Thanks for asking, Henchar (although the sarcasm wasn't necessary).  I teach HR  courses at a university and posed this question to my students....therefore, not "magic insight", but from just asking the question...and why I asked in this forum what others thought.  Business students may not necessarily be representative of society at large, but most of my students expected the living wage + tips, and were mortified at the thought that some people might expect to forego tips if living wages were being paid.  A minority worked in the service industry and actually opposed the new minimum wage for this reason.  They would rather receive tips, and declare only a portion of them on their taxes, than receive the higher minimum wage (without tips) and pay tax on it all.    

For businesses, there are no payroll taxes on tips.  Replace tips with higher wages, and payroll taxes go up too.  This may...MAY...result in the Law of Unintended Consequences where good intentions result in lose-lose.