Best of Blogs for Week of October 30th

Every Friday afternoon I share some of the more interesting or notable posts that I have seen in the personal finance blogs and other sources for the past week

Clark Howard's site has a Work from home guide

DoughRoller has a list of 10 Top Rated Online Colleges     And it isn't just scammy for-profit schools, but instead well regarded public schools mostly.

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Why Do Restaurant Tip Rates Inflate? Slower Increases in Food Prices & Minimum Wage

A while ago I asked Why Do We Tip So Much?   I'd been puzzled why we used to tip only 10-15% but now the norm is 20%.

Just now a thought occurred to me... maybe the reason the standard expected % rate for tips has gone up is that food costs didn't go up as fast as wages?   Its a possibility.   I mean if a burger cost $1 in 1980 and is now $2 then a 15% tip in 1980 would be 30¢ and 60¢ today.  Just about doubling.   But what if wages tripled in that period?    Tips wouldn't have kept pace with inflation so it would make more sense to have a higher % tip.

In 1984 the 15% tip was typical (noted previously).   Today we expect 20% tips.

What has the cost of restaurant food done in that same period?

For that lets look too data chart from the Fed. :
Consumer food prices (away fro home ) were up ~155% from 1980 to today.

Now compare that to income.  From the census 

In 1984 median income was $10,417 and by 2014 it went up to $28,757.

From the early 80's to today, restaurant food prices went up ~150% and wages went up ~180%.

In 1984 the minimum was $3.35 with a 50% tip credit.   So workers would have gotten $1.67 per hour in tips.  (minimum wage history)    Minimum wage for tipped employers (with the tip credit) has been stuck at $2.13 per hour since 1991 where it is today.

 Median hours worked for waiters and waitresses is around 35 hours a week.  

Nationally today waiters and waitresses average $10.40 an hour.   (BLS data)    With a $2.13 minimum they're getting $8.27 in tips on average.

From an old Occupational Outlook Handbook said that "In 1984, median annual earnings (excluding tips) of full-time waiters and waitresses were $9,400."

I'm finding it hard to believe that annual wages for waiters were that high excluding the tips.    I'm thinking that might be an error and that they probably mean to say including tips instead.

If I start with annual wage of $9,400 in 1984 and then work forwards then it goes as follows:

$9,400 in total wages in 1984 would have been a combination of minimum wage and tips.   Assuming a weekly work week of 35 hours that works out to $5.16 per hour.   Minimum wage in 1984 would be $1.67 so they would have made $3.49 per hour in tips.   Thats then $6351 in tips and $3039 in wages.   Assuming a 15% tip rate then the food served would have to be about $42,340 a year to get to that $6351 tip total.

$42,340 in food in 1984 would then grow to $107,967 per year in 2015.
For the $9,400 in 1984 to grow the same as wages in general that would have to hit $26,320 today.
Minimum wage on 35 hours a week would give just $3913  so they'd have to make $22,407 in tips.
$22,407 in tips a year on $107,967 of food equates to just about ... drum roll.... 20% tip rate today.

So theres my answer :

Due to slower increases in minimum wage pay for tipped employees and slower increases in food costs tips would have to go from 15% to 20% in the past 30 years in order for tipped workers to retain the same relative incomes.

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Best of Blogs for Week of October 23rd

Every Friday afternoon I share some of the more interesting or notable posts that I have seen in the personal finance blogs and other sources for the past week

Bloomberg had an article discussing You've Been Offered a Ton of Money. Should You Take It?

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How Wasteful Is It to Leave The Fridge Door Open

Whenever I see the refrigerator door left open for too long I can almost feel my blood pressure go up.    I react like someone has attached a vacuum hose to my wallet and is sucking $20 bills out of it.    I don't really know why I have such a automatic negative reaction to an open fridge door.   Maybe my parents drilled it into me as a child growing up or maybe I just have a instinctual dislike for what I consider wastefulness.   But turns out its really not all that bad.

I looked at several sources and it seems the consensus agreement is that  leaving the fridge door open a little while too long doesn't waste much energy to be concerned about.

