Tipping

No way out

Photo by Sam Dan Truong on Unsplash

“It’s just gonna ask you a quick question.”

Ugh.

It’s a phrase that’s gone from novel to hackneyed in just a few years. An employee swings their tablet around and there are several options for how much you can tip. No longer private, the entire line can now see you deciding whether to tip 15%, 20%, or even 25%. On a coffee. Or… you could hit the “no tip” option, especially because the coffee somehow already costs $7. But then the person behind you would see your stingy, selfish choice. The barista will surely spit in your drink. Lightning may strike your miserly body down in the parking lot. The end is near. You admit defeat, tip 20%, and spend over $8 on a single drink.

Once the province of only a few niche industries, tipping has expanded to many interactions between customers and staff. Tipping at full-service restaurants has expanded to include counter joints and even food trucks. Tipping for taxis has expanded to ride-share services, when one of the explicit benefits originally touted by Uber was that customers didn’t need to tip. Even standard retail outlets sometimes ask for tips. Not only that, but percentages have increased. While 15% used to be the norm for tipping at a sit-down restaurant, that is now seen as the minimum. Tablets will often now have a 25% tip option, even for counter service. As tipping in America continues to expand, it’s worth examining how we got here and what can be done.

First, it’s important to note that tipping exploded during Covid. Many customers, flush with cash and wanting to recognize employees in high-contact industries, wanted to tip. Tipping a grocery store employee would have seemed absurd in 2019, but all of a sudden seemed reasonable in the depths of the pandemic. Customers wanted to tip more employees, and it seemed wrong not to give them that option. Then, the Great Resignation in 2021-2022 caused short-staffing in many hospitality businesses, and tipping seemed like a good way for businesses to improve employee retention.

As Covid faded into memory and people spent their stimulus checks, attitudes changed. Now, being asked to leave a tip at a bodega seemed obnoxious. Unethical, even. Companies like DoorDash enable workers to deduce whether they will be tipped for delivering an order and allows them to reject untipped deliveries. Hospitality workers seem to expect 20% tips for providing standard service. The emergency ended, but cultural norms had shifted. People were being asked for tips everywhere, but there was no crisis. Also, tips were becoming more common at businesses like coffee shops, where customers pay before they receive their product, forcing them to tip before they even know the quality of service they are tipping for.

Some defend the practice as a way to redistribute wealth and reward the hardworking people of the hospitality industry. Others see a system built on false-pricing and emotional manipulation. Both sides often rely on sentiment more than rationale. One common argument from the anti-tipping camp is that tipping is subsidizing the employer and is nothing more than corporate welfare. This overlooks the simple fact that ALL money paid to the employee ultimately comes from the customer. Businesses don’t create money out of thin air. A customer pays the business who then pays the employee. Obviously. Tipping just eliminates the middleman, the employer. Pro-tippers often act as if it’s cruel or heartless to not tip, as if violating a social more is akin to committing a crime.

The problem anti-tippers have, however, is they never have a plausible solution for a way forward. Tipping has been standard in the United States for almost 200 years. While tipping for a coffee may be relatively new, tipping a porter for carrying your bags was something your great-great-grandparents did.

The most common solution anti-tippers advocate for is to simply remove the tipped minimum wage, which is still a paltry $2.13 per hour at the Federal level (most people live in states with a significantly higher state minimum wage). Unfortunately, this will not work. Seven states, including California, don’t have a tipped minimum wage. Servers at California restaurants make $16.90 an hour, the same as a clerk at a retail store or other non-tipped, minimum-wage profession. Servers in the Golden State are still tipped. Data shows they receive less, as a percentage, than servers in other states, but the difference is small. If anything, getting rid of the tipped minimum wage is going to make things worse. If restaurants have to pay their employees more, they will raise prices. Since tips are calculated as a percent, higher menu prices mean higher tips.

Any effort to end or reduce tipping runs up another barrier: servers love it. Tipping culture may be annoying to consumers, but it is a boon to hospitality staff. Servers at even moderately priced restaurants can make a middle-class salary for working a job that can be, and is, performed by high school students. That isn’t to say being a server is easy; it isn’t, but the qualifications for entry are low. There aren’t any other jobs a middle-America teenager can get with a salary of $40,000 a year. Tipping culture, for all its faults, does provide a useful entry point into the labor force. It enables young workers without a high level of education to gain valuable experience. Older workers who are out of a job can wait tables as a stopgap. If tipping was somehow banned in the United States, it would increase inequality and decrease income for over a million Americans.

The reality is that tipping is here to stay. So what to do? Those who are anti-tipping need to toughen up. If being asked to tip at a food truck feels like you’re being extorted or your food is being held hostage, chill out. It isn’t that hard to hit the “no tip” button. Might the employee purse their lips at you? Yes. But oh well. Such is life. Tipping at a food truck is not mandatory. It isn’t a long-held cultural norm going back to the Civil War. Some people do, and some people don’t. It’s reasonable to not want to tip before service is given. It’s also reasonable to tip service workers regardless of whether it’s a bartender or barista. Deal with it.