The state of tipping in the United States has become a recent issue, with many customers complaining about higher demands to tip. According to new data from the Pew Research Center, 72% of consumers oppose the added service fees tacked on by businesses, which are being used to substitute higher labor costs. Dubbed “tipflation,” this phenomenon ultimately increases the pressures on consumers to pay greater gratuity for smaller exchanges while ignoring the adverse effects of tipped wages on minority groups.
One of the most common methods businesses, especially food venues, have used to receive greater gratuity is digital tipping requests. Digital tipping in places like coffee shops puts consumers in a challenging situation, as their tipping decisions are visible to the cashier and other customers. Leaving a tip for every purchase and service can create financial debt, regardless of how small or large, good or bad. Research conducted by PYMNTS found that two-thirds of Americans live paycheck to paycheck, which is expected to worsen. The lingering effects of inflation in a post-COVID economy are still present, with the Federal Reserve concluding that American household debt has increased by $2.7 trillion from 2019 to 2022.
Outside of the United States, tipping is not even close to being a significant factor of consideration for consumers. In Japan, leaving a tip can offend locals and be seen as awkward, if not worthy of ridicule. For countries in Scandinavia, such as Denmark, leaving a tip in a restaurant is equated to rounding up the bill; a larger percentage of gratuity is only expected and given to above and beyond service.
In the United States, however, tipping is being used to fill the gap in livable salaries for minimum-wage workers. The federal tipped minimum wage in the U.S. has been $2.13 since 1991, even though the federal minimum wage without tip and consumer activity has risen 70.6% and 90.24%. With the present stagnation of tipped minimum wage, workers within the food or service industry depend on tip earnings as a supplemental source of income.
Just because the adverse effects of tipping are not obvious to the average consumer doesn’t mean they don’t exist. According to gender economist Katica Roy, women of color face significantly harder challenges at the hands of the tipped minimum wage. Black women working tipped jobs have experienced a significantly higher poverty rate of 27.5% compared to states that do not follow the federal wage of $2.13. Outside of discrimination toward people of color, women specifically face higher risks of sexual harassment and abuse at the hands of their employers while working jobs where they earn tips. Considering that almost 40% of the service industry is made up of Black, Latino, or Asian male and female workers, the unchanging tipped minimum wage cannot be seen as equitable.
Despite workers receiving generous tips for their service, minimum wage violations ultimately result in a reduction of their earnings. An investigation conducted by the U.S. Department of Labor found that 84% of restaurants had violated at least one minimum wage law, leading to the loss of $15 billion in worker’s wages. Even if customers were to provide tips for exchange, there is no guarantee that the worker is actually reaping these benefits. Such worker rights violations are unsurprising as the United States has fostered an antagonistic relationship between laborers and employers.
At the state level, California is already quite progressive in accommodating this disparity by requiring its employers to pay the full state minimum wage without tips, making California a One Fair Wage state. Whilst this is one of the few steps that need to be taken to improve employee-employer relationships, it is intended to remove the pressure of unnecessary tipping and not leave workers dependent on an unreliable form of income. However, we see the opposite effect today because of the structural injustices within service industries.
Ultimately, generous tips should be given for generous service. And while restaurants can request gratuity from their customers, perhaps it should be done in a way that doesn’t cause stress at the sight of an iPad being turned around. The public demand for a decrease in tipping is a manifestation of deep-rooted transparency issues within the working industry and is, at the end of the day, a call to give workers more stability than tips can.
