Tips About Tipping In The Era Of Tipflation

When I worked at Warner Brothers I had a phenomenal expense account to, among other things, take our artists out to dinner. What a great perk— especially when it was with artists who were interesting and pleasant to be with. Some were so interesting that I would go out of my way to take them out as often as possible. One English superstar was always a joy to go out with and I really liked him and took him out for years both when he was in the U.S. and when I was in Europe. He was rich but had a reputation for being a little stingy and once he shocked me by insisting on picking up the check. I was horrified that he didn’t leave a tip. I asked him if he was dissatisfied with the service and he seemed confused. He thought the service was perfect. I assured him that I did too and asked him why he wasn’t leaving a tip. Clearly not someone who was used to paying his own bills, he didn’t seem to understand the concept of tipping. So I explained it to him.

I concentrated on how it was a supplement to the dismally low wages waiters are paid and how tipping helps to bridge the gap between the paltry sum they are paid and the cost of living. He didn’t disagree but did offer some pushback about why that was his responsibility and not the restauranteurs’. I explained how custom and social norms have developed and waiters are just stuck with this rotten situation and that people who dine out have accepted it as an obligation. I then showed him how to calculate 15%. He left the tip and I don’t know if he adopted it as a customer or not because I paid every bill after that— or at least Warner Bros did.

At that time, I let him know that tips were also expected by tax drivers, hotel staff, delivery services, tour guides, bartenders, airport porters… Since then— but especially since the onset of the pandemic— there has been immense “tip creep” or “tip inflation” in the U.S. I’m not talking about the customary among going from 15% to 20% and beyond. Touch-screen digital payment systems include tip prompts which creates social pressure to tip (guilt-tipping) counter workers you may not have thought about tipping in the past, even cashiers in self service establishments.

Most of the reporting on tipflation that I’ve seen has been negative— and from the point of view of consumers who feel put upon. A couple of weeks ago, CNBC reported that two-thirds of Americans have a negative view about tipping when it comes to digital payment prompts with pre-determined options. “Cash-strapped consumers are starting to tip less… Fewer consumers now say they ‘always’ tip when dining out compared with last year… or for other services, such as ride-shares, haircuts, food delivery, housekeeping and home repairs.”

“Inflation and general economic unease seem to be making Americans stingier with their tipping habits, yet we’re confronted with more invitations to tip than ever,” said Ted Rossman, Bankrate’s senior industry analyst.

Many feel the pressure to tip has increased over the last year, NerdWallet’s consumer budgeting report also found.

However, two-thirds of Americans have a negative view about tipping, according to Bankrate, particularly when it comes to contactless and digital payment prompts with pre-determined options that can range between 15% and 35% for each transaction.

“Now you have to go out of your way to not tip and that’s what a lot of people resent,” Rossman said.

Tipping 20% at a sit-down restaurant is still the standard, etiquette experts say. But there’s less consensus about gratuity for a carryout coffee or other transactions that didn’t involve a tip at all in the past.

While tipping at full-service restaurants has held steady, tips at quick-service restaurants by guests fell to a five-year low of 16.7% in the first quarter of 2023, according to Toast’s most recent restaurant trends report.

“Part of it is tip fatigue,” said Eric Plam, founder and CEO of San Francisco-based startup Uptip, which aims to facilitate cashless tipping.

“During Covid, everyone was shell shocked and feeling generous,” Plam said.

“The problem is that it reached a new standard that we all couldn’t really live with,” he added, particularly when it comes to tipping prompts at a wider range of establishments, a trend also referred to as “tip creep.”

“Now we are inventing new scenarios where tipping should occur.”

Yet, since transactions are increasingly cashless, having a method to tip workers in the service industry earning minimum or less than minimum wage is critical, Plam added.

In fact, the average wage for fast-food and counter workers is $14.34 an hour for full-time staff and $12.14 for part-time employees, including tips, according to the most recent data from the U.S. Bureau of Labor Statistics.

