Last updated July 2023
The jar by the register at the coffee shop, hand lettered with “Tips for Barista” and a smiley face. A service charge of 20 percent tacked onto every check at the pizza joint. Messages sent by rideshare apps during and after trips asking you to tip drivers. Tablets at counter-serve spots that staffers swing around for you to sign—and perhaps tack on 25 percent for great service.
You’re not imagining it: More U.S. businesses are grasping for gratuities, and consumers are catching on. In a recent survey completed by more than 1,300 Consumers’ Checkbook subscribers, 61 percent of respondents agreed they are tipping for services they didn’t tip for five years ago, and 72 percent said they feel more pressure to tip now. (See the table at the end of this article for a summary of our survey findings.)
New tipping expectations are partially due to COVID-19 pandemic lockdowns, which raised awareness about employees and gig workers putting themselves in harm’s way to deliver dinners or shop for groceries and toilet paper. “Many Americans decided they needed to compensate these workers for the risks they were taking—you are risking your health for my orange chicken,” says Jaime Peters, a tipping expert and the assistant dean of accounting, finance and economics at Maryville University in St. Louis. “We were not going out to a typical restaurant, so we adapted.”
The pandemic also accelerated a shift toward a cashless economy, as more businesses sought to make it easier to tip their workers by adding gratuity options at checkout on their apps and websites.
Many survey respondents didn’t approve of all these new tipping expectations. A constant refrain in feedback to our survey was that consumers didn’t like the custom of tipping or the increased pressure to do so. “The tip requests are relentless now,” complained one reader. “Fast casual restaurants always turn the card swipe machine around to face me when I pick up a to-go order...this is annoying,” said another.
Still, most respondents seemed to agree that, when tipping is the norm, it must be recognized as an essential part of the service worker’s income, and that leaving a fair tip is every customer’s responsibility. “I’m more aware of how hard servers are squeezed,” said one respondent. Many subscribers didn’t mind being expected to tip, noting they were happy to “help these workers survive.”
Giving gratuities is a widespread custom in the U.S., powered by longstanding societal customs and traditionally low wages for service workers. But in many other parts of the world, tipping is much less prevalent; instead, workers are paid living wages. In Australia, restaurant bills often have no spots to write in tips; in France, Italy, and many other European countries, eateries might tack on service or table charges, but tipping isn’t expected, other than maybe rounding up payment to the next whole euro.
But in many U.S. states, hourly wages paid by employers to tipped employees are quite low—in many areas, they’re paid only $2.13 per hour—with the assumption that waiters, bellhops, valet parkers, and their brethren will make up the discrepancy with tips. This arrangement is known as the “tipped-wage loophole,” and it can make knowing who to tip, how much to give them, and under what circumstances to do so confusing.
Several states—Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington—have passed laws that aim to eliminate the tipped-wage loophole by requiring employers to pay staff that receive gratuities minimum wages similar to those for non-tipped workers; lawmakers in a handful of other states are considering similar rules. And some businesses, particularly non-chain restaurants, have adopted the European model and add automatic service charges to tabs—usually 20 percent—instead of asking for gratuities.
“Both consumers and management can benefit from the practice of service charges,” said Larry Yu, a professor of hospitality management and tourism studies at George Washington University. “Consumers can benefit from transparent and consistent prices, since the cost of production and services is clearly in the check. For management, service charges can help simplify employment payroll management.” Yu also noted this arrangement contributes to an improving equitable work environment, and that if employees are paid higher hourly wages or salaries, that might motivate them to provide quality service.
Charging service fees or raising prices to cover higher wages would also protect workers from lousy days of earnings when business is slow or when bad luck provides them with customers who stiff them or undertip. And it would relieve customers of having to decide whether a tip is appropriate, calculating the right gratuity, and the often-weird interpersonal dynamic that tipping creates.
But in most states and in most restaurants, hair salons, cabs, etc., tipping is expected and, as indicated by responses to our survey, the practice continues to grow, not shrink.
There are solid economic arguments in favor of tipping. When tipping is customary, it creates incentives for waiters and other workers to deliver quality service. Of course, rather than relying on a gratuity system, restaurants, like many other businesses, could monitor the quality of each waiter’s service and reinforce good performance with higher wages. But at least in theory, having customers compensate staffers according to service quality creates a more nuanced feedback system. And some people like tipping because it provides a concrete way to say thank you for very good service.
However, for tips to work as financial incentives for good customer service, there must be tipping norms, with customers consistently tipping more when they receive above-average service. Apart from a sense of fairness and social responsibility, consumers may also tip to ensure future good service if they plan to return to the business and possibly encounter the same worker. But many waiters, hotel workers, drivers, and other service providers count on tips from customers they never expect to see again. Another reason for tipping may be to avoid the embarrassment and discomfort of being viewed with contempt by service workers.
Whatever the reason, our survey indicates most consumers do follow broad tipping norms. We asked members to tell us how much they typically leave for dozens of types of service providers (note that we examined only gratuities for routine tipping at the time of service, not holiday bonuses; EmilyPost.com has advice on that).
A large majority of survey respondents reported they regularly tip for most of the types of services we asked about. All respondents said they give gratuities for average or exceptional service in full-service restaurants, and more than 95 percent usually tip pizza delivery folks, bartenders, hotel bellhops and porters, airport skycaps, taxi and rideshare drivers, parking valets, hair stylists, and manicurists/pedicurists.
Respondents reported tipping less often for takeout (73 percent usually tip) and at fast-casual restaurants (79 percent) than at full-service establishments.
We found that Checkbook subscribers do sometimes significantly vary their tip levels in response to variations in service quality—but not as much as you might think. For “exceptional” service in full-service restaurants, respondents on average said they tip about 22 percent; for “average” service, the average tip was 18 percent; for “poor” service, the average tip was only 12 percent.
When they receive poor service in full-service restaurants, only eight percent said they usually leave no tip. In these scenarios, some respondents said they’d send a message to waiters by leaving a very small tip, rather than stiffing them. Others said they tip normally but complain to restaurant management of problems or “write ‘poor service’ on the credit card receipt.”
Many respondents cautioned about the difficulty of determining whether poor service was really the fault of the service worker (as opposed to kitchen staff, for example). “I always tip and take into account what is beyond the control of the server—crowds, kitchen issues,” said one respondent.
As in our previous surveys on tipping customs, there were no significant differences in tipping practices across the seven metro areas where we publish Consumers’ Checkbook magazine, nor were there significant differences across income levels. Age didn’t affect tipping practices—even between subscribers younger than 35 and those older than 75. And subscribers who travel or dine out frequently don’t tip more than those who don’t.