THE STATE OF TIPPING: Tipping has become a burden. 25%,
50%, 75% tips for a takeout order or Starbucks coffee. And don’t even get me started on food
delivery apps. If you’re ordering something small, be prepared to leave a tip that’s worth more than
your order itself. It’s not just the restaurants where you’ll be tipping either. Nowadays, tipping
is commonplace at barbershops, car washes, ubers, plumbers, and basically any other service that you
can think of which doesn’t really make sense. At least with restaurants, the service is not
the main thing that you’re paying for. You’re paying for the food, so it kind of makes sense
to appreciate great service that came along with it. But, in the case of a car wash or a hair cut,
you’re paying for the service itself, so it’s kind of odd that you have to pay 15 or 25%
for an average job, and inflation has only made this worse. Now, I’m not trying to suggest that
these people shouldn’t be paid a fair wage, but rather that it should be reflected in the upfront
price. This would not only make it easier for customers to guage just how much their spending
for a service, but it also makes the income of the service worker much more stable. In fact, this is
how it is most places outside of the United States and Canada. In countries like France,
Denmark, and much of Europe, a standard service fee of 15% is applied to all bills. So, there’s
no awkward situation where you have to select 15, 25, 35% or no tip as the cashiers watching you,
but even this is not ideal. Ideally, the price of service is just included in the product itself as
is the case in Japan, China, and South Korea. In fact, in many of these countries, tipping is
actually considered rude and disrespectful. The reason being that if you’re tipping,
you’re basically insinuating that the business doesn’t pay them enough which is unfortunately
often the case in America. In fact, the minimum wage for service workers is only $2.13 per hour
in America. But, how did things get so bad? How did tipping go from being something that we use to
appreciate exceptional service to being a burden for customers and a necessity for employees.
A CHECKERED HISTORY:
Taking a look back, tipping wasn’t always a custom in the United States,
but it has been this way for quite some time as American tipping dates back to the mid 1800s.
You may have heard that tip stands for “To Insure Promptness”, but that’s just a myth. In reality,
tipping was something that wealthy Americans discovered when traveling to Europe. You see,
tipping was a master-serf custom that was invented in Europe during the middle ages.
Masters would reward servants with a bit of extra cash for excellent service. As these Americans saw
this practice, they latched onto it and brought it back to the US. Being able to pay extra for
service really showcased their status and wealth which many of their egos could not resist. But,
tipping didn’t catch on in America that easily; in fact, there was a lot of resistance to tipping.
For one, people felt that tipping culture was simply reinforcing social constructs and
classicim. The upper class was literally flexing their wealth on lower class citizens. But, that
wasn’t the only concern. The other concern was that tipping was only viable for the rich. Eating
out was expensive as it is, so expecting middle class and lower class people to offer tips on top
of the bill seemed “un-American”. Fun fact, this ideology became so prevalent in America that it
actually spread to Europe and that’s why tipping is not standard in European countries. But,
America would completely u-turn on this idea after the civil war. While slaves were finally freed,
their job prospects weren’t all that great and most of them would end up in service related
jobs. And these industries figured that this was the perfect opportunity to capitalize on tipping.
You see, these industries figured that they could get away with paying former slaves no money.
Technically, they weren’t enslaving these people as they could earn money through tips. Also,
they could theoretically leave at anytime, but really it’s not like they had anywhere else to
go. So, service industries became filled with former slaves that became dependent on tips
for income. Suddenly, tipping was no longer a way to flex your wealth, it became much more
of a moral issue. If you didn’t tip, you were inadvertently supporting slavery. Now of course,
you could argue that if you buy chocolate or something, you’re supporting child labor in
some 3rd world country. But, it’s a completely different scenario when you’re face to face with
the person. Essentially, the people who were against slavery started feeling obliged to tip
regardless of their own financial position, and with that, tipping started becoming a burden.
RESISTANCE FALLS OUT: While tipping was rapidly gaining popularity
through the late 1800s and early 1900s, this isn’t to say that everyone was happy with the practive.
