and you weren't asked for a tip?

Yeah, I can't remember either.

Tipping culture has gotten out of control.

I get up to the pay window and she's like,

How much do you want to tip? What am I going to

tip you for?

I'm in the drive through.

Oh my God. Tips have been on the rise for

decades. During the 1950s, people commonly

tipped 10% of the bill.

By the 1970s and 1980s, that jumped to 15%.

Today, people tip anywhere from 15% to 25%.

According to one 2022 survey, consumers said

they tipped more than 21% on average.

Nowadays, there are people who argue 20% is

kind of a cheap tip.

While the percentage that consumers are tipping at

full service restaurants in the past couple of

years has remained about the same, in the fourth

quarter of 2022, the number of tips provided

at full service restaurants grew 17%.

Meanwhile, the tip frequency at quick

service restaurants such as coffee shops and fast

food chains rose 16% during the same time

period.

What we're seeing now nationwide is something

that is known as tipflation.

At every opportunity, we're being presented

with a tablet that's asking us how much we'd

like to tip.

In many cases, not only replacing the old

fashioned tip jars that you could feel good about

throwing some spare change into, but actually

suggesting tip amounts, often right in front of

the employee receiving that tip, not to mention

also your dinner date and the dozen or so

people standing behind you in line.

And it's gone beyond just the tablets.

The other day I was using the Hopper app to

book a hotel, and it wasn't until I confirmed

my payment that I realized my hotel was $10

more expensive.

It turns out, Hopper assumed I wanted to add a

tip and I had to go back to a prior page in order

to opt out. Tipflation refers to not just that

we're tipping more, but we're tipping everyone

for everything.

You're being guilted into tipping on something that

is not technically a service.

Someone simply doing their job.

In those situations, consumers are feeling

resentful. Where do you draw the line?

Tip stands for "to ensure promptness." Tipping may

go back as far as the Roman era, but according

to most experts, the practice likely has its

origins in medieval Europe.

Noblemen taking passage on roads would throw

coins to the rubble to ensure safe passage.

One theory is that it evolved in eating and

drinking establishments as a way to forestall

envy that when you're eating and drinking,

you're having fun and the people who are

serving you are not.

Fast forward to the 19th century when waiters who

received a full wage went on strike demanding

higher wages. They were replaced with women who

employers could pay less. A decade later,

there was the population of newly freed slaves.

The idea from these restaurant owners was

that they were giving the luxury or privilege

of a white person's tips .

That was without a full wage.

Ironically, as tipping exploded in the United

States, it became less common in Europe and was

replaced with service charges.

While the first federal minimum wage law was

passed in 1938, it wasn't until almost three

decades later when the tip minimum wage was

established. In 1991, the federal minimum wage

for tipped employees was set at $2.13, which is

what it remains at as of March 2023.

As far as I know, the United States is the only

country that exempts tipped workers from

having to receive the full minimum wage.

In 43 states, it is legal to pay tipped workers

less than the standard minimum wage because tips

presumably make up that difference.

In recent years, you might have found yourself

asking, Do I tip this barista for pouring that

hot coffee? What about when I'm going to a

restaurant and picking up takeout?

And how much do I tip that doorman, driver or

dog walker? When those in the service industry

were feeling the brunt during the coronavirus

pandemic, consumers started tipping for

things they never had before, and the

percentage of remote transactions when tipping

was an option in which the consumer tipped

soared from about 46% before the pandemic to

around 86% in January 2022.

If people were willing to tip the person

delivering food to their home 30%, why not ask if

they'd like to tip when they come pick up?

During the pandemic, businesses who lost a lot

of traditional customers and transactions were

looking for alternative ways to make up that

income. And if asking for tips was one way to

do it, they were willing to try it.

And since then, that ask hasn't dissipated.

Another reason consumers say they feel pressured

to tip more? They're being asked to tip prior

to service completion.

Asking for a tip beforehand is almost like

a bribe, right?

It's, I'm afraid not to tip because would you do

less good work?

Customers might not be concerned about the

barista's perception of their tip before getting

their latte, but what about the mechanic

repairing your car?

I don't know about you, but I'm certainly going

to make sure to tip them well to ensure my safety.

Another reason consumers are tipping more: newer

technologies.

Kiosks and tablets with three large tipping

suggestions that pop up on the screen in front of

you. Three Options chosen by the business.

