Tipflation

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An "Add a tip" screen after paying for a US$3.85 coffee, with suggested gratuity amounts of $1 (26%), $2 (51.9%), and $3 (77.9%) Tipflation tablet 2023.jpg
An "Add a tip" screen after paying for a US$3.85 coffee, with suggested gratuity amounts of $1 (26%), $2 (51.9%), and $3 (77.9%)

Tipflation and tip creep are terms to describe the United States' recent widespread expansion of gratuity to more industries, as opposed to being traditionally only prevalent in full-service restaurants. Tipflation's origins are likely the COVID-19 pandemic and the inflation surge which began in 2021. Touch-screen digital payment systems run by companies like Clover and Square include gratuity prompts that are often visible to nearby members of the public and the service worker. The social pressure created from such systems is often separately mentioned as guilt-tipping, and tipflation has also been seen as causing tipping fatigue, which is the resentment that American consumers generally feel from tipping culture.

Contents

Origins

COVID-19 pandemic

Tipflation is often said to have been incited during the COVID-19 pandemic, where in the United States, numerous measures introduced by federal and state officials such as stay-at-home orders forced the closure of many smaller businesses, especially restaurants. Customers have been noted during the pandemic to tip generously to smaller businesses and lower-wage workers.[ citation needed ]

Role of tech companies and social pressure

Tipflation further traces its origins to the increase of digital payment systems and the creation of digital tip jars. Many reports on the increased phenomenon of tipflation involves the technology developed by fintech firms such as Square (a subsidiary of Block), Toast, and Clover (a subsidiary of Fiserv), the three largest makers of digital tip software. All three companies manufacture integrated hardware and software services which not only have expanded the ability for small businesses to accept payments by card or contactless, and at the merchant's discretion come with prompts to add gratuity. [1]

These systems, most frequently in the form of a tablet, can request a tip prior to receiving the full completion of a paid service. The format of the tablet also displays, either directly through the screen or through hand movement patterns, how much a person tips to not only the employee, but also everybody else waiting in line. [1] Guilt-tipping is often coined to describe the social pressure that this situation creates. [2] [3] Etiquette researchers, such as Diane Gottsman, has phrased this phenomenon as consumers being "overwhelmed by the little piece of technology looking them in the face". [4] An article from Vox also has raised concerns that tips collected through digital payment systems can also be subject to digital payment systems' fees as part of the overall revenue collected. [5]

Starbucks labor unions

Starbucks in particular has been seen as a battleground for the changes in American tipping culture. As a concession to its baristas, who began to organize in 2022, the Seattle-based coffee company started to offer tips to its baristas within the app and at payment terminals. Customers who pay at the register are now required to either select a tip amount on a card processing device, or for mobile orders, can add tips later on. The tipping system implemented by the company and baristas places all tips within a single collection pot, divided up equally to all employees who currently work during the time that the tip is received. The new systems have been widely criticized by customers, slamming the system as "awkward", intrusive, and likewise to digital payment systems, being intrusive and severely increasing the social pressure to tip. Additionally, these credit card tipping benefits are only being provided to Starbucks stores which have not unionized, further dividing the company's baristas. [6] [7] [8] [9]

"New" tipping culture

The culture of tipping has been described as "radically different" and similar phrasing by American media outlets, beginning mostly in 2023. Previous customary tipping amounts have further been escalated, with 15% tips being exchanged in favor of occasionally 30% tips. [10] [11] Some occupations which are now widely requesting gratuities are ridesharing drivers like those for Uber and Lyft, food delivery drivers, and baristas at coffee shops. [12] [13]

Generational differences toward tipping

Beginning in the 1980s, the economy of the United States began to shift from a manufacturing based economy to a service economy. By 2021, the service sector contributed 77% of the nation's GDP. [14] This change has resulted in younger generations entering service jobs at higher numbers compared to prior generations, contributing to differing views on tipping. Millennials on average leave larger tips at 26% or higher while Gen Z tips more frequently at 51% of the time compared to 42% for Baby Boomers and Gen X. [15] With the average age of workers in the service industry being 29 years old, Millennials make up 49% of the service workforce while the National Restaurant Association estimates that 82% of Zoomers' first jobs are in restaurants. [16] [17] The tipping behavior among younger generations is believed[ by whom? ] to be due to their overrepresentation in service jobs compared to prior generations. Their understanding of the jobs and the challenges that workers face in these jobs prompts them to be more sympathetic toward workers and causes them to tip larger and more frequently than prior generations.

