TIPPING IN AMERICA

There is now almost no payment transaction in the US that doesn’t involve a prompt for a tip. If you
go to get a coffee or pick up a takeout order, for example, an electronic screen will almost certainly get
pushed in your direction, asking if you want to add a 20%, 25% or 30% tip. More confusingly, however,
if you go to the local convenience store to buy a pint of milk or a pack of crisps, chances are you’ll still
see that tip screen pointed at you. You’re even prompted to leave a tip at some self-checkouts. Tipping
is most entrenched in the restaurant industry, where workers rely on gratuities to make up much of
their wages. Even Americans have long been ambivalent about it.
In the United States, tipping is optional in name only. Legally it’s voluntary but if you slink out of a
restaurant without leaving a gratuity of between 20 and 25 per cent, you’re likely to be chased by a
waiter demanding to know why. A gesture of appreciation has mutated into a fundamental right; a
discretionary offering corrupted to become an almost compulsory surcharge demanded by everyone
from cab drivers and shop assistants to baristas and waitresses. The practice has brought on
phenomena like guilt tipping, or the pressure to tip whenever presented the option, and tipflation, or
customers seemingly being asked to tip everywhere. A majority 60% of Americans say they’re tipping
more these days, according to an April 2023 LendingTree survey of 2,000 U.S. consumers. And about a
quarter, 24%, say they always feel pressured to tip when presented the option. It’s the wild, wild west
these days across America’s dining scene. Whether you live here or are merely visiting, it’s hard to know
what exactly is expected of you when dining out. With so many industries now building tipping into
people’s tabs, it can be overwhelming to know when you’re supposed to leave a little extra and how
much.

Why should I tip?

In other countries, a tip is just that – a bonus for great service. Paying extra on top of the bill at a
restaurant may seem unnecessary to us but if you consider the servers in America earn just a few
dollars per hour for their services, it starts to make sense. In fact, under American federal law, the
minimum wage for employees who also earn tips is just US$2.13 an hour and for those who don’t it’s
US$7.25. Think of servers as independent contractors you’re paying to wait your table. Taking a seat at
a restaurant in the US means you’re entering a social contract with your waiter.

Americans brought tipping over from Europe

As a practice, tipping has its origins in Europe of the Middle Ages (a period which lasted from about
500 to 1,500 A.D.) when the wealthy would give people in lower classes extra money for their services,
according to Kerry Segrave’s “Tipping: An American Social History of Gratuities.” In the 1800s,
Americans who had seen tipping on travels abroad thought this would be a wonderful thing to kind of
mimic our brothers and sisters in Europe and brought the practice to the U.S.. Though many
Americans rebelled against it, the practice spread.
At the end of the Civil War, America’s labor force “was flooded” with formerly enslaved people and
immigrants. Employers took advantage of this class of “low-educated, low-income” workers, and hired
them for jobs that paid very little, encouraging patrons to tip as a supplement to wages. This shifted the
responsibility of paying workers to customers and cut employers’ costs. Various businesses within the
service industry adopted the practice. But the company that “really institutionalized” tipping was the
Pullman Company, which built and operated railroad cars. Workers shined shoes, made beds, woke up
passengers and so on. They worked long hours and relied heavily on tips for pay.
Economically, companies really liked the opportunity to not have to pay for labor.
The Fair Labor Standards Act of 1938 established a minimum wage for some industries, excluding
food services and others like retail and construction. When restaurants were added in 1966 they weren’t
covered under the typical minimum wage as other industries ultimately were. Instead, restaurant owners
would pay what’s called a tip credit, which means you can pay a percentage of the minimum wage as
long as your tipped employees get enough tips to equal what the minimum wage is or more. As of
1996, the federal tipped minimum is $2.13 per hour.
These days, tipping is deeply embedded in the restaurant industry. In part, that’s because restaurants are
very difficult to operate and very difficult to make money, and labor has now become the highest cost
in any food and beverage business. With tipping, because the whole thing is shifted onto the customer,
it’s less expensive for restaurant owners to hire people. For workers, however, that creates a pretty
precarious wage system. It’s hard to plan because you don’t know how much you’ll make. You’re at the
mercy of the customer.

