Corp is shuttering more than 100 stores and laying off at least 5,457 employees, investor website Seeking Alpha reported on Thursday, indicating the struggling retailer may be stepping up store closures.

Sears said in August it had closed 96 stores in the six months since February and planned to close a total of 130 underperforming stores during the full fiscal year. It added at the time that it may shutter additional stores beyond the 130 target.

Sears spokesman Chris Brathwaite declined to comment on the number of planned closures, saying the company would provide an update when it reports quarterly earnings next month. Reducing operations to the best performing stores is key to Sears' revival strategy, he said.

"While this has resulted in store closures where appropriate - decisions that we do not take lightly - we continue to have a substantial nationwide footprint with a presence in many of the top malls in the country," Brathwaite said.

Sears shares rose 5.9 percent to $36.46 on Nasdaq at mid-afternoon.

Since August the company has moved to close at least 46 Kmart stores, 30 Sears department stores and 31 Sears Auto Centers, Seeking Alpha said, citing local media reports and liquidation notices. (http://bit.ly/1z0RVyd)

Sears is closing stores to cut costs as it shifts to an "asset-light" business model. The company lost nearly $1 billion during the first half of the fiscal year in a downturn that has worried some vendors and prompted a series of moves by the company to generate cash.

On Monday Sears said it would raise as much as $625 million through an unsecured loan and equity warrants, about half of which will be purchased by Chief Executive Eddie Lampert and his hedge fund. It was the company's third fundraising in a little over month.

It also said on Monday that it would lease seven stores to discount fashion chain Primark for an undisclosed amount, reflecting its effort to use generate rental income from better performing retailers.

Sears had 1,077 Kmart stores and 793 Sears stores in the United States as of Aug. 2. The company had 226,000 U.S. employees as of Feb. 1. (Reporting by Sruthi Ramakrishnan in Bangalore and Nathan Layne in Chicago; Editing by Kirti Pandey and Richard Chang)

One Way Chipotle Has Completely Revolutionized How We Eat

Judging by our eating habits, we've become a nation of adult babies eating pre-cut food out of bowls.

Instead of sitting in highchairs toying with our cooked beef and rice, we shovel our lunches into our mouths while typing at computers in open-plan offices or robotically scrolling through our News Feeds.

Always an option at home and some restaurants, the bowl meal truly launched a decade ago when Chipotle first introduced its burrito bowl, a diners’ choice of rice, beans, meat, salsa and other fixings mixed up in a bowl. Chipotle now sells more bowls than burritos, according to Chris Arnold, a spokesman for the chain. Though Chipotle doesn't break out revenue by menu item, its success overall has been meteoric -- with revenue rising about 11 percent from $2.73 billion in 2012 to $3.04 billion so far this year.

Sales of so-called Mexican bowls at fast-casual restaurants went up 14 percent over the past two years, according to data from Technomic, a food research firm. The number of chains offering "Asian bowls" with ingredients like noodles, chicken, rice and vegetables grew 8 percent over the same period, according to Technomic. Chipotle’s Asian-themed spinoff, ShopHouse, exclusively sells bowls comprised of a base of rice, noodles or salad mixed with a protein like grilled chicken satay, vegetables and a choice of curry and tamarind sauces.

A Chipotle burrito bowl.

Besides just tasting good, the bowls play into some recent dining trends: the rise of gluten-free eating and the popularity of protein over carbs as people turn away from bread-heavy sandwiches. We're also increasingly picky, and a setup with a base of grain or lettuce and a choice of toppings allows us to dictate our meals to our exact preferences.

Perhaps more importantly, bowls are also perfect for workers looking for meals they can eat easily at their desks.

“No one is sitting down and eating a meal you have to cut up into little pieces,” said Kira Fisher, who runs the blog Sad Desk Lunch, which succinctly sums up the bowl trend. “It takes a lot of space to eat like a proper person.”

Some industry observers dismiss the bowl meal as trend. But it hints at more troubling concerns, said Marlene Schwartz, the director at Yale’s Rudd Center for Food Policy and Obesity.

Part of the recommended treatment for obesity and eating disorders is to “sit at a table without the television on and actually eat your food with a knife and fork,” Schwartz said. “The fact that that’s part of the treatment means that we’ve really moved away from it” as a society, she added.

