- Today, expected tips in US coffee shops are often upwards of 20%
- 35% of Americans think tipping culture has gotten out of control
- Studies show tipping no longer accurately reflects quality of service
IF you flinch when your barista flips the tip screen around to show options for upwards of 35%, you’re far from alone. In fact, a majority of Americans are annoyed and confused about how much to tip.
From headlines with inflammatory phrases like “tipflation gripping America” and “Is America approaching peak tip?” it’s obvious that a majority of consumers think US tipping culture is out of control.
In a country with inflation affecting even a cup of coffee, baristas are taking the brunt of the backlash.
The history of tipping actually arose from European feudal systems transitioning into a world economy. The tip-adjacent gesture was that of generosity or satisfaction for a service done by domestic workers. By the 18th century, this practice spread across Europe as domestic labour extended into public places. Service work was eventually recognised as a professional occupation, but tips remained the main form of compensation.
America adopted this tip structure in the 19th century, which was pushed by the hospitality and railroad industries who did not want to pay wages to their employees – many of whom were former slaves.
Tipping became commonplace in America after the Civil War. Stemming from feudal oppression and slavery, tipping has preserved subordination in today’s capitalist economy. To this day, American service industries are largely reliant on low-paid, tipped, mainly female and immigrant labour.
The US has a two-tier wage system in which the federal minimum wage is $7.25 for non-tipped workers and the subminimum wage is $2.13 for tipped workers. States are able to set higher minimum and subminimum wages.
This system enables businesses like cafes to hire more workers, keep menu prices down, and lean on customers to supplement wages with tips. Hypothetically, tipped employees earn enough tips to reach minimum wage, and employers are supposed to fill the gap if tips fail to do so.
Encouragingly, seven states have nixed subminimum wage in favour of paying tipped workers minimum wage, and more states are poised to follow suit. Chicago, for example, is projected to close the gap between subminimum ($11.02) and minimum wage ($16.20) in the next few years.
“I wonder if tips will come down because people will be more aware that the wage gap between a tipped employee and a minimum wage employee is getting closer,” says Rich Troche, Founder of Everybody’s Coffee in Chicago.
In contrast, baristas in Texas are more likely to earn higher tips given the state subminimum wage of $2.13.
“Tipping culture varies demographically too, from cities where relative anonymity pressures bigger tips to rural communities where tighter relationships mean baristas might be more understanding when a customer can’t tip much,” says Rich.
Either way, America’s convoluted wage structure affects tipped employees across the hospitality sector very differently.
The tipping structure is just the tip of America’s economic woes
Despite the murky past and present of US tipping structure, the percentage of the total bill covered by tips has only risen in recent history – from 10% of the bill in the 1950s to 20% in recent years.
Americans’ persistent tipping is driven by the old-fashioned belief that it encourages good service paired with the recently-intensified pressure to tip more to evade guilt and social scorn coined “tipflation.” Americans also spend more dining out than they did in the previous half-century, so the bar on tips is rising over even pricier meal tabs.
“How much customers tip is a strong economic indicator,” says Rich. “I’ve seen what tipping and cafe life have looked like in different economic scenarios, and it has been consistent throughout the years. When there’s tumultuousness, we feel it in tips first.”
Throughout the 2000s Great Recession, the COVID-19 pandemic shut-downs, and inflation today, he has noticed customers tighten their belts first with tipping when the cost of essential goods and services rise.
“A guy who buys a pour-over Geisha will continue to buy the pour-over Geisha. But he might just not tip as much,” he says. “Since Everybody’s Coffee opened, tips generally make up 10-20% of the bill, depending on how tightly strapped for cash Americans feel.”
The COVID-19 pandemic is perhaps an exception, as people tipped more to show gratitude towards those still going to work. Tipping is still expected in more places and at higher rates, and pre-entered tip screens make it easier to suggest higher tips (on the contrary, tip screens sometimes result in smaller tips).
With the pandemic in the rear view for many Americans, tipflation frustration has evolved into a declining percentage of people who always leave a tip. Coffee shops are no exceptions, as the percentage of people who always tip baristas fell from 23% in 2021 to 20% this year.
Is a hospitality industry reliant on tips sustainable?
The tipping structure in the U.S. bolsters a dividing relationship between hospitality workers and customers that may one day implode. About 35% of Americans think tipping culture has gotten out of control—a five percentage point increase from last year.
Contrary to its origin, tipping no longer accurately reflects quality of service. A study in 2000 found that differences in customer service ratings accounted for only 1-5% of the variation in tips.
Another study suggests that tipping is more common in societies with rampant inequality. Multiple studies have found that black waiters receive smaller tips on average while female waiters face more scrutiny and sexism in tipping. Furthermore, working for tips can enable a culture of harassment, especially for women.
Yet another point of economic divide is the fact that companies behind electronic payment screens pressuring higher tips take a cut of them. It therefore comes as no surprise that baristas’ demands for labour rights have intensified in the 2020s.
These inequitable undertones beg the question of how long Americans will put up with a tipping culture that undermines many of their values.
Most establishments are hesitant to do away with tipping in favour of increasing menu prices, and those that have tried eventually backtracked after losing customers and watching online ratings dip.
Some establishments are responding to rising subminimum wages by cutting staff or store hours, while others have tacked on service charges. Either way, cafe-goers are tired of shouldering labour costs, which may be one more reason that coffee-drinkers are choosing convenience over a cafe experience.
The US might never reach a point at which tips are not expected – or even frowned upon – like in other countries, but more sustainable wage structures are possible.
Everybody’s Coffee, for example, bases its wages very minimally on tips, factoring in only a 7-10% tip, and pays baristas Chicago’s minimum wage or more, plus benefits.
“The goal is that if someone decides to tip zero dollars every time, it doesn’t really affect them,” says Rich.
A quality of service influenced by the number on a tip screen does a disservice to both the barista and customer. Instead, wage structures that do not integrate tips can foster workplaces in which baristas are self-motivated to create an excellent cafe experience.
“Tipping is yet another cultural phenomenon on a pendulum – and it has reached its zenith,” says Rich. “But it’s not lost on me that Americans want to tip, and that won’t change any time soon. There will always be a component where people want to say thanks in their own way.”
While it looks like tipping is firmly anchored in American consumer culture, it seems to have reached a tipping point – pun intended. With inflation and a cost of living crisis, more sustainable tipping practices are required.
It’s also an opportunity to examine other unsustainable behaviours associated with tipping that can exacerbate existing discrimination and oppression of vulnerable groups.
Coffee Intelligence
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