Tipping fatigue and calls for reform

The rise of tipflation has been accredited to widening the appeal of reforming tip culture, or abolishing it altogether. While journals, newspapers, and other mediums of media have previously published on abolishing tipping in the United States, such as a 2015 episode of the CollegeHumor series Adam Ruins Everything , tipflation is widely credited with popularizing the movement to a broader audience. [18]

Numerous videos on TikTok in early 2023 have spread the idea and awareness of tipflation to an audience broader than ever before. Some videos showing people who claim to be landlords requesting tips have been highly criticized, while other videos have denounced the increase in tipping seen at quick-service restaurants and coffee shops, criticizing workers for only preparing and handing over a drink. Others have criticized the increase in both tips and extra charges, such as one instance where a video criticizes a drink shop where a tip is requested after the customer purchases a smoothie for $17 and $1.35 for an extra pack of stevia. [19] [20] [21] [22] Some response videos made by TikTok creators, themselves servers, have incited viewers to publish comments themselves reasserting the practice of optional tipping, arguing that bad service doesn't deserve gratuity. [23] One video in particular reported on by CBS News expressed the request to tip on a worker simply pouring the customer a glass of water. [13]

The causes of tipping fatigue have also been attributed to the remaining expectation that one should still provide a tip after numerous service charges levied by a service. Etiquette expert Thomas Farley has blasted restaurants for still asking customers for tips after numerous service were levied against them for various services and add-ons (such as to-go boxes), as well as the price increases in general costs due to the global inflation surge which started in 2021. Furthermore, a study from PlayUSA revealed that while 10% of customers are tipping more due to the pandemic, 17% are tipping less for the reason of inflation, and 60% of Americans wish to do away with tipping culture entirely. [1] A similar study from Toast reported that the average gratuity rate for quick-service restaurants has dropped from 16.4% to 15.9%. [11] It has been reported that several customers' 20% tips are not being seen as enough gratuity, further increasing outrage at new tipping culture. [12] Some have expressed that gratuity outside of full-service restaurants should only be provided to workers "who go above and beyond". [24]

Anti-tipping sentiments have continued to grow throughout 2023. A CNBC report published in early June cites statistics released by Bankrate showing that fewer Americans always leave a gratuity, including for dining at restaurants. Bankrate's statistics further show that nearly two out of every three Americans have a negative view on tipping. [25]

Response from tipped workers

Workers who receive tips have frequently stated that tips help them to survive as members of society, especially with regard to inflation. Some workers have also expressed difficulties sympathizing with people who are able to afford such goods but not provide gratuity. [13]

Related Research Articles

<span class="mw-page-title-main">Gratuity</span> Sum of money customarily tendered to service sector workers

A gratuity is a sum of money customarily given by a customer to certain service sector workers such as hospitality for the service they have performed, in addition to the basic price of the service.

<span class="mw-page-title-main">Starbucks</span> American multinational coffeehouse chain

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<span class="mw-page-title-main">Waiting staff</span> Service occupation

Waiting staff (BrE), waiters / waitresses, or servers (AmE) are those who work at a restaurant, a diner, or a bar and sometimes in private homes, attending to customers by supplying them with food and drink as requested. Waiting staff follow rules and guidelines determined by the manager. Waiting staff carry out many different tasks, such as taking orders, food-running, polishing dishes and silverware, helping bus tables, entertaining patrons, restocking working stations with needed supplies, and handing out the bill.

<span class="mw-page-title-main">Online food ordering</span> Process of ordering food via a website or other application

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<span class="mw-page-title-main">California Labor Code</span> Collection of Californian civil law statutes

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Kevin R. Johnson is an American businessman and software engineer who was the president and chief executive officer (CEO) of Starbucks Coffee Company from 2017 to 2022. Succeeding Howard Schultz as CEO, Johnson previously was the company's president and chief operating officer from 2015 to 2017. On March 16, 2022, Johnson announced that he was stepping down as CEO, Schultz would take over as CEO in the interim. Johnson joined the board of directors of Goldman Sachs in late 2022.

<i>Annabels (Berkeley Square) Ltd v Revenue and Customs Comrs</i>

Revenue and Customs Commissioners v Annabel's Ltd [2009] EWCA Civ 361 is a UK labour law case regarding the treatment of tips under the National Minimum Wage Act 1998. It led to the abolition of tips being considered part of wages for the purpose of assessing compliance with the national minimum wage.

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Mandatory tipping is a tip which is added automatically to the customer's bill, without the customer determining the amount or being asked. It may be implemented in several ways, such as applying a fixed percentage to all customer's bills, or to large groups, or on a customer-by-customer basis. Economists have varied opinions on the issue of mandatory tipping. Arguments against mandatory tipping include higher food price at the restaurant to make up for wages and loss of control of dining experience.