Forking a mixture of rice, vegetables and meat into your mouth while looking at email or making phone calls isn’t an ideal way to eat, according to Schwartz. “People do tend to eat more and not realize how much they’re eating” if they’re distracted by another task, she said.

It’s true that in some cultures, people regularly eat stews, noodles and sushi without a knife and fork, and those meals are often unrushed family or even community events. But the elimination of the knife and the move towards the bowl at fast food and fast-casual restaurants is largely a Western invention of convenience.

Traditional fast food restaurants are on trend, too. The number of fast food restaurants offering a "bowl meal" grew by 5.6 percent between 2010 and 2014, according to research from Dataessential, a Chicago-based firm that tracks food industry trends.

Taco Bell launched a Cantina Power Menu earlier this year, which includes a selection of steak, chicken and veggie bowls featuring lettuce, guacamole, pico de gallo, cheese, sour cream and rice. KFC has offered its “famous bowl” line -- a mix of mashed potatoes, bite-sized crispy chicken pieces, gravy and cheese -- since 2006.

Many of the submissions coming into Fisher’s blog celebrate the old-school bowl meal: leftovers of a meat and rice stew or lasagna that were better the night before. “There’s always been casseroles and one-dish meals,” said Mary Chapman, senior director of product innovation at Technomic. “How it’s positioned is new.”

A sampling of the classic one-dish bowl lunch:

Part of the appeal of the bowls offered in fast-casual and fast food restaurants is that they can stand in for many of the standard lunch items, Chapman said. They’re “a way to have a big giant sandwich without having to hold it in your hand” or “a healthful alternative without having to be a salad,” she said.

But the rise in restaurants offering a bunch of ingredients mixed up in a bowl is “pure trend” that’s liable to go out of fashion, said David Just, a behavioral economist at Cornell University who has studied why people eat what they do.

“It’s trying to play to a modern idea of what’s beautiful and attractive,” Just said, noting that bowls also allow restaurants to rein in portion sizes because it takes less food to make a bowl look full.

And customers seemed convinced. A group of 16-year-old boys having their first-ever off-campus lunch at a Manhattan Chipotle one recent afternoon bragged about their ability to game the system by ordering bowls. “They give you more if you get the bowl,” one said. “I got it literally every day this summer,” another noted. An 18-year-old NYU student having a quick lunch by himself cited similar reasons for choosing a bowl instead of a burrito. “It’s more calories, more bang for your buck,” he said.

(That may be more perception than reality. According to Chipotle’s calorie calculator, burrito bowls typically have about 300 fewer calories than burritos.)

Out of 13 people who went through the line in about a 15-minute period during the lunch rush at the restaurant, just four ordered burritos. The other nine opted for bowls.

Even Mitt Romney gets a burrito bowl at Chipotle.

Eating without a plate, knife and fork has become so ubiquitous, we may have actually reached peak bowl. While the number of bowls on the menus of fast food and fast-casual chains grew between 2010 and 2014, it declined in fine dining restaurants, according to research from Datassential, a Chicago-based firm that studies food industry trends.

Once a trend starts to fall off in more expensive eateries, that typically means it’s saturated the market as much as it’s going to, according to Christin Groh, a senior manager on the MenuTrends team at Datassential. “It may end up tapering off,” Groh said. “In recent years, penetration has really remained flat.”

Still that doesn’t mean bowls are disappearing from restaurants like Chipotle any time soon. As Cornell's Just said, diners "are looking for things that are easy to eat and go without much thought.”

Half of Holiday Shoppers Say They'll Avoid Stores That Got Hacked, Survey Finds

As another holiday shopping frenzy nears, a new survey suggests that many consumers plan to avoid the growing number of retailers that have been hacked.

Nearly half of people -- 45 percent -- say they would “definitely not" or "probably not” shop this holiday season at retailers like Target or Home Depot that acknowledged computer breaches exposed customer credit card data, according to a survey released Monday by CreditCards.com.

In addition, 48 percent said they are more likely to use cash more often this holiday season out of concern over the numerous cyberattacks against retailers, according to the survey of 865 credit and debit card holders.

“It’s a clear sign that people are at least somewhat concerned about shopping in a place that has had a data breach,” said Matt Schulz, a senior industry analyst at Creditcards.com.

