Why Tipping Is So Out Of Control In The U.S.

Summary

The tipping culture in the US has seen a significant rise, with consumers now tipping 15-25% on average, up from historical norms. The term 'tipflation' has emerged, reflecting the pressure to tip more and more frequently, even in situations not traditionally associated with tipping. Technology, such as payment tablets, has made tipping easier but also more expected, with preset tip amounts influencing consumer behavior. However, there's a growing resentment among consumers and concerns about the sustainability of this tipping culture, with some advocating for its abolition.

Takeaways

• 😕 Tipping culture has become pervasive, with customers being asked for tips in various service scenarios, including drive-throughs.
• 📈 The percentage of tips has increased over the decades, with the average tipping rate in 2022 being over 21%.
• 📊 'Tipflation' refers to the phenomenon of increased tipping amounts and frequency, with technology like tablets and apps making it easier to suggest and collect tips.
• 💡 The origin of tipping dates back to medieval Europe and has evolved over time, with the U.S. being one of the few countries where tipping is customary and not included in the service charge.
• 💼 The federal minimum wage for tipped employees in the U.S. has remained at $2.13 since 1991, which is significantly lower than the standard minimum wage.
• 🌐 The pandemic has influenced tipping behavior, with an increase in remote transactions and a higher percentage of customers opting to tip.
• 📱 Technology, particularly POS systems from companies like Square, Toast, and Clover, has made it easier for businesses to suggest and receive tips, potentially contributing to the rise in tipping.
• 🤔 There is a growing consumer sentiment of resentment towards tipping, with some feeling pressured to tip more than they are comfortable with.
• 📉 Inflation and the constant prompting for tips have led some customers to tip less or not at all, affecting service industry workers who rely on tips as a significant part of their income.
• 🔍 There is a debate on whether the tipping system should be reevaluated, with some advocating for the abolition of tipping in favor of service charges included in the bill.

Q & A

What is the current tipping culture like according to the transcript?

The current tipping culture is described as being out of control, with people being asked to tip at every opportunity and for services that are not traditionally associated with tipping.

What historical percentage did people commonly tip at during the 1950s?

During the 1950s, people commonly tipped 10% of the bill.

How has the average tipping percentage changed from the 1970s and 1980s to today?

By the 1970s and 1980s, the average tipping percentage jumped to 15%, and today people tip anywhere from 15% to 25%, with a 2022 survey indicating an average of more than 21%.

What term is used to describe the phenomenon of being asked to tip more and for more services?

The term used to describe this phenomenon is 'tipflation'.

How has technology, such as tablets and kiosks, influenced tipping behavior?

Technology has made it easier to present tipping options and suggest tip amounts, which can lead to consumers feeling pressured to tip more than they normally would.

What is the current federal minimum wage for tipped employees in the United States as of March 2023?

The federal minimum wage for tipped employees in the United States as of March 2023 is $2.13.

How has the coronavirus pandemic affected tipping habits?

During the coronavirus pandemic, consumers started tipping for services they never had before, and the percentage of remote transactions with tipping increased significantly.

What is the impact of businesses asking for tips before service completion?

Asking for tips before service completion can create a sense of obligation or even a feeling of a bribe, potentially leading to customers tipping more out of fear of receiving lesser quality service.

What are the three prominent companies mentioned in the script that have contributed to the increase in tipping?

The three prominent companies mentioned are Square, Toast, and Clover, which have developed point of sale systems that make it easier for businesses to gather tips.

How do the new tablet systems for tipping change the consumer's experience compared to traditional tip jars?

The new tablet systems make it more difficult to avoid tipping as consumers have to actively choose not to tip, whereas with traditional tip jars, not tipping was more of a passive omission.

What is the potential danger of the current tipping culture according to the transcript?

The potential danger is that consumers may start tipping less or not at all due to resentment or feeling overwhelmed by the constant requests for tips, which can hurt those who rely on tips as a significant part of their income.