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“Out of control”: No one knows how much to tip




(CNN) — A new checkout trend is sweeping across America, making for an increasingly awkward experience: digital tip jars.

You order a coffee, an ice cream, a salad or a slice of pizza and pay by credit card or phone. Then an employee standing behind the counter spins a touch screen and pushes it in front of you. The screen has some suggested tip amounts – usually 10%, 15% or 20%. There is also often an option to leave a custom tip or no tip at all.

The worker is right in front of you. Other customers stand behind, waiting impatiently and looking over your shoulder to see how much you tip. And you have to make a decision in seconds. Lord, the stress.

Customers and workers are today confronted with a radically different tipping culture than just a few years ago ̵[ads1]1; without any clear norms. Although consumers are used to tipping waiters, bartenders and other service workers, tipping a barista or cashier may be a new phenomenon for many shoppers. It is largely driven by changes in technology that have made it possible for business owners to more easily shift the costs of compensating workers directly to customers.

“I don’t know how much you should tip, and I study this,” said Michael Lynn, a professor of consumer behavior and marketing at Cornell University and one of the leading researchers on American tipping habits.

Adding to the changing dynamic, customers were encouraged to leave generous tips during the pandemic to keep restaurants and stores afloat, raising expectations. Total tips for full-service restaurants increased 25% during the most recent quarter compared to a year ago, while tips at fast-casual restaurants increased 17%, according to data from Square.

The shift to digital payments also accelerated during the pandemic, leading stores to replace old-fashioned cash with tablet touchscreens. But these digital tipping screens and procedures have proven more intrusive than a low-pressure cash register with a few dollars in it.

Customers are overwhelmed by the number of places where they now have the opportunity to tip and feel pressured about whether to add a tip and for how much. Some people deliberately walk away from the screen without doing anything to avoid making a decision, say etiquette experts who study tipping culture and consumer behavior.

Betting can be an emotional decision. Attitudes towards tips in these new environments vary widely.

Some customers tip anyway. Others feel guilty if they don’t tip or embarrassed if their tip is stingy. And others avoid tipping a $5 iced coffee, saying the price is already high enough.

“The American public feels that tipping is out of control because they’re experiencing it in places they’re not used to,” said Lizzie Post, co-president of the Emily Post Institute and great-great-granddaughter of its namesake. “Moments where tipping is not expected make people less generous and uncomfortable.”

Starbucks has launched tipping this year as an option for customers who pay with credit and debit cards. Some Starbucks baristas told CNN that tips add extra money to their paychecks, but customers shouldn’t feel obligated to tip every time.

A Washington state barista said he understands if a customer doesn’t tip for a drip coffee order. But if he creates a custom drink after spending time talking to the customer about exactly how to make it, “it makes me a little disappointed if I don’t get tips.”

“If someone can afford Starbucks every day, they can afford to tip on at least a few of these trips,” added the employee, who spoke on condition of anonymity.

“Un-American”

The ability to tip is seemingly everywhere today, but the practice has a troubled history in the United States.

Tipping spread after the Civil War as an exploitative measure to hold down the wages of newly freed slaves in service occupations. Pullman was the most notable for his tipping policy. The railroad company hired thousands of black porters, but paid them low wages and forced them to rely on tips to make a living.

Critics of tipping argued that it created an imbalance between customers and workers, and several states passed laws in the early 1900s to ban the practice.

In “The Itching Palm,” a 1916 diatribe about tipping in America, author William Scott said that tipping was “un-American” and argued that “the relationship between a man who makes a tip and a man who accepts it is as undemocratic as the relationship of master and slave.”

But tipping workers were essentially built into law by the 1938 Fair Labor Standards Act, which created the federal minimum wage that excluded restaurant and hospitality workers. This allowed the tipping system to spread in these industries.

In 1966, Congress created a “subminimum wage” for tipped workers. The federal minimum wage for tipped employees has stood at $2.13 an hour — lower than the federal minimum requirement of $7.25 — since 1991, although many states require higher base wages for tipped employees. If a server’s tip doesn’t match the federal minimum, the law says the employer must make up the difference. But this does not always happen. Wage theft and other wage violations are common in the service industry.

The Department of Labor considers any employee who works in a job that “customarily and regularly” receives more than $30 a month in tips eligible to be classified as a tipped employee. Experts estimate that there are more than five million tipped workers in the United States.

Tips on tips

How much to tip is completely subjective and varies across industries, and the link between quality of service and tip amount is surprisingly weak, said Cornell’s Lynn.

He theorized that a 15-20% tip in restaurants became standard due to a cycle of competition among customers. Many tips to get social approval or with the expectation of better service. As the tip level increases, other customers begin to tip more to avoid loss of status or risk poorer service.

The gig economy has also changed tipping standards. An MIT study released in 2019 found that customers are less likely to tip when workers have autonomy over whether and when to work. Nearly 60% of Uber customers never tip, while only about 1% always tip, a 2019 University of Chicago study found.

What makes it confusing, Lynn said, is that “there is no central authority that establishes tipping standards. They come from the bottom up. Ultimately, it is what people do that helps determine what other people should do.”

You should almost always tip sub-minimum wage workers such as restaurant servers and bartenders, advocates and tipping experts say.

When given the opportunity to tip at places where workers earn an hourly wage, such as Starbucks baristas, customers should use their discretion and remove any blame from the decision, etiquette experts say. Tips help these workers supplement their income and are always encouraged, but it’s okay to say no.

Etiquette experts recommend that customers approach the touchscreen option the same way they would a tip jar. If they want to leave change or a small tip in the glass, do so when prompted on the screen.

“A 10% tip for takeaway food is a very common amount. We also see change or a single dollar per order,” said Lizzie Post. If you’re not sure what to do, ask the worker if the store has a suggested tip amount.

Saru Jayaraman, president of One Fair Wage, which advocates ending the sub-minimum wage policy, encourages customers to leave tips. But tips should never count against service workers’ wages, and customers must demand that companies pay workers full wages, she said.

“We have to tip, but that has to be combined with telling employers that tips have to be on top, not in place of the full minimum wage,” she said.



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