The holiday season is typically the busiest time of the year for retailers, and this season comes amid heightened concern that they are unprepared to fight off hackers who have stolen credit card data from millions of their customers this year.

At the peak of last season -- from Nov. 27 to Dec. 15 -- hackers stole credit and debit card data belonging to 40 million Target shoppers. The fallout from the data breach led to a 5.5 percent decline in transactions, the largest quarterly drop for Target in six years, the retailer reported in February.

Since then, numerous other retailers have been attacked, including Neiman Marcus and Home Depot, which revealed last month that hackers had stolen data on 56 million customer debit and credit cards in the largest retail breach on record.

A Target spokeswoman said customers view last year’s credit card breach “as old news” and “they have moved on."

“As we enter the busy holiday retail season, we are focused on turning the page and delivering an outstanding holiday shopping experience to all Target guests,” Target spokeswoman Molly Snyder told HuffPost.

The retailer has taken measures to improve security, including hiring new executives to oversee its technology team and introducing machines that read a new type of credit card that uses an embedded microchip and a PIN code to authorize transactions. Such technology is supposed to be more secure by making it difficult for thieves to produce counterfeit credit cards. The more secure credit cards are expected to be issued to most Americans by October 2015.

Home Depot spokesman Stephen Holmes said the retailer recently introduced new technology that protects payment information through encryption to make credit card numbers unreadable to hackers. The home-improvement store plans to introduce machines that read more secure credit cards in all of its stores by the end of the year.

Though the number of credit and debit cards stolen from Target and Home Depot equals about one-third of the U.S. population, the repercussions for shoppers have been minimal. For the most part, banks have issued new debit and credit cards to affected customers and reimbursed them for fraudulent charges.

Some industry experts said Target may see a decline in shoppers this holiday season because of the massive credit card breach, but expressed skepticism with the survey’s findings that 45 percent plan to avoid the retailer.

“We know that Target’s business was negatively impacted by the breach that occurred there, but nowhere near the level that would be suggested by 'almost half,’” said David Robertson, publisher of The Nilson Report, a credit card industry trade publication.

Target also has an easy way to make wary customers forget about last year's cyber attack, said Schulz, the Creditcards.com analyst.

“A really good sale can sometimes trump people’s security concerns,” he said.

9 Reasons We Should Abolish Tipping, Once And For All

Tipping is a strange, self-defeating phenomenon. The practice as we know it today has come to negate the very reason it exists: What started out as a reward for exceptional service has now become compulsory. "Tipping starts with people wanting to be generous, or to show off, but then it becomes something where people just do it because it's expected of them," says Michael Lynn, a professor of consumer behavior and marketing at Cornell University who has written more than 50 research papers on tipping. When we tip, we are essentially buying the right to avoid disapproval and guilt -- a uniquely first-world problem.

Still, tipping is a huge thing, accounting for around $44 billion in the U.S. food industry alone, according to the economist Ofer Azar. Polls show that Americans love to tip. "People like the power," says Sage Bierster, a waiter friend of mine who's been in the business for more than six years. But tipping brings with it a welter of problems: It's costly for taxpayers, it's often arbitrary (and even discriminatory) and it contributes to poverty among the waiters and waitresses who must grovel for our change to earn their living.

That's why I'm proposing that we abolish tipping. Just get rid of it entirely. Here are nine reasons to ban the begging bowls once and for all:

1. It Pushes Waiters Into Poverty (And Helps Keep Them There)

In most states, restaurants are allowed to pay waiters far less than the minimum wage. The federal rate for servers in the U.S. is just $2.13 an hour, and in 19 states, that's what servers make. Each state, though, has leeway to set a higher wage for servers. Twenty-four states have voluntarily raised servers' minimum wage above $2.13 an hour, and seven states have gone as far as requiring servers to be paid the same minimum wage as everyone else.

This is a great system for the restaurant industry, because it lets businesses pay less than the minimum wage in almost every state. But it contributes to poverty among the waiters and waitresses who toil in diners and other inexpensive restaurants across the country. (Servers in higher-end places tend to earn a livable wage.) In fact, servers are nearly three times as likely as other workers to experience poverty, according to a March 2014 report from the National Economic Council, the U.S. Department of Labor and others.