<span class="mw-page-title-main">Tip jar</span>

A tip jar, also known as a tip cup is a container, commonly a glass jar, into which customers can put a gratuity. A tip jar is usually situated at the point-of-sale at many businesses. Although common in many countries around the world, tip jars in food and drink establishments are ubiquitous in the United States.

The tipped wage is base wage paid to an employee in the United States who receives a substantial portion of their compensation from tips. According to a common labor law provision referred to as a "tip credit", the employee must earn at least the state's minimum wage when tips and wages are combined or the employer is required to increase the wage to fulfill that threshold. This ensures that all tipped employees earn at least the minimum wage: significantly more than the tipped minimum wage.

<span class="mw-page-title-main">Instacart</span> Internet-based grocery delivery service

Maplebear Inc., doing business as Instacart, is an American delivery company based in San Francisco that operates a grocery delivery and pick-up service in the United States and Canada accessible via a website and mobile app. It allows customers to order groceries from participating retailers with the shopping being done by a personal shopper. The company also provides alcohol delivery in states and provinces where it is allowed. It has partnerships with 1,500 retail banners comprising 85,000 stores. Instacart reaches nearly 98% of SNAP households, offering delivery services from nearly 180 retail banners, including ALDI, Food Lion, Publix, The Save Mart Companies and Walgreens, spanning more than 30,000 stores across all 50 states and Washington D.C. Since its founding, Instacart Marketplace has powered more than $100 billion of GTV and over 900 million orders with approximately 20 billion items ordered.

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Starbucks, an American coffee company and coffeehouse chain, is the subject of multiple controversies. Public and employee criticism against the company has come from around the world, including a wide range issues from tax avoidance in Europe, anti-competitive practices in the United States, human rights issues in multiple countries and labor issues involving union busting, questions about pay equity and ethics in partnerships in Africa.

<span class="mw-page-title-main">Impact of the COVID-19 pandemic on the restaurant industry in the United States</span> Impact of COVID-19

The COVID-19 pandemic impacted the United States restaurant industry via government closures, resulting in layoffs of workers and loss of income for restaurants and owners and threatening the survival of independent restaurants as a category. Within a week after the first closures, industry groups representing independent restaurateurs were asking for immediate relief measures from local, state, and federal governments, saying that as many as 75 percent of independent restaurants could not survive closures of more than a few weeks. By late July, nearly 16,000 restaurants had permanently closed.

<span class="mw-page-title-main">Starbucks unions</span> Unionization efforts at the multinational coffee shop chain

As of October 2024, over 11,000 workers at 500 Starbucks stores in at least 40 states in the United States have voted to unionize, primarily with Workers United. Workers United and Starbucks have been engaged in negotiations over a national collective bargaining agreement since February 2024. This unionization effort started at a store in Buffalo, New York. About a third of Starbucks' Chilean workforce is already unionized, as well as 450 workers in New Zealand and eight stores in Canada. The longest Starbucks strike lasted 64 days, took place in Brookline, Massachusetts in September 2022 and resulted in the unionization of the employees at that location.

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The Starbucks Red Cup, also called the Starbucks holiday cup, is a modern Christmas and holiday season tradition and promotional campaign operated by coffee chain Starbucks; each winter, some hot drinks served at Starbucks cafés will be served in cups with a red background and various festive designs instead of the regular white cups. New designs are used each year. Starbucks have used the campaign to support HIV/AIDS research. In 2015 the cups were plain red without the festive designs, and were accused of being anti-Christian.

Tip Project was a business venture and organization which unsuccessfully pushed to introduce American practices of gratuity into Japanese culture. First launched in 2021 and managed by the Tip Promotion Association, it was shut down in the first half of 2023.

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A menu hack is a non-standard method of ordering food, usually at fast-food or fast casual restaurants, that offers a different result than what is explicitly stated on a menu. Menu hacks may range from a simple alternate flavor to "gaming the system" in order to obtain more food than normal. They are often spread on social media platforms such as TikTok, and are more popular with Generation Z, which has been known to customize their orders more than previous generations. Hacks are sometimes officially added to the menu after their popularity grows. However, in some cases, they have been criticized for overburdening fast food employees with outlandish requests, sparking debate as to whether certain menu hacks are unethical.

<span class="mw-page-title-main">Employment (Allocation of Tips) Act 2023</span> UK freedom of speech legislation

The Employment Act 2023 is an act of the Parliament of the United Kingdom designed to ensure tips, gratuities and service charges are allocated to workers.

