Tipcreep: Majority Americans Feel the Gratuity Grind

A man paying the bill in a restaurant.

More than seven in ten United States adults (72%) say tipping is expected in more places now than five years ago, per a Pew survey of nearly 12,000 U.S. adults from December.

With costs rising across the board, one often overlooked spending category looms larger on the American consumer from all sides: tips.

Unlike Mr. Pink in Reservoir Dogs, people don't have a complete reluctance to pay. About nine in ten adults who eat at sit-down restaurants (92%) say they always or often pay a gratuity. Although this near-universal tipping drops away in other categories, be it food delivery, coffee shops, nail salons, or bars.

Dr. Donna Corbett, Executive Director of Amazing Grace Etiquette, says tipping hasn't yet reverted to pre-pandemic norms as many sectors have used tech to broaden the scope for gratuity requests. Despite this, she says when it comes to tipping, you give what you get.

“It's all about service,” Corbett says. “And I think that's gotten lost in the mix, the service piece. If I go to a very nice restaurant and I have great service, naturally, I would want to tip that person.” Mr. Pink would approve.

And Corbett's views are backed up by the survey findings. Over three-quarters of respondents (77%) said the quality of the service received determines whether they tip and the amount given. No other factors were nearly as consequential as the level of service rendered to the customer.

‘Tipping Point'

The practice remains divisive in American life. Despite being a long-standing custom, there is still much confusion over tipping among the population, possibly due to the changing methods of tipping and the variety of situations in which it is requested.

Only about a third of Pew respondents said it's extremely or very easy to know whether or how much to tip for different types of services.

Guidelines are often available. It's common for businesses to try to suggest amounts to pay, often with a display on a checkout or electronic bill. Yet 40% of Americans oppose these recommendations from vendors, while only 24% favor them. 32% feel neutral about it.

At a deeper level, there are questions over the nature of the practice. Few agree on whether tipping is an option or a duty, although more people tend to view it as the latter rather than the former. Around a fifth of Americans (21%) say it's more of a choice, while almost a third (29%) say it's more of an obligation. However, nearly half of the respondents emphasize context, saying tipping standards change depending on the situation.

Tipflation

In both frequency and scale, tipping has climbed in the years since the pandemic. According to data from digital payment platform Square, gratuity payments received by restaurants in 2022 were up over 15% year-over-year for both full-service and quick-service establishments.

The tip jar should be overflowing, but it has actually disappeared. The explosion of digital tipping — where customers tip with point-of-sale systems rather than cash — has made physical tip collection procedures all but invisible at the counter. This may exacerbate fatigue and confusion for some customers as they lose their traditional bearings for when and how to tip.

The expected percentage rate is also climbing. One 2022 survey by Creditcards.com found the traditional pre-pandemic 15% tip has since bumped up to around 20% and has been adopted as the norm for most consumers.

Although a hassle for consumers, tips are a blessing for workers. A wide range of tip jobs opens up the door to earning even more.

Beyond the classic roles of restaurant service staff or food deliverers, other tippable workers include dog walkers, cleaners, golf caddies, beauticians, and even tattoo artists.

Bartending is another role where tips constitute a large part of total earnings. It is relatively simple to become a bartender. No formal education is needed. Plus, employers tend to emphasize practical skills and hands-on experience. Depending on the state or city where the bar is located, a valid bartending license may be needed to start.

Yet not all customer-facing blue-collar jobs earn tips. Retail staff, for instance, are not often tipped for their service. Neither are security guards or cashiers.

As American consumers continue to struggle with rising costs of living, inflation will likely remain a hot-button issue. The rise of digital tipping has enabled gratuity requests to creep into new spaces previously off the tipping map. Tips are typically small sums of money. Yet they add up over time. Going forward, consumers handling this new environment could have an outsized impact on their financial well-being over the long term.

This article was produced by Media Decision and syndicated by Wealth of Geeks.