Tipped workers and their families often depend on welfare programs to survive -- and they do so at significantly higher rates than non-tipped workers, according to a 2014 report from the Economic Policy Institute, a think tank focused on labor issues. "Tipped workers are heavily reliant on public subsidies to help make ends meet," said Sylvia Allegretto, a research economist at the University of California, Berkeley and a former waitress, who co-authored the report. "Who helps them bridge the gap? Taxpayers."

2. Servers Make Less Per Hour Than They Used To...

The "tipped minimum wage," which is the amount servers make per hour (not counting their tips), was established in 1966 by the federal Fair Labor Standards Act (FLSA). Prior to 1966, there was no standard rate for servers and other workers who earned tips, like hotel workers. The FLSA established that the tipped minimum wage had to be no less than 50 percent of the regular minimum wage. That way, when the regular minimum wage increased, the tipped minimum wage would automatically increase along with it.

But in 1996, that changed. Under pressure from the restaurant lobby (led at the time by fast-food mogul Herman Cain), the Clinton administration decoupled the tipped minimum wage from the regular minimum wage. As a result, because of inflation, the value of the tipped minimum wage has steadily fallen over the years, as this chart from the Department of Labor report shows:

The current federal tipped minimum wage for servers, $2.13 an hour, is exactly the same as it was in 1991, when the regular minimum wage was $4.25.

"What a boon to the restaurant lobby, that for 23 years in a row they've been able to pay the same low wages [to servers]," said Allegretto.

3. ...And People Tip Less Now Than They Used To, Too

It's generally accepted that when you go out to eat, you're supposed to leave a 20 percent tip for good service. But most people don't tip that much, according to a survey conducted earlier this year by the coupon site Vouchercloud. The company polled more than 2,600 adults from all over the country, asking them what percentage of the bill they usually leave as a tip when they dine out. Just 23 percent said they leave a 20 percent tip, and about half the survey's respondents said they tip less now than they did five years ago, with the majority saying it was because their "financial situation had changed."

4. Abolish Tipping, And Customers Will Still Spend The Same Amount

Here's one argument you often hear in favor of keeping the tipped minimum wage so low: If restaurants have to pay servers a higher hourly wage, they'll be forced to increase menu prices and that will drive business away by giving people "sticker shock." But in all likelihood, the price hike of your meal, or the mandatory service charge tacked on in lieu of a tip, would be roughly equal to what you would have paid in tips anyway. In reality, customers already pay 100 percent of servers' wages, said Azar, who has done extensive research on the subject.

"Restaurant owners don't bring money from their own personal pocket to pay servers," said Azar. "Whatever they pay waiters is from the restaurant revenues, and [those revenues] come from customers paying. It makes no difference if these payments are called tips, prices, or service charges."

So if you're bothered by restaurants that add a mandatory service charge to the bill, don't worry: You're paying the same amount, albeit in a different form, that you normally would.

Restaurants like Sushi Yasuda in New York have already gotten rid of tipping. (Photo Yelp/Germain W.)

5. Paying Waiters A Low Hourly Wage Can Be Bad For Restaurants' Profits

According to a 2014 report by the union-backed Restaurant Opportunities Center (ROC), those states that legally require restaurant owners to pay servers higher hourly wages also have higher per capita restaurant sales. Why? Because, the report says, when workers make more, they stay at their jobs longer, increase their productivity and spend more of their own money at restaurants.

Packhouse Meats, an independent eatery in Newport, Kentucky, is one establishment that's already experienced the benefits of paying waiters a guaranteed wage. Servers at Packhouse Meats make $10 an hour or 20 percent of their sales -- whichever amount is greater.

The online menu for Packhouse Meats alerts customers to its no-tipping policy.

"We have very low turnover here, because our waiters don't want to leave," said Packhouse manager Kurt Stephens. Low turnover means the restaurant spends less time and money training new servers, and so it can provide a better experience for customers, according to Stephens.

"We end up saving a hefty sum," he said, "and the feedback I get from customers is, they love it, because the price on the menu is exactly what they end up paying."

6. When People Tip, They Discriminate

Every waiter knows that tips are unpredictable -- sometimes you'll earn 10 or 15 percent just because your customers don't like you. Worse, sometimes they don't like you because of the way you look. Studies by Michael Lynn, the Cornell professor and tipping expert, have shown that waitresses with larger breasts, smaller body sizes and blond hair tend to earn more tips than waitresses without such attributes. A separate study by Lynn found that white servers are tipped more than black servers for the same quality service and regardless of the race of the customer.

