Tipflation shows how U.S. tipping culture has changed since COVID
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“Tip who exactly?”
That was the response to a photo by a Reddit user who titled the post: “It finally happened. I was prompted to tip at the airport self-checkout station.”
Indeed, the photo, from Newark Liberty International Airport, shows a chicken Caesar wrap, a coconut water and a prompt on the tablet screen: “Would you like to leave a tip?”
Anyone who’s been to their local coffee shop has seen it. Everywhere you go, it feels like tipping has become just a part of everyday life.
Tips used to be limited largely to taxi rides and sit-down restaurants. Maybe you’d throw a few bucks to a car valet or a bellhop. Now we see prompts for tips at every business with a spin-around touchscreen. Not to mention fast food restaurants. Food trucks. Delivery apps. Rideshare services.
Even self-checkout lanes.
A recent survey by Pew Research Center, which polled 12,000 people, found that most American felt that tipping was expected more often than it was five years ago, in what’s been dubbed “tipflation.”
And about seven out of 10 American adults say tipping is expected in more places today than it was five years ago, Pew found.
Figures from earlier this year provided to USA TODAY by Square, the company behind many of the iPad point-of-sale machines you see at a local restaurant or coffee shop, found total tips received in the fourth quarter 2022 climbed 16.5% year-over-year at full-service restaurants and 15.9% at quick-service restaurants.
How COVID changed tipping culture
Parul Jain, who teaches finance and economics at Rutgers Business School, said tipping got a huge boost during the COVID-19 pandemic.
People used to tip on the basis of performance, she said. Now, the near ubiquitous use of touch screens at places where we’d never previously think of tipping applies enormous pressure.
“You feel guilt or misery,” Jain said, adding that during COVID when many eateries were struggling, it was not uncommon to tip 30%.
Tipping guide 2023:How much to tip your mailman (and others) for the holidays
Problem is that the expectations remained high. “Tipping norms went up,” she said. Moreover, restaurants already faced with increased food costs began relying on increased tips to pay their employees.
Shubhranshu Singh, who teaches marketing at Johns Hopkins Carey Business School, said that the shift to tipping came out of new “technology changes.”
“A lot of places are using this new payment interface that has the option to ask for a tip, and they are just there as defaults,” he said.
And many businesses, buffeted by higher costs of labor, supplies and procurement, saw the tip option as one additional way to add the costs onto the consumer, Singh said.
How much should you tip? Opinions differ
In June, financial website Bankrate published a survey that found that roughly two thirds of Americans had a negative view of tipping. Thirty percent of respondents felt tipping culture was “out of control.”
“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, a senior industry analyst at Bankrate.
TikTok user “twoguystakeonrealestate” posted online trying to make the case that tenants should tip their landlord when paying rent.
But for the holidays at least, 15% of Americans said they’ll increase how much they’re tipping this year, while 44% plan to tip the same as last year and 13% plan to tip less, BankRate found.
Rossman said that many beneficiaries of those bigger year-end tips are people whom we “interact with regularly,” like garbage pickup, mail carriers, hair stylists, baby sitters, nannies and landscapers.
Louise Ford, a mother of two from Montclair who moved to the United States from the United Kingdom seven years ago, felt there was a “pressure to tip,” and that “makes you hesitant to give any extra.”
“Tipping really should be just people who are working very hard and are very polite,” Ford said. “But now, you feel more obliged to tip everyone, even if they’re just putting your food down and not even being polite.”
Kristina Lecaros, a staff member at frozen yogurt place Let’s Yo in Montclair, said average tips come in at between $1 and $2.
“People usually tip the bare minimum, or sometimes don’t tip. But if we go out of our way to give them samples, or extra attention and good service, they tip even more,” Lecaros said.
That’s been the same mindset at Local Coffee in downtown Hackensack: better service means more tips, said owner Levar Thomas. And out of 100 customers, roughly half would tip, and at roughly 10% to 15%, he estimated.
“Customers do see that we put in time and diligence to making sure that each and every beverage is prepared perfectly, so I think they tip to that type of service.”
Jaimin Patel of Edison said they only tip at sit-down restaurants where “service is being provided.”
“Beyond that, I don’t tip. I just have to be tough on it,” said Patel, who described the prevalence of tipping as an “epidemic.”
At BAM Desserts in Somerset, roughly 25% of the customers tip, even though those can be as low as $1 or $2, said owner Melissa Jenkins.
Orders for their cake pops, macarons and cookies, which sell by the dozen, can run between $30 and $60, though people tend to tip more on custom items, Jenkins said.
“I’m trying to keep prices down as much as possible while some ingredients on our end have doubled or tripled in price, so tipping is helpful,” Jenkins added.
Tipping at restaurants: 2% say they won’t tip at all
The Pew survey found that 57% of American diners tip 15% or less for a sit-down meal, which includes “2% who say they wouldn’t leave any tip.” Only about 22% of people said they would leave a tip of 20% or more, Pew found.
As Americans are asked to tip more often, there could be a backlash caused by tipping fatigue.
Labor advocates say this poses a problem for tipped restaurant workers, who earn below minimum wage and count on tips to make up the difference.
“The decline in tipping amounts means many workers can no longer rely on tips to make ends meet,” said Saru Jayaraman, director of the UC Berkeley Food Labor Institute and a national labor activist.
In New Jersey, the subminimum wage for tipped workers is $5.26 an hour. Tips have to make up the rest, or the employer has to make up the difference, so that a salary reaches the state minimum wage of $14.13 an hour — which will rise to $15.13 an hour come Jan. 1.
But that system is untenable, said Jayaraman, who founded the group One Fair Wage, which is dedicated to ending the subminimum wage.
“It’s hard to keep track for every hour, how much tips are coming in, and whether they’re covering the difference for each worker every day, every shift,” she said. “And the reason it’s difficult is the same reason it doesn’t work for workers, is that tips fluctuate wildly, they fluctuate from hour to hour, month to month, shift to shift, season to season.”
Singh, the Johns Hopkins professor, said that as people tip less, the onus could be increasingly placed onto restaurants to make up the difference.
“What’s going to happen is somebody has to cover, so either consumers are going to have to pay directly because prices are going to go up, or then you see that businesses do not survive this pressure, that the prices are not rising or tips are going down,” he said.
‘Tipflation’ is real, says expert
People might tip less, or they might go out less or not spend as much as they used to.
“A lot of people are saying this is getting costly,” said Jain, the Rutgers professor. “They are not inclined to dine out so soon.”
An added factor that coincides with tipping is the tendency to charge 3% for the use of credit cards. This too drives up the cost. While people are still going out after being cooped up for long, Jain could see people cutting back because of the expense.
Tipping fatigue, she said, is a real thing as is “tipflation” and it is affecting all sectors, fine dining, takeout places, even ride sharing like Uber or Lyft.
Businesses might end up scaling down the size of the tips they expect from customers, who right now are manually entering lower amounts rather than selecting the automatic 22% or or 25%, according to Singh.
“Setting defaults at more reasonable levels can lead to consumers to continue conveniently tipping at default levels, possibly resulting in higher overall tip collection,” he said.
Matt Fagan, Jenna Intersimone and Kara VanDooijeweert contributed to this article.
Daniel Munoz covers business, consumer affairs, labor and the economy for NorthJersey.com and The Record.
Email: [email protected]; Twitter:@danielmunoz100
