When restaurants add service fees or auto gratuity to make their employees whole, everyone goes up in arms saying “just raise your prices” to pay them more. This argument never highlights the fact that prices would have to greatly exceed the price of the fee because the restaurant would have to pay payroll tax on those wages (essentially doubling the cost of the wage). If the goal is 1) have employees get more money, 2) keep prices reasonable, and 3) keep the restaurant in business and therefore job available, then I have ZERO problem with this approach.
Honestly, I would rather have restaurants call it out, “20% will be added to every bill”, so it’s not sneaky and the earnings of the employee are not dependent on why willing customers are to give (getting rid of the free rider problem). Profits in the restaurant business are notoriously small so raising prices enough to cover the wage and the payroll tax would put it out of business and lead to that server not having a job. The fee/auto tip IS them “raising their prices” and “paying their staff more” it just avoids the burden of the tax.