I guess there's two subjects going here. The tipping subject and the pay subject.
The major problem seems to be the disparity of what motivates the instructor. I taught full time for many years, including a stint out west. And at the time, money meant everything. Recently, I've noticed that the cost of housing in Summit County, CO has probably tripled (or more) since the late 80s. However, in 1989 or 90, at Breck, I was making $11/hr with a L2 cert. I don't think the rate of pay for the full timers in destination resorts has kept pace with the cost of living. Not even close.
Now, as a part timer with a day job that pays the bills, I make less per hour teaching skiing (with a L3 cert) than I did over 15 years ago. But to be honest, I'd rather see benefits improved rather than pay for people like me, because the ski areas can offer benefits such as comp passes, discounts, etc., that have value, but cost almost nothing to the ski area, yet can save the instructor a lot of money. For example, (as theRusty eluded to) I have 1 year old triplets. The other 2 local ski areas, which are owned by the same parent company, offer $1/hr daycare to employees. Yet my ski area decided to revoke that on weekends this year. I'd be able to spend a lot more time teaching if I could bring my kids and put them in day care for less than a mortgage payment. But then again, thinking back to my days of being married without kids, I would rather have had a pay increase to cover a seasonal rental at the ski area. At a destination resort with full time staff, money would definitely be the motivator. So how does a ski school director deal with these issues? There's too many variables.
As for tipping, I don't think the general skiing public understands that tipping is welcomed by instructors. Sure, some people have a "thing" against tipping instructors because they think we should be able to demand $30+ from our ski school directors, and won't tip even if they know it's common, but most people would chip in a few bucks if they knew the situation and how much time and energy we put into educating ourselves to become better instructors. even $2-$5 per student for a group lesson would make a difference to a lot of younger instructors that get put off by the long hours and lack of pay. I'd bet that 90% of students don't even realize that most instructors are required to show up to line-up but don't get a dime if they don't get a lesson. Back when I was in college and teaching 6 days/wk, there would be many days when I wouldn't get a single lesson.