References

  1. 1 2 3 Why Tipping Is So Out Of Control In The U.S., CNBC via YouTube, March 30, 2023, archived from the original on 2023-03-30, retrieved 2023-03-30
  2. ↑ Gauntt, Josh (23 November 2022). "Etiquette experts tell us how to deal with 'guilt tipping'". WBRC. Retrieved 2023-04-06.
  3. ↑ Marks, Gene (2023-03-19). "'Guilt tipping': is there any escape from the gratuitous rise in gratuities?". The Guardian. ISSN   0261-3077 . Retrieved 2023-04-06.
  4. ↑ "What Is Tipflation? What You Should Know About the Increase in Tipping". MSN. Retrieved 2023-03-30.
  5. ↑ Morrison, Sara (2022-10-07). "Everyone wants a tip now. Do you have to give them one?". Vox. Archived from the original on 2023-03-15. Retrieved 2023-03-30.
  6. ↑ Wiener-Bronner, Danielle (2022-12-16). "Starbucks union organizers wanted credit-card tipping. Now they're being left out | CNN Business". CNN. Archived from the original on 2023-02-11. Retrieved 2023-03-30.
  7. ↑ "Starbucks has rolled out a new tipping system and customers are freaking out". Fortune. Archived from the original on 2023-02-10. Retrieved 2023-03-30.
  8. ↑ "Opinion | Outrage at Starbucks' tipping prompt shows people don't get how the tip con works". NBC News. 9 December 2022. Archived from the original on 2023-02-01. Retrieved 2023-03-30.
  9. ↑ Rumpf, Sarah (2022-12-03). "Starbucks fans furious over new 'awkward' tipping system". FOXBusiness. Archived from the original on 2023-01-12. Retrieved 2023-03-30.
  10. ↑ "How "tipflation" and "tip creep" are sparking a backlash: "I don't feel obligated" to tip". www.cbsnews.com. 27 January 2023. Archived from the original on 2023-03-14. Retrieved 2023-03-30.
  11. 1 2 Meyersohn, Nathaniel (2023-03-25). "Customers now face a radically different tipping culture compared to a few years ago | CNN Business". CNN. Archived from the original on 2023-03-26. Retrieved 2023-03-30.
  12. 1 2 Reporter, Delaney Tarpley, KOMU 8 (30 March 2023). "Columbia service workers, consumers experience 'tipflation'". KOMU 8. Retrieved 2023-03-30.{{cite web}}: CS1 maint: multiple names: authors list (link) CS1 maint: numeric names: authors list (link)
  13. 1 2 3 "Are tip requests getting out of hand? Many consumers say yes". www.cbsnews.com. 25 January 2023. Archived from the original on 2023-03-14. Retrieved 2023-03-30.
  14. ↑ "Topic: Service sector of the U.S."
  15. ↑ "Boomers, millennials, Gen Xers: Who tips the most". Fox Business . 4 February 2020.
  16. ↑ "From hair salons to bars, here are 30 industries dominated by millennials". Business Insider .
  17. ↑ "Putting Gen Z to Work in Restaurants" (Press release). 2 October 2018.
  18. ↑ "This Guy Makes A Good Point About Why Tipping Needs To Go". HuffPost. 2015-01-13. Archived from the original on 2022-06-20. Retrieved 2023-03-30.
  19. ↑ Heald, Melody (2023-03-06). "'I'm all cleaned out today': Customer says she was asked to tip after being charged $1.35 for Stevia packet after spending $17 on a smoothie". The Daily Dot. Archived from the original on 2023-03-23. Retrieved 2023-03-30.
  20. ↑ Bjella, Braden (2023-01-28). "'I'm not gonna f*cking tip you when all you're doing is taking a cup and handing it to somebody': Former service worker calls out Starbucks drive-thru tipping". The Daily Dot. Archived from the original on 2023-02-04. Retrieved 2023-03-30.
  21. ↑ Jaworski, Michelle (2023-02-28). "'Truly unfunny and evil behavior': TikTok about tipping a landlord goes viral". The Daily Dot. Archived from the original on 2023-03-22. Retrieved 2023-03-30.
  22. ↑ Kelley, Jenna. "A TikToker Said US Tipping Culture Is Getting Out Of Control & So Many People Are On Her Side - Narcity". www.narcity.com. Archived from the original on 2023-03-24. Retrieved 2023-03-30.
  23. ↑ Elliott, Josh. "A Server Ripped The 'It's Their Job' Argument Against Tipping & TikTokers Aren't Buying It - Narcity". www.narcity.com. Archived from the original on 2023-03-07. Retrieved 2023-03-30.
  24. ↑ "Which drives you crazier? 'Tipflation' or tip creeping? - RetailWire". 10 February 2023. Archived from the original on 2023-03-30. Retrieved 2023-03-30.
  25. ↑ Dickler, Jessica (2023-06-08). "Americans push back against 'tip creep' — 'It's time to take a stand,' expert says". CNBC. Retrieved 2023-06-08.
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