A Reddit thread discussed the topic a while ago.   Someone there did the math to calculate the energy it requires to cool down the air that escapes when you open a fridge door for 20 seconds.  They concluded that it takes "0.0002 USD to heat all that air".    

The Portland General electric utility did a study on wasteful fridge use.  
"It turns that if you never opened the door, they would use about half the annual projected energy consumption listed on the familiar yellow EnergyGuide cards"
They measured how much energy is used by keeping a door open different amounts of time from 5 seconds up to 10 minutes.   Unfortunately (and very annoyingly) they didn't label the actual values so they've just got unlabeled bar graphics.    At least they confirmed that the longer the door is open the more it uses.    But I can't easily tell if its even directly proportional or not.   I zoomed into their graphic using paint and then added gridlines to count the unit height of the bars.   Seems the usage per time isn't proportional.  I figure it roughly :

seconds	energy
5	1
10	2
30	2.5
60	3.5
120	6.5
300	20
600	29

They also look at opening and closing the door two times versus leaving the door open for a longer period to see if its better or worse to open and close when you get an item and return it or just leave it open the whole time.

They concluded its better to open and close twice than to leave it open based on their measurements.   Suppose though that it depends on how long you take.   If it only took you 30 seconds total that would be less energy than if you opened and closed for two 10 second intervals based on their data from how much energy it takes to leave a door open a specific period.

Michaelbluejay.com says that :
"Home Energy magazine says door openings account for 7% of fridge energy use, assuming 42 door openings a day.  But the Institute of Food & Agricultural Sciences at the University of Florida (link no longer available) says poor open/close habits waste 50 to 120kWh a year, which would be 10-24% of a 500 kWh/yr. fridge.  They don't say whether this is too-frequent opening, or leaving open too long when opening, or both."

But that seems to contradict what Portland General said when they concluded that half of the energy use is when you never open the door.

So we've got anywhere from 7% to 50% of usage based on opening/closing the door.   That variation may be due to the changes in fridge design.   Maybe as they've gotten more and more efficient they require less energy to remain cold when the door is cold so now opening/closing the door uses up more of the consumption versus the past.  Just a theory.

A Phys.org article Energy mythbusting: The truth about those energy-saving tips cites research from a Michael Blasnik saying :

"the moment you open the door, the cooled air rushes out, and it's a fairly trivial loss, he said. Most of the refrigerator's coldness is held not by the air but by the contents, and those contents won't warm up significantly in the time it takes you to decide between the leftover pizza and last night's meatloaf.
Obviously, leaving the door open all the time would waste energy, because your refrigerator would never stop running, Blasnik said. But closing the refrigerator door quickly will save you a dollar's worth of power a year at most, his research shows."

If we assume that worst case 50% number then thats a few bucks  month.   A full size 24' cubic fridge uses about $90 a year.   Half that is $45 a year.   Thats 12¢ a day roughly.   People open and close their fridge probably a couple dozen times in a day and total usage there is probably more like 1/2¢ per door opening/closing.    If I assume that this is a normalish 10s period and then use the chart Portland General made then we could guess it wastes maybe another 1/2¢ to leave a fridge door open a full minute instead.

Ideally I'd really like to measure it myself by using a kill-a-watt meter to measure actual usage for leaving a door open varying times like Portland General did.   But I don't have the ability to do that easily.  I'm not going to mess with our fridge at home like that just out of curiosity.   Suppose it won't do any real harm but it just isn't convenient.  Maybe next time I have a rental vacant I can do some testing, but that would be an empty fridge and may not be valid comparison.

No matter how I cut it, best or worst case scenario we're talking in the order of anywhere from $1 to $20 a year in total cost from someone leaving fridge doors open for longer periods of time.   It could be as little as 0.02¢ to leave a fridge open 20 seconds to 1/2¢ to leave a fridge open for a full minute.

It of course adds up over time and its not good to leave a fridge open for long periods without reason.   But leaving a fridge open for a minute or so really only costs a fraction of a cent worst case.  Its nothing for me to get bent out of shape about.

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