“People should know that the livelihood of that person is largely based on how much tipping happens,” Plam said.

In other cases where workers don’t rely on gratuity for income, “we, as consumers, should use our own judgment.”

That doesn’t mean consumers need to necessarily tip less, Plam added, but “think about whether that person improved your experience.”

“It’s time to take a stand,” he said.

One of my favorite restaurants is a Moroccan restaurant in the neighborhood. It’s a mom and pop operation and I’m very friendly with the owners— who more often than not also take my order and bring me my food. Tip or no tip?

Unless a waiter really fucks up, I give 20% and if a waiter is really good, I give more. A few days ago, I was at a counter and I ordered pancakes and they came with powdered sugar all over them. I yelled at the busboy and said I didn’t want them and he ran away. The waiter came over and told me he wouldn’t charge me for them. So I thanked him for the attentiveness and gave him a much bigger tip. In really good restaurants, there are often really professional wait staff who know every single ingredient in the dishes or who can advise you intelligently about what to order. I always feel like tipping them more than 20% to show them that I appreciate them and to encourage them.

Yesterday, The Hill, reported that “Some of the frustration is more about tipping itself. Two-fifths of diners feel restaurateurs should pay better wages and rely less on tips, a concern that predates the pandemic and touch screens. Tipping is a unique and, some would argue, a troubling expression of capitalism. The gratuity empowers a customer to reward or withhold a large share of a server’s salary, based on a subjective appraisal of the service. When the service is bad, ‘the error could be in the kitchen or in the backroom staff,’ Astvansh said. ‘Most customers don’t see that.’”

America’s tipping habit originated in 1800s Europe. Wealthy Americans returned from European vacations and adopted the practice at home.

Following the Civil War, tipping spread across a range of service jobs worked by Black Americans, “to basically continue slavery,” said Saru Jayaraman, director of the Food Labor Research Center at the University of California, Berkeley, in a Time magazine interview. Many white employers refused to pay salaries to Black workers, forcing them to rely on tips.

Many generations later, tipping endures, sustaining a wage system that is hard to imagine in other professions. Consider: A doctor or lawyer or professor or journalist might do subpar work on a given day, but nothing empowers a patient or client or student or reader to withhold a portion of their pay.

With tipping, “I control how much money someone makes,” Astvansh said. “I have the power. That power is bad.”

Outside America, tipping is far from universal: The practice is frowned upon in Japan and China, uncommon in Australia and New Zealand. French restaurants generally add tips to the bill.

In the United States, food-service workers earn higher or lower salaries according to what they collect in tips. The arrangement leaves some diners uneasy.

“As Americans, we have kind of a love-hate relationship with tipping,” Popovich said, “because we think these businesses should be paying their employees a fair wage to begin with.”

Age-old dining etiquette suggests that even a bad server deserves a tip. Yet, not every diner agrees. The Bankrate survey found that only 73 percent of Americans “always tipped” in sit-down restaurants in 2022.

In a YouGov poll, 38 percent of American diners said they generally tip baristas at coffee shops. Three-fifths tip delivery drivers. Two-thirds tip pub and bar staffs.

Another recent survey, from Forbes, found tipping rates of 36 percent at food trucks, 35 percent at coffee shops and 31 percent at takeout restaurants.

Tipping has even spread to the fast-food kingdom. An industry survey from Toast, a management-software firm, found that roughly half of quick-service restaurants, such as Starbucks and McDonald’s, now offer a tipping option, up from 38 percent in 2020.

Some fast-food customers bristle at tip prompts. Others welcome the chance to supplement the modest hourly wages of fast-food workers.

“We’ve transformed our consciousness on what was the purpose of the tip,” said Huy Do, research and insights manager at Datassential, a market-research firm in the food-service industry.

When I was a kid, I had all kinds of jobs, including as a waiter. Because of that experience I would never not tip a waiter something, even for a really bad one, although less than for a normal waiter or a really good one.