Is America approaching peak tip?

https://www.economist.com/finance-and-economics/2024/06/20/is-america-approaching-peak-tip

33 85 2 years ago

richrichie• 2 years ago

In the 1950s tips ran to about 10% of bills. By the 1980s they rose to 15%. In recent years they have hit 20%. Whereas tipping used to be reserved for table service at restaurants, now buying a coffee or a muffin is likely to involve the employee flipping around a tablet screen to the customer to solicit a tip. That can be hard to refuse when the person behind you in line is peering over your shoulder. And these screens typically give three options—of, say, 18%, 20% or 23%—making it difficult to opt for something smaller.

This is perhaps a consequence of student debt nightmare from worthless, over priced college degrees. People waiting tables and serving coffee now are "highly educated" with expectations!

viraptor2• 2 years ago

Not just for that reason. A long time ago my home country had memes about people not being hired as a bus driver because they only had one PhD. The degree inflation is a separate issue and the tips won't happen unless people are paid really poorly. Instead in the us, the wages are too low and the social part of tipping works in employers' favour. Servers don't have high expectations - they want to afford a to live and food. In most places in the us that's not possible without tips.

kelipso3• 2 years ago

It is possible, just increase prices by 20% and pay servers. Not that hard.

eesmith6• 2 years ago

I strongly doubt the local staff have much say about the tip options on the tablet, no matter what level of education they may have.

Symbiote• 2 years ago

In Denmark those staff will often press the "no tip" button themselves.

They don't want to beg.

randomdata16• 2 years ago

Not my experience running a restaurant. I just went through this last year. The last thing I wanted to add to my plate was changing the tipping options, but I also have to retain staff who were adamant that the tipping options needed to be higher. There is no business without them, so what do you do?

rebeccaskinner2• 2 years ago

This is perhaps a consequence of student debt nightmare from worthless, over priced college degrees. People waiting tables and serving coffee now are "highly educated" with expectations!

I hate this sentiment. Not every degree is going to lead to a high paying career, but knowledge is worth having in it's own right. If people are passionate enough spend four years studying art history or poetry or underwater basket weaving then I'm glad we are sharing and preserving that knowledge in our culture. I don't like tipping culture, and I don't really think the two are related, but if tipping is the only way that we could get a generally well rounded educated population then I suppose I'll prefer tipping.

gruez7• 2 years ago

I hate this sentiment. Not every degree is going to lead to a high paying career, but knowledge is worth having in it's own right. If people are passionate enough spend four years studying art history or poetry or underwater basket weaving then I'm glad we are sharing and preserving that knowledge in our culture.

There's probably some non-zero value in learning underwater basket weaving or whatever, but I don't see why it should be publicly funded. I don't see any fundamental difference between someone wasting 6 figures on an useless degree, and someone wasting 6 figures on a useless hobby.

ryandrake3• 2 years ago

This ignores the actual reason most people go to college: They are by and large not doing it to gain knowledge for its own sake, or to become more well rounded people. They are doing it for vocational training and/or to satisfy a credential requirement/expectation from employers.

Yes, there exist (often already very privileged) students who have no career motivation for going to school and are just going for the knowledge and culture, but the vast majority go for career reasons.

freitzkriesler22• 2 years ago

I only tip for table service and taxis. If I see a tip on anything else, I happily hit no tip. I don't do delivery either since even with tips delivery drivers still bring my food cold. I'd rather get off my bum and guarantee hot food immediately without the risk of the driver eating it.

whyoh2• 2 years ago

People feel good about themselves when they leave extra, deriving a sense of generosity.

Interesting. I never feel good about tipping. If I tip I feel bad, because I caved in to the pressure. If I don't tip I feel bad, because the staff will wrongly think I didn't like them or their performance. Then there's the question of how much % is right... What an unpleasant social convention. Just give me higher prices on the menu.

Ekaros2• 2 years ago

On holidays it really makes me think should I have frequented some other place where they paid staff better... Instead of seemingly exploiting them and their work...

zarathustreal2• 2 years ago

Isn’t it strange how employers can make the decision to pay their workers less than we think they’re worth, employees can make the decision to take a job working for less than we think they’re worth, and yet the person feeling responsible for all these decisions is us?

tpmoney5• 2 years ago

Holidays are the time I feel best about tipping. When I first moved to my local area for school, I had no family and no place to really go for thanksgiving. And really no place was open (what with it being a holiday and all). The one exception was a local diner that's open 24/7/365. As a broke college student in a new town, that diner was my go to spot for that first thanksgiving and many a holiday after when everything else was closed and I had no where to go.

