Have you noticed how many financial choices are calibrated, not in dollars and cents, but in percentages?  Raises. Cost of living adjustments. Tips for servers. Taxes. One of the insidious effects of such percentage adjustments is to widen the gap between the haves and the have-nots, hie rich and the poor.

A few examples.  You and a friend go out to lunch, paying separately. You are hungry, she is not. The effort by the server is not proportional to the dollar value of your order.  Your bill for food including tax is $45, hers is $20. You both give a 20% tip. You add $9, she adds $4. Does that make any sense? If you are paying the waiter for his service, shouldn’t the tip each of you pay represent the quality of service and not the price of the meal? I’m not trying to stiff servers here, just being a little more egalitarian.  I don’t tip at drive-in windows or fast food restaurants where the service is minimal, but I will probably tip more at a fancy restaurant than a pizza joint. Perhaps it should be a function of how long we spend sitting there, preventing someone else from claiming that space and generate another tip. Or, if there is a single payer, perhaps the tip should reflect the number of people served rather than the total cost.

Second example. Social Security, or anything that else is adjusted for the increase in the cost of a representative basket of goods and services purchased by the average household.  Let’s take this coming year, where the COLA for Social Security will be 2.7%. The average monthly Social Security benefit in July 2025 was just over $2000. A 2.7% raise is another $54 a month for a single individual.  The maximum benefit is $6000, resulting in a raise of $162 a month.  Don’t these two retirees pay the same price for a gallon of gas or a loaf of bread?  And what if you are down at the lower end of the scale, say a monthly benefit of $1000 a month?. Your raise is a stingy $27 a month. In fact, it probably won’t even cover the increase in your Medicare premium except maybe for those at the top of the scale..

A similar inequity exists when an employer, often a state government, proclaims percentage raises across the board.  The $15,000 a year custodian gets a 5% raise to $15,750 and the $90,000 engineer sees his salary rise to $94,500. Basic costs go up for both, but the difference in COLA widens the income gap.

There is a place for percentages.  I give 10% of my income to charity, a guideline set by Hebrew scriptures that has had remarkable staying power. The tithe embodies the idea is that one has been blessed, the more one is expected to contribute. And I certainly understand the rationale for other kinds of raises, for meritorious performance or to retain a valued employee in a competitive market.  But if it is a COLA, both the poor and the rich see the increase in price of bread, the rent or mortgage for housing, the gallon of gas, the kilowatt of electricity. Wealthier households have more flexibility in adjusting to inflation.

So, what’s the answer?  For tips, it’s a matter of personal preference. If I am taking my daughter and granddaughter to lunch, I tip on the basis of the number served. If it’s just me, I usually tip $4-5 unless the service is exceptional. For a COLA, a solution is even simpler. The average Social Security recipient’s monthly check is $2,000. The COLA is 2.7% of $54 a month. Why shouldn’t everyone get the same dollar amount? should one person get $27 and another $162 and someone else get $27 a month when the basket of goods being priced is the same? In a nation of rapidly rising inequality, why do we let COLAs exacerbate the gap?