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They are a contributing factor in the whole system of gratuity as pay. WH is an interesting niche in that, those that work there generally make decent money, like a good bit better than most fast food joints. It requires people skills, and a crisis management type of multitasking, but often there will only be the minimum required staff in the better run places. It is not too unusual to see a place with only 2-4 people working with a packed restaurant.

The gratuity culture is that you always must tip, but not excessively. However staying past your welcome/meal is not considered acceptable behavior, nor is showing up and not ordering. There are slower WH's in smaller towns where it is more acceptable to hang out when the place is not busy, but these are more like the exception. This is also a place that typically is associated with the idealized single working mom stereotype. You'll often find places where the employee shifts are flexible for these types of circumstances. There is often also some tangible drama to a WH, both from the staff and the customers. There are usually WH's within many residential communities or right on the outskirts. You'll often find the same people present as part of a regular routine. It usually does not involve dangerous culture or violence, but WH is a funny place to go find out and watch the drama of the local community if one is close to where you live.

When I lived in the suburbs of Atlanta, I knew everyone that worked at my local WH and could find out what was going on in the neighborhood based on the collective conversations that happened there. In a WH there is no real privacy or formality. It is one of the few places where striking up a conversation with anyone is acceptable if not expected. You can sit there and be quiet and answer tersely to indicate you just want to be left alone, but that is the exception.

This is part of the southern libertarian republicanism ideal of independent hard work to bootstrap success. This is an illusion that leads to decay and poverty, as time has shown, but is still a core part of southern culture. I'm not saying it is right or wrong. I live in California now. There are no Waffle Houses here because California does not participate in this poverty wage type of exception to ethical pay. Overall, there is no effective alternative to turn to for people on either side, customers or workers. Places like California do not have an equivalent establishment for ultra budget dining 24/7 either. I've lived in both areas long term. I don't know of a good solution.