How much should I tip at a restaurant?

A gratuity of 20 to 25 per cent on top of the bill (before sales tax) is standard, with extra given for
topnotch service. Servers in America work hard for the money – they’re generally friendly,
knowledgeable and willing to go the extra mile for customers. Approximately two-thirds of customers
will tip 20 per cent for table service without question, which is the minimum so long as your server
does not commit some sort of violent crime against you. Meanwhile, 90 per cent of customers prefer
to tip as they see fit, which allows for greater gratuity in the case of excellent service, and 78 per cent
would like to be made clearly aware of any automatic gratuity additions on the menu, rather than when
the check arrives. You should factor an extra 30 per cent into restaurant prices to include sales tax and
tips. A $50 pizza lunch thus becomes $65, while a $150 dinner would be $195.

What if the service was terrible?

Bad service is unusual but it happens. To not tip at all, though, the service would have to be dreadful.
Leaving just 10 per cent is a clear indication that the experience was not good. If you really don’t think
your waitperson deserves to be paid for their service, the best course of action is to explain to the
restaurant manager why you’re not leaving a tip. If you depart without tipping or providing an
explanation, your server will want to know why.

Do I tip even if the restaurant has already added a gratuity to my bill?

Some restaurants will take it upon themselves to add a gratuity if you’re with a large party or it’s a
public holiday. If the bill reads “gratuity included”, you’re not required to pay extra.

What about at a bar?

The accepted standard is US$1 a beer – if you’re heading out to a bar, ensure you have a pocketful of
dollar bills. Order and pay for your drink and leave a dollar bill on the bar for the bartender – it’s not
necessary to put it in their hands. If your barkeep slings you a free beer, leave the standard tip even if
you’re not paying for the drink. For a complicated cocktail, however, the standard 20% rate is
recommended.

Do I have to tip for fast food or takeaway coffee?

At fast food chains such as Dunkin Donuts or In-and-Out, the answer is no. In any other establishment
such as specialist deli's, cafes and fast-casual joints from taco trucks to hotdog vendors, 10 per cent is
the accepted minimum amount. For takeaway from a restaurant, you should tip the restaurant at least
10 per cent to cover the staff who facilitate and manage your order. If you're simply picking up a coffee
to go, a US$1 tip or 20 per cent is customary.
What about tipping at other service businesses, like coffee shops or delis? It gets a little more
complicated, especially with the proliferation of touchscreen payment methods that encourage you to
tip upwards of 20 per cent where, previously, a few dollars of loose change would have sufficed. If
people are just coming in and buying groceries, they don’t need to tip. But if you get coffee, if you get
sandwiches, then it’s nice to tip. Beware of smart tipping: this is a process by which the suggested
amount on the screen changes from a percentage to a fixed sum — typically $1, $2 or $3 — for
purchases below $10. Fail to pay attention and you could end up paying $7 for a $4 latte, effectively
leaving a 75 per cent tip.

Who else should I be tipping?

Tipping has gone digital, so expect bars, taxis, restaurants, coffee shops and tour guides to offer you a
tablet requesting you to select a suggested gratuity of 20, 22, 25 or 30 per cent. If there’s a “No tip”
button it’s usually the smallest. Otherwise, simply hand the tablet back and leave cash instead. Or not.
Taxi drivers, hairdressers, porters and those who deliver food will all expect a fee for their services.
New York cabs have back-seat displays that allow you to choose a default tipping amount, up to 30 per
cent. Generally, 20 per cent is fine and if you’re paying cash just add a couple of extra dollars – the
same applies for Uber drivers. For hairdressers and manicurists the standard is 20 per cent, plus a few
dollars for the apprentice who washes your hair. If you order food to your accommodation, its
recommended that you tip a minimum of US$5 or 20 per cent (or more if they had to schlep up stairs
or battle inclement weather) to the delivery person – cash is preferred. Tip porters, or bellhops, US$1
per bag they carry or US$2 for heavy bags. Break your big notes down before checking into a hotel.
Luggage porters still accept tips in cash and particularly enjoy the ATM-fresh $50 and $20 bills carried
by those straight from the airport.