The High Price of US Tipping Culture

Unwritten rules for tipping vary around the world. In the US, establishments have increasingly resorted to tactics to extract extra fees, leading to a veritable "tip inflation." Frank Sinatra was known for tipping waitstaff generously with $100 bills. This was at a time when $100 was actually worth much more than it is today. But what are the rules for tipping today?

Many people wouldn't think twice about tipping a waiter at a good restaurant, a hairdresser, a friendly bartender, or the doorman carrying their heavy luggage at a busy hotel. These are situations with clear, long-established rules in many countries.

But what about the Starbucks barista? Or the person taking your order at a coffee counter? What about a self-service kiosk?

To tip or not to tip?

Most historians agree that tipping began in medieval Europe, with aristocrats distributing gratuities to servants or those who worked on their land.

By the 19th century, the idea was fading in Europe, but it reached the US. Later, it would be re-exported around the world.

Today, people tip for a variety of reasons: to feel better about themselves, to impress others, to help offset employees' paltry salaries, or because they're asked to.

Tipping is primarily motivated by helping waiters or rewarding good service, Michael Lynn, a professor of service marketing at Cornell University in the United States and a researcher on tipping, told DW.

Some tip to fulfill a sense of obligation, Lynn said. Others are even more selfish. These people tip to obtain or maintain future preferential service or social approval, explained the expert, who is currently writing a book on the subject, to be titled *The Psychology of Tipping: Insights for Service Workers, Managers, and Customers*.

Digital tipping: how did we get here?

These days, new technologies are changing how and where tips are expected. In the past, a few dollars were left on the restaurant table or a small amount of change was placed in the tip box next to the cashier.

The rise of cards, apps, and touchscreen payment systems has added tipping options—and even more confusion for customers.

"We've seen an explosion in tipping requests, even though tipping amounts haven't changed dramatically," says Ismail Karabas, associate professor of marketing at Murray University in Kentucky.

During the COVID-19 pandemic, many businesses have moved away from cash and toward accepting contactless and online payments. As a result, businesses that provide these digital devices have decided to include a tip requirement.

"Tipping is already built into the process; businesses have to opt out of this option. Many didn't, for various reasons, and so we started to see widespread tip inflation," Karabas, an expert in service marketing, tipping, and advertising, told DW.

The default of not opting out

When customers receive pre-calculated tips of 15%, 20%, or 25%, what should they do? Simply press one of the buttons and go, take the time to add their own amount, or leave nothing while looking directly at the cashier?

Customers often choose a predefined tipping option rather than holding up the line. This gives technology designers a lot of influence over tipping.

Lynn argues that the question of how interface design affects tipping is a "hot new area of research." "Increasing the amount asked for tipping options increases the amount received—although it may decrease the proportion of people who leave tips," he said.

Designers have an incentive to make tipping the default option and make it difficult to opt out. Anyone who wants to opt out ends up struggling or wondering how to do it.

"More tips mean more income for employees, but also for technology designers because they charge a fee for every transaction that goes through their systems," Karabas added.

What do tippers really think?

A YouGov survey conducted in May 2023 in the US, UK, France, Germany, Denmark, Sweden, Spain and Italy showed that the overwhelming majority of restaurant tippers in these countries pass on 5% to 10%, not much more.

The US was a different story, with two-thirds of respondents tipping 15% or more. The survey also revealed that many Americans would tip at a restaurant with poor or terrible service.

Another study on tipping culture in the US, published by the Pew Research Center in November 2023, analyzed so-called tip inflation in the US.

The Pew survey found that 72% of adults say tipping service workers is expected more often than it was five years ago. Furthermore, only 34% of adults surveyed say it's extremely or very easy to know when tipping is appropriate.

Tips for complicated situations

How to deal with this new tipping culture? First, understand your location, the local situation, and how employees are paid. Do they earn minimum wage, with tips as an additional bonus? Or do they earn a much lower wage, below the minimum wage, and therefore rely on tips to subsidize their take-home pay?

In some places in the US, this subminimum wage for tipped workers can mean earning as little as $2.13 an hour. Knowing how much people earn can help you decide whether and how much to tip.

Second, take the time to understand the system. Once you understand local regulations and wage conditions, you'll be able to navigate tipping technology, such as calculating what that 25% button actually means in dollars and cents.

Don't let the line behind you or the group sitting at the table with you pressure you – although this is probably the hardest part, especially if it's a romantic date.

Also, don't tip out of guilt. "Tipping out of guilt leaves a bad impression on customers, makes them angry, and makes them less likely to return to the same establishment," Karabas explained.

Finally, as a last resort to avoid confusing or unexpected tip requests, customers should consider paying in cash, says Karabas. That way, everything will be in your hands, even if it's a crisp $100 bill, like Frank Sinatra's.