I have not yet been to the restaurant where they

recommend 5, 10 or 15% for quick takeout.

It normally always starts at 15 as a bare

minimum, sometimes even starting at 20, 25 and up

to 30.

According to a 2022 CreditCards.com survey,

22% of respondents said when they're presented

with various suggested tip amounts, they feel

pressured to tip more than they normally would.

They use those options as an indication of kind of

what the normative range is and feel compelled to

tip within that range.

So the more you ask, the more you get.

The three prominent companies with that

trendy, sleek look are Square, Toast, and

Clover. They launched a bit more than a decade

ago to help businesses run smarter, faster and

easier, all in one point of sale or POS systems.

In some cases, fewer fees so it's less of a

burden to accept multiple credit cards, no

long term contracts and multiple other useful

tools, including inventory and employee

management.

They got credit card processing into the hands

of individuals and very small merchants.

Square did a great job and it's been a

tremendous growth story.

That's half of the business today.

Do you think these companies are responsible

for this turn of events that we've seen with

tipping?

I would say they could take some of the credit

for helping restaurants gather more tips.

Robert Sanchez manages Eli's Essentials in New

York City. One of the business's locations uses

Toast while the other uses this.

He says the storefront that uses Toast sees more

and higher tips.

The Clover, Square and Toast terminals to a

consumer are very easy to use.

Big buttons, big areas to sign the tip, and easy

way to tip a different amount if you don't like

the starting at 20% option.

There are others that do it.

They're just not as cool looking.

We've come a long way from being able to just

throw your spare change into the jar by the cash

register.

The new tablets have turned what used to be a

sin of omission, I simply didn't put money

into the tip jar, into a sin of commission.

I have to hit a button and say no tip.

I have to actively choose not to tip.

Whereas before, not tipping was a kind of a

passive thing.

Glancing at the tip jar could have also been a

way to get a sense of how many others are

tipping on that service and maybe even how much

money. Meanwhile, not only can the tipping

options be customized, but the tipping feature

can be disabled as well.

So it's the merchant's choice to ask or not to

ask for tips.

From the business side, it makes employees want

to perform better and do a better job.

It's seriously significant.

It really pays for the software.

You'd be a foolish business owner not to

install it based on what the numbers display.

Even a mammoth company as large as Starbucks has

decided that they need to sink or swim.

And the best way for them to do that is to

offer the tip screen.

Starbucks rolled out the tipping feature in stores

in September 2022.

It's one thing to have a happy staff.

It's another thing to have customers that are

feeling resentful.

I think it's a calculus that all business owners

really need to make.

Do you think that they're somewhat going to start

seeing that they're getting lower tips

because people are paying tips to so many

services or they're resentful of the act of

tipping in general?

I think that's a very real danger.

Servers in a sit down restaurant, they were

greatly affected during and immediately

post-pandemic by restaurants doing all

sorts of fees.

Their tips were actually going down because

consumers were saying, well, if I'm paying for

their health insurance and I'm paying for

inflation and I'm paying for this and I'm paying

for that, enough is enough.

The more you levy these line items onto

consumers, guess who's being penalized?

It's the one area that's still quasi

discretionary, which is the tip.

I went door to door talking with waitresses,

bartenders and baristas, and while they wanted to

remain anonymous, they told me it's happening

already. With inflation and being prompted for

tips left and right, they say customers have

already started to tip less and sometimes not at

all. A 2022 study found that 17% of Americans are

tipping less because of inflation. However, 10%

report tipping more.

At the same time, more than half of Americans,

or 60%, want to do away with tipping entirely.

The extent of pandemic-influenced

generosity has also gone down.

43% of consumers typically tipped servers

20% or more in 2022, compared to 56% of

consumers in 2021.

Meanwhile, the average tip for full service

restaurants has gone down only slightly during

the same time period.

According to Toast, 19.6% in the fourth quarter of

2022, compared to 19.8% in 2021.

However, according to surveys conducted in

those same years, respondents said they're

tipping higher percentages: 21.2% and

18.9%, respectively.

It can genuinely hurt the people who truly, truly

rely on gratuities for their livelihood.

I firmly believe that the tipping invasion we

are experiencing right now, I think it's a net

negative for society.

And with that tablet at just about every counter,