Here’s why Americans are getting sick of tipping: survey

Business

By Erica Lamberg, Fox Business

June 10, 2023 | 20:21

Americans are tipping less often for a variety of services, showing a steady decline in recent years, according to new data from Bankrate released this week.

Also, two-thirds (66%) of survey respondents have a negative view of tips, including 41[ads1]% saying they feel companies should pay their employees better instead of relying so heavily on tips.

And people feel annoyed by pre-set tip screens (32%), sharing that the current tipping culture has gotten out of hand (30%), noting that they would be willing to pay higher prices if they could do away with tips. (16%), and are confused about who and how much to tip (15%), according to Bankrate’s report.

Ted Rossman, Bankrate’s senior industry analyst, says in his opinion, what has caused negative tips for the past year is the economy.

“The biggest change, at least over the last year, is that inflation is giving people less money to go around,” Rossman tells FOX Business.

“A lot of people seem to feel that things cost enough already, so they’re not as likely to tip on top of that.”

He also says the “ground of gratitude” for service industry workers that was evident early in the pandemic appears to have faded.

“But we saw a tipping decline even before the pandemic. It seems like the ‘tip creep’ that’s going on—being asked to tip for things that don’t warrant a tip—is irritating a lot of people.”

Tips for approving servings vary by service

Tipping is becoming more and more ingrained in our society and workers are dependent on it, says Rossman.

“Consumers won’t pay higher prices, and if you don’t tip generously, you’re hurting the worker, not the business,” he says.

The topic of tip authorization with respect to food items often involves the type of service and may include sit-down, quick service and delivery services.

“I think everyone should tip 20% at a sit-down restaurant, unless the service is really bad,” Rossman tells FOX Business.

“Many waiters and waitresses earn as little as $2.13 an hour (the federal minimum wage with tips), with tips expected to increase their compensation.”

Rossman cites surveys showing that only 65% ​​of diners tip, down from 77% four years ago, and he notes that only 44% tip at least 20%, down from 50% last year.

“I think we should always tip for delivery as well. The exact number depends on the size of the order – for example, instead of a percentage, it might make sense to tip something like $5 for a pizza,” adds Rossman.

Consumers may not know that a service or delivery fee often does not go to the delivery person.

“I don’t think you should feel compelled to tip if you get takeout. It was more of a thing during the pandemic when sit-down service was closed, he continues.

Why should consumers budget for tips?

Bankrate’s study suggests that high inflation and economic turmoil contribute to frugal consumers.

“I understand that it’s tight for a lot of people, but I also want to note that tipping often involves discretionary spending,” says Rossman.

“Honestly, if you can’t afford to tip 20% for dinner, you probably shouldn’t go to that restaurant. When tipping is common, as it is in restaurants, I think consumers need to build these costs into their budgets.”

Can tip messages go over the limit?

Rossman believes that sometimes the tip creep goes too far.

“I was recently asked to tip by a self-checkout machine at Newark airport. I also don’t like how Hopper, the online travel agency, asks for tips when people book trips on their website. I’ve even heard of some doctor’s offices asking for tips, says Rossman.

“All of these feel like overreach and obvious revenue.”

According to Rossman, tips should be more of a reward for service, and are often expected when someone serves you food or carries your luggage.

“It’s usually not for self-serving or highly paid professionals like doctors,” he says.

And in his view, pre-populated tip screens can be tricky.

“Because the cashier often looks right at you when you’re deciding whether or not to tip them, and customers behind you in line can also snoop,” adds.

The amounts are also very strategic.

They are usually 10%, 15% and 20% or 20%, 25% and 30%.

Many people tip in these cases out of guilt.

“Starbucks, for example, says half of its customers who pay by credit and debit card leave a tip,” reports Rossman.

“These preset screens shift the tipping dynamic from having to decide to tip (like putting extra change or a few dollars in a tip jar) to actively declaring that you don’t want to tip (which isn’t always easy to do) they I suspect that many people don’t really want to tip for something like a coffee or food truck order, but they’re guilty of it, and then they feel bad afterwards.”

How has the pandemic affected the behavior of the betting culture?

The survey reports that people said they would bet better during and after the pandemic, but that hasn’t really lasted, Rossman says.

“Currently, 14% of Americans say they are giving more than they did before the pandemic, and 9% say they are giving less,” he explains.

“Other components of our survey point to a marked decrease in the frequency of tipping for various services. Every single category is down from the last time.”

How does age affect betting attitudes?

Bankrate’s report outlines that Americans are tipping less frequently for a variety of services, showing a steady decline in recent years.

According to the research, Gen Zers (ages 18-26), millennials (ages 27-42) and men stand out as the worst tippers across multiple service categories.

In general, Rossman says, older Americans tend to be better punters.

“I think this is mostly because they have more money, but also maybe because they are more ingrained in the social norms around tipping,” he says.

This pattern continues across most other services, with differences in how Gen Zers, millennials and men in particular tip hairstylists/barbers, food delivery people and taxi/rideshare drivers, Bankrate says.

The study reports that “While 53% of American adults who have a hairdresser always tip them, only 24% of Gen Zers, 40% of millennials and 46% of men do so, compared to 60% of women, 67% of Gen Xers and 70% of baby boomers.”

Similarly, 50% of US adults who order food delivery always tip the delivery person, but only 31% of Gen Zers, 42% of millennials and 45% of men do the same, compared to 54% of women, 63% of Gen Xers, and 62% of baby boomers, reports Bankrate’s study.

Finally, according to the study, while 40% of US adults who ride in cabs/rideshares always tip the driver, only 22% of Gen Zers, 30% of millennials and 36% of men always tip, compared to 45% of women. 51% of Gen Xers and 56% of Baby Boomers.

Overall feedback from the tipping culture, according to the study, 30% of American adults overall say tipping culture has gotten out of control, and the tendency to feel this way increases for older generations and higher incomes.

33 percent of Gen Xers and Baby Boomers agree with this sentiment about tipping culture, compared to 27% of millennials and 22% of Gen Zers.

How do income levels and betting attitudes intersect?

40 percent of those in the highest-income households (those earning $100,000-plus annually) say the tipping culture has gotten out of hand, according to Bankrate’s data, compared with 34% of those earning between $80,000 and $99,999 annually, 33% earning between $50,000 and $79,999 annually and 23% in the lowest income households (earning less than $50,000 annually).

And goodwill is surely still important, as the study says 35% of people say they feel good when they leave a generous tip.

Bankrate’s survey was carried out on 3-5 May 2023, with a sample size of 2,437 US adults.