In fact, a large portion of the population was not happy with the practive and we would see some
resistance even from local governments. Georgia, for example, deemed that tips were essentially
commercial bribes used to influence service. So, naturally, paying bribes should not be customary
or encouraged. But, the issue was the much of the push back from these governments were classic in
their own ways. For example, in 1915, six states would abolish the practice of tipping. This seems
like a reasonable move. The policy that should have been introduced to enforce this rule would
have been some sort of minimum wage. This way, service workers would no longer be dependent
on tips. But, instead of punishing businesses for paying $0 incomes, these governments would decide
to punish service workers. Iowa, for example, ruled that those who accepted a gratuity of any
kind — not those who gave the money themselves — could be fined or imprisoned. Fortunately,
supreme courts would step in and deem these rules unconstitutional, but they never proposed a better
solution, meaning that things just returned to how they were. In fact, they actually became worse due
to a series of laws passed by Congress starting with the Fair Labor Standards Act in 1938. This
legislation introduced a federal minimum wage, a 40 hour work week, and banned child labor which
sound great. But, the pitfall of this act was that it specifically excluded tipped workers. Congress
would simply double down on this stance in 1966 with their so called “tip credit”. Essentially,
restaurants were legally allowed to pay a sub minimum wage as long as tips pushed workers over
the minimum wage threshold. At least, restaurants were required to pay a percentage of the minimum
wage, usually somewhere between 40 and 60%. But, this too would change with time. In 1996,
congress ruled that restaurants only had to pay tipped workers a minimum of
$2.13 per hour and that’s still how it is across much of the US. You would think that with all
these anti service worker policies that people would rise up and protest these changes, but the
exact opposite actually happened. You see, the demographics of service industries were rapidly
changing. It was no longer a bunch of former slaves. In fact, over 50% of all waiters are
now white people. So, while tipping may still be classicist, it was no longer particularly racist
which eliminated much of the general public’s hesitancy towards tipping. But, it wasn’t just
the public that was ok with tipping. Many service workers actually preferred the tipping model. You
see, it wasn’t just the race of service workers that was changing, but also the age. Nowadays,
service industries are filled with a bunch of high school students and young adults. In fact, nearly
50% of all waiters are between the age of 20 and 30. For these people, doing service work is often
a part time thing so stability isn’t necessarily the top concern meaning that they’re much more
willing to take a gamble. Instead of taking a set minimum wage, they’re willing to bet on
the generosity of people during a Friday night or Independence Day weekend. Statistically speaking,
you’re much better off with a minimum wage, but this hasn’t exactly changed the minds of service
workers. Tipping was no longer about appreciation or fighting slavery. Tipping was now about
maximizing revenue for service industries and service workers leading us to where we are today.
THE TIPPING BURDEN: It turns out that there’s a
whole science behind the psychology of tipping and there’s dozens of research articles about
how to maximize tips. These studies found that waiters should introduce themselves,
repeat customer orders, give compliments, call customers by their name, etc. But,
those are all small fish items. The factor that has really propagated modern tipping culture is
none other than technology. The reality is that technology makes it so easy to spend money and
has removed so much of the pain that is naturally associated with spending money that we’re simply
way more willing to spend money. Take cards for example. Consumers are willing to spend up to 83%
more when paying with a card as opposed to cash. So, I don’t think you’d be surprised to hear that
the average cash purchase is only $22 while the average card purchase is $112. But, by far the
biggest culprit when it comes to excessive tipping is the infamous iPad payment terminals. For one,
you’re paying with a card as opposed to cash, so that’s already working against you,
but there’s several other factors that push you to tip. For example, you don’t have to go through
the hassle of calculating a tip. You can simply select a percentage and the iPad will do the math.
Another technique that these terminals employ is suggesting a super high minimum tip. This terminal
for example is suggesting a minimum tip of 18%. Of course, you could skip the tip, but what if you
felt that the service actually deserved a 5 or 10% tip. You can either type in the tip manually which
would just prolong the awkwardness or you can just select 18. Speaking of awkwardness, this is
likely the most effective method when it comes to guilting customers into tipping and the source of
most people’s frustrations. Traditionally, any and all tips are left on the table and waiters don’t
see the amount until after the customer leaves. This allows customers be honest about how good the
service actually was. But, when you’re forced to select a tip amount at the register, you know that
the cashier is going to see what you select, but that’s not the worst part. The worst part is that
everyone behind you is also going to see what you select and you don’t want to be the person
that skips the tip. And all of this is obviously by design. Service industries have figued out
how to brilliantly leverage technology and peer pressure to maximize tips. While this is a smart
move for them, this has simply left customers exhausted and frustrated with modern tipping.
THE ANTI TIPPING MOVEMENT: Hearing all this, I don’t think
that you’d be surprised to hear that there’s a strong and growing movement against tipping.
These people argue that tipping has nothing to do with showing appreciation and everything to
do with the fact that many service workers aren’t paid fairly to begin with. I mean, it’s not like
you tip service workers who are paid well. For example, when was the last time you tipped your
pilot or your lawyer or your accountant or your doctor. These people provide way
more valuable services than a waiter or a hotel housekeeper, yet you don’t tip them. If anything,
you might send them a thank you note or buy them chocolate. Why? Well, probably because you know
that they’re already paid well which supports the idea that the only reason you tip some service
workers is because you know they’re paid poorly, not actually because you appreciate their service.
So, theoretically, if we paid service workers better wages, we can eliminate tipping culture
in America or atleast that’s what the anti tippers think. Pro tippers don’t agree. They feel that
eliminating tipping will simply give businesses more opportunity to gauge prices. For example,
a $21 meal may rise to $24. Also, this isn’t all that favorable for takeout customers as they will
also have to pay the higher prices. But, with that being said, it looks like the rest of the
world has made this work, so maybe there’s something to it, but only time will tell.
Are you team anti tip or team pro tip? Comment that down below. Also, drop a like if you think
tipping has gone too far. And of course, consider checking out our discord community to suggest
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