Americans Cutting Back on Tipping, Expert Says

Due to the high cost of living and economic uncertainties, people in the United States are finding it difficult to tip generously. A recent report by Bankrate reveals that fewer customers now tip consistently, whether it’s at restaurants, for ride-shares, haircuts, food delivery, or home services.

Bankrate’s senior industry analyst, Ted Rossman, suggests that Americans are becoming less generous with their tips due to inflation and economic unease.

However, the pressure to tip has increased over the past year, according to a consumer budgeting report by NerdWallet.

Bankrate’s report further highlights that two-thirds of Americans hold a negative view of tipping, especially when faced with digital payment prompts that offer pre-determined tip percentages ranging from 15% to 35% for each transaction.

Not tipping has become increasingly unusual, and many people feel resentful about that, Rossman further expressed.

The standard expectation for tipping at a sit-down restaurant is still around 20%, as suggested by etiquette experts.

While tipping rates at full-service restaurants have remained consistent, the percentage of tips given by customers at quick-service restaurants dropped to a five-year low of 16.7% in the first quarter of 2023, as reported in Toast’s recent restaurant trends analysis.

‘Tip fatigue’ leading to a decrease in tipping

Eric Plam, the founder, and CEO of Uptip, a San Francisco-based startup that facilitates cashless tipping, believes that “tip fatigue” is a contributing factor to the decrease in tipping.

Plam explains that during the COVID-19 pandemic, people were initially more generous due to the challenging circumstances.

However, he highlights that the issue arose when this increased generosity became the new standard, which was difficult to sustain.

Let's discuss:

I am a big believer in tipping. If you call in ahead of time you should tip on to go orders.

Having said that I'm not a fan of this new trend. This was taken at a Subway just a few moments ago. These are hourly workers, Do you generally leave a tip? pic.twitter.com/k1YTcUuUzS

— Lovable Liberal and his Old English sheepdog (@DougWahl1) June 8, 2023

Plam specifically mentions the growing prevalence of tipping prompts in various establishments, a phenomenon referred to as “tip creep.”

He notes that now there are situations being created where tipping is expected, even in new scenarios that traditionally did not involve tipping.

‘It’s time to take a stand’

As transactions increasingly shift towards cashless methods, it becomes crucial to have a means of tipping workers in the service industry who earn either the minimum wage or less, Plam further expressed.

He emphasizes the significance of this, considering that the average wage for fast-food and counter workers, including tips, is $14.34 an hour for full-time staff and $12.14 for part-time employees, based on the most recent data from the U.S. Bureau of Labor Statistics.

Plam highlights that people should be aware that the livelihood of these workers largely depends on the number of tips they receive.

However, in situations where workers don’t rely on gratuities as a significant part of their income, Plam suggests that consumers should use their own judgment when deciding whether to tip.

He clarifies that this doesn’t necessarily mean that consumers should tip less but rather encourages them to consider whether the worker has positively contributed to their overall experience.

“It’s time to take a stand,” Plam stated.