Where does the money go if not to provide decent pay for the staff?
Wages are poor -- overheads are high. Profit margins tend to be very low and restaurants come and go a lot as a result. A restaurant owner might be paying health insurance for his or her staff on top of rent and business costs which would include insurance - fire, flood, claims made by customers for injury or illness as well as workers comp which tends to be very high in the restaurant industry. There is no NHS nor anything remotely like it in the US.
As mentioned by Poopadoop, the waiters are taxed on anticipated tip earnings, which is calculated from the restaurant turnover. If you don't tip the waiter still gets taxed. The 'performance' that Novack complained about is what each waiter has honed in order to extract tips and they only do what works. Poopadoop is right to characterise it as wait staff being 'allowed to work' in a restaurant, with the aim being to beat the IRS estimation of about 15% of each bill being tipped. How much you make as a waitress is up to you to figure out.
I agree with those who have said the addition of a service charge to bills in Europe is really presumptuous.
I found customer service in general far better in the US than anywhere else.
My DD1 spent a few months in Paris this year with her American university but used her Irish passport for ID purposes when she was there, and found she paid less for tickets to various things.
AnnaLiza -- if you're occupying the seat you can't just sit and chat. You eat and pay and move on with your life elsewhere. You are paying for the food, not to rent the chair. The table is expected to provide X amount of income per night. It can only do that if X number of parties sit there or if you order (let's say) ten meals while you sit.
$85 for a haircut in LA was incredibly cheap. This is obv a hairdresser who makes his money by volume of clients rather than a reputation for being exclusive. The receptionist asked you if you were going to leave a tip so that she could provide a small tip envelope for you where you could discreetly place whatever amount you wanted. The little envelopes would have a space for your name and thus when you phoned next time they could either fall over themselves accommodating you or tell you they were booked up.