Since those days, even though I have family and friends to have holiday meals with, I've made it a point every year to have a small meal at the diner even if it's just coffee and a desert. And since I'm doing much better these days than a poor broke college student, I do it because I want to leave a large tip for the staff. No big Oprah style "you get at tip and you get a tip" performance or videos for youtube, just a simple card and big tip expressing my gratitude for them being there those years ago for past me, and for being around today for all the people who don't have anywhere to go still.

Whether they consider themselves exploited or not. Whether they're there because they need the work and the money, or (like I often did when I worked retail) they volunteered for the holiday shift because they had no where to be that day either. In either case, I was and remain grateful and the holidays are the one time a year I truly enjoy giving a tip.

naveen99• 2 years ago

Feel free to not tip if you make less than the tipee or maybe 2x the tipee ?

porksoda• 2 years ago

My home currency is worth ~20x less than USD. I fall totally into this category. But I feel enough dumb pressure that I'll cave. As a result I simply avoid these types of interactions. USA is the weirdest place to be poor! One somehow feels shabby and less-than, even while walking past endless homeless.

stavros2• 2 years ago

What does it mean for a currency to be worth less than another currency? That makes no sense.

karmakaze2• 2 years ago

Yeah, I saw a default tip for making a week-long hotel booking on online, which amounts to more than peanuts--oh and it was on top of the already mandatory 'service fees and taxes'. I would think only the taxes are mandatory and service fees should be in the advertised price. (I checked if booking different number of days changed the 'service fee', no it was a straight daily percentage). Same goes for shipping+handling that hides the actual price of items.

ensignavenger2• 2 years ago

Shipping and handling costs can vary widely with the number of items purchased. If I buy one shoe lace or three, the shipping costs are going to be the same... so if you price shipping into the item price, folks buying three pairs of shoe laces will pay excess shipping from folks buying one pair of shoe laces.

karmakaze2• 2 years ago

I'm not talking about reasonable rates but the ones on eBay that lists an item underpriced at $20 with $50 s+h. I've started seeing this pattern spread to other online sellers besides such platforms.

This is similar to 'free delivery' on Uber Eats which still has a service charge--it's a delivery service! All it means is there's no extra delivery charge on top. Plus priority if you'd like that maybe still warm. It's all a meaningless cash grab.

sunflowerfly• 2 years ago

I would love for my state to make all fees and tips included in the price like Europe. The price should be the price. Make asking for a tip illegal. Raise minimum wage for restaurant workers so they do not need the tip. Have a separate price for take away so that eating in includes a bit extra to cover the additional costs.

But alas, I live in a red state so it is never going to happen.

randomdata16• 2 years ago

Raise minimum wage for restaurant workers so they do not need the tip.

Servers at my mid-range restaurant bring in around $20 per hour in tips, on top of a base $16 minimum wage. So approximately $36 per hour is where you'd need it to land. Anything less and they ain't showing up. It is already hard enough to find anyone at that rate!

aeadio• 2 years ago

Let the industry self-regulate that. You stipulate a reasonable minimum wage, but like most other industries, mid-level and above restaurants need to pay a competitive wage, or talent goes elsewhere. If the going rate post-tip is about $36/hour, then the restaurants can target that as their post-tip benchmark wage.

I can tell you as a different type of talent worker, nobody is trying to pay me minimum wage. Minimum wage is set to ensure there's a reasonable floor on downmarket offerings. When you're 18 and fresh out of school and you work at your local Cracker Barrel, minimum wage ensures you don't get exploited. It's not the benchmark for experienced workers who have picked up a valuable skillset.

You have all these restaurant operators crying that getting rid of tippers puts them out of business, makes their business unviable. Well for one, that's nobody else's problem -- there's no contract, no constitutional guarantee that you're allowed to be in business. Making something economically viable is the whole game.

But it seems like everyone just flunked grade school arithmetic.

The cost is a wash at the end. At mid-range restaurants and above, practically everyone tips the same 18-20% on top of the base cost of the meal. If tipping is made illegal, you can expect meal cost across the board to rise by about this much to make up the difference. It's the exact same cashflow. You can pay a living wage on what you're already charging customers on the final card settlement.