7. Tipping Culture Is An Incubator For Widespread Sexual Harassment

The tipping economy is particularly unfriendly to women. According to an October 2014 report from ROC, 80 percent of female servers say they've been sexually harassed at some point in their careers, and sexual harassment is more prevalent in states that only pay servers the federal sub-minimum wage of $2.13 an hour, as opposed to states that mandate a higher minimum wage.

"Since women restaurant workers living off tips are forced to rely on customers for their income rather than their employer, these workers must often tolerate inappropriate behavior from customers, co-workers, and management," the report says. "This dynamic contributes to the restaurant industry's status as the single largest source of sexual harassment claims in the U.S."

8. It's Arbitrary

We like to think of our tips as a reflection of how well a server did his or her job. But in reality, the reasons we tip are often irrational. Research has found that we tend to tip waiters more if they touch us on the arm or draw a sun or a smiley face on our check. We also tip servers who wear red or squat next to the table more than we do servers who wear other colors or remain vertical while working.

What's more, lots of people like tipping because they believe it gives them power -- they think that leaving a small tip, or no tip at all, sends a message to a server that he or she needs to do a better job next time. (See Steve Buscemi's "Reservoir Dogs" rant, above.) In reality, multiple waiters I spoke to for this story said that getting a substandard tip tells them very little.

"If you had a bad experience, say something to your waiter, say it to a manager, but don't say it with your money," said my friend Sage, who has spent years waiting tables and managing various New York restaurants. "There could be a million reasons your experience wasn't good. But you leaving a 10 or 15 percent tip with no explanation, it tells me nothing."

9. At High-End Restaurants, Tipping Creates Income Inequality Between Waiters And Kitchen Staff

As already mentioned, for many servers in cheaper restaurants, the tipped minimum wage contributes to poverty. But in high-end restaurants, tipping leads to a different form of income inequality. When menu prices are higher, servers often end up making a lot more in tips than kitchen staff, who have equally valuable skills but are often paid modest wages.

Because the Fair Labor Standards Act restricts servers from sharing their tips with workers who aren't directly engaged in customer service, some upscale restaurants have banned tipping altogether in favor of a service charge, which those restaurants can use to pay their employees more equitably.

The restaurants Next and Alinea are sister establishments in Chicago. Neither is cheap. (With wine pairings, the bill at either restaurant can easily exceed $300 for one person.) Customers at Next and Alinea pay a mandatory 20 percent service charge, a system that co-owner Nick Kokonas says allows him to pay all his employees a fair, performance-based wage, whether they're waiters or sous-chefs.

"Before, we could only share gratuities, which were a large portion of our revenue, with a small amount of the staff" -- namely, the servers, Kokonas said. Having a service charge "allows us to run a much more balanced and efficient operation."

Getting Rid Of Tipping Will Take Time

A bill introduced last year, the Fair Minimum Wage Act, would re-couple the hourly wage for tipped workers to the minimum wage. If it passes, every restaurant in the country would have to pay servers a rate equal to 70 percent of the national minimum wage. But the bill is opposed by the restaurant lobby and a number of Republican lawmakers, and it has only a minute chance of passing this year.

Still, despite political opposition, there's public support for both a higher national minimum wage and a higher wage for tipped workers. A 2004 poll cited by Lynn in his research paper "Tipping and Its Alternatives" found that only 22 percent of respondents said they would prefer waiters to be paid in tips instead of regular wages. Thirty-four percent said they had no opinion, while 44 percent said they would prefer waiters to be paid a guaranteed wage. Still, people love to tip. A survey conducted by Azar in 2010 found that 60 percent of Americans prefer tipping to a service charge.

Why are we so enamored of this strange, antiquated custom?

Michael McGuan, a former manager at the Linkery, a now-closed San Diego restaurant that was one of the first to outlaw tipping, offered some insight into why we're so gratuity-obsessed. Speaking to The New York Times Magazine in 2008, McGuan said that Linkery customers would sometimes get offended when told they weren't allowed to tip.

"I'll go over to the table and ask if there is a problem with the service. If there is, then I offer to remove the service charge," McGuan said. "Almost always, the customers' issue isn't about the service but about not being able to handle their loss of control."