They all seem to be imagining this nightmare scenario where they're forced to raise their menu prices, and that prices them out of the business versus their competitors who, somehow, don't need to do the same.

The law shouldn't cater to business operators with no business sense.

5555624• 2 years ago

on top of a base $16 minimum wage

That depends on what state you're in. The Federal minimum tipped wage is $2.13 per hour and has not increased in years. (If wages and tips, combined, don't equal the minimum wage of $7.25 per hour, teh employer is supposed to make up teh differences.)

A number of states have set a different minimum tipped wage, just as they have set a different minimum wage. Seven states have the same minimum tipped and non-tipped wage. (California is $16 for both tipped and non-tipped employees.)

Crosseye_Jack• 2 years ago

Tipping isn’t illegal in Europe, and as someone who has worked in the service industry I don’t really like the idea of making it illegal either (Even if its just making asking for one illegal).

But IMO it should be a measure of the service provided not an expectation pushed on the customer. A nice gesture given by the customer.

I remember a visit to the States where I stayed with friends, so got to see “Real America”, not just tourist traps. On my visit when we were just chilling out I remember my friend’s parents ran a Limo service and the discussion they had because one rider hadn’t tipped the driver, and who they were going to call them up and demand a tip. I can remember thinking that shit just wouldn’t fly back home and if I got a call demanding a tip after the fact I would just laugh my head off and put the phone down.

But it’s a different culture I suppose, one I still can’t get my head around.

EDIT: I see how it would be hard to change right now, IMO it would have to be gradual. Servers can easily make more than their wage just in tips, removing tips and paying the staff the same "wage" as if they got tips would have to put that increase of costs on to the products, which the avg customer will baulk at even if they are paying the same overall.

holowoodman• 2 years ago

Excessively requiring tipping is a form of tax-dodging. Tips are untaxed and exempt from social security fees.

fallingknife• 2 years ago

Why throw in the red state line? No states do that.

anthony100• 2 years ago

Agreed. I live in a blue state where the minimum wage for fast food workers is $20 and they still expect tips on top of that.

freitzkriesler22• 2 years ago

What are you talking about? You can still tip in Europe. In fact, if you tip at bars enough at the rate of 1-3 EURs per drink , you'll end up getting free drinks and significantly better service.

That was the best part about being in Europe. Tips were appreciated whereas in america, wait staff expect them and feel entitled to absorb 25% tips.

ryandrake3• 2 years ago

I just bought movie tickets with a $1.89 "fee" tacked on to the price. They didn't even say what the fee was for. Just "$11.75 + $1.89 Fee". There was zero findable information about what the fee was for and why it was that amount. They didn't even list a vague purpose like "Service Fee." It was just a fee. Why do this? Just say "$13.64" like a normal human being.

sammyo• 2 years ago

A big percentage of ticket price goes directly to the studio/distributor, perhaps the entire fee stays with the theater.

craftkiller• 2 years ago

In Australia there is no tipping and the full price, including all fees and taxes, is the list price. So if you're in a bar and see a beer for $5 and you have $5 in your pocket, you can buy that beer. It speeds things up considerably because when paying for stuff, you can just tap your card. No need to click through a tip UI or fill out a receipt, just tap-and-go.

benfortuna2• 2 years ago

I would add that tapping your card in Australia now will typically add a service fee on to the price.

Also there are some cafes and restaurants that have 10% surcharge for public holidays, etc. So the hidden costs are creeping in, but thankfully not mainstream yet.

beachy• 2 years ago

Also there are some cafes and restaurants that have 10% surcharge for public holidays

This is increasingly common in NZ but also entirely justifiable as staff must legally be paid time and a half on public holidays and wages is likely the largest component of the restaurant's costs

im3w1l• 2 years ago

I can imagine the possibility of the opposite happening. As we reach an economy of automation-based abundance, we might see a transition to a gift economy.

Molitor5901• 2 years ago

Tipping is so awkward for everyone involved but to get rid of it would upset a large segment of society. It's foremost out of control and I think it's because of greed, which is not a bad thing because everyone wants to get as much money as they can.

The problem is that the greed has exacerbated beyond reasonable greed and now threatens social cohesion, and commerce. The guilt with tipping, or not tipping enough, or when they bring the card swipe to the table and look at you while you tip. It's.. awful. Simply awful.

I am tired of tipping for what seems to be the basic function of a job, then being tacitly or overtly being guilted into tipping more. In my large American city is the reason I don't go out as often.

Is America approaching peak tip?

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