High Cost Of Living Is Pushing People To Tip (A Lot) Less

June 24, 2023
2 mins read
High Cost Of Living Is Pushing People To Tip (A Lot) Less

How much you tip for good or not-so-good service is both a personal and cultural decision; while some countries pride themselves on high server wages that make extra tips unnecessary, American tipping culture dates back to a 1966 Congress ruling allowing employers to pay waiters below minimum wage to account for the “tip credit” that will get them over that threshold.

Despite a recent uptick in restaurants replacing tipping with a service charge, the tipping expectation remains in place not just for servers at restaurants but for everyone from the Uber  (UBER) – Get Free Report drivers to one’s hair stylist.

DON’T MISS: If You Feel Like You’re Getting More Pressure to Tip, You’re Right

An annual tipping survey by Bankrate found that, amid rampant inflation and rising cost of living, long-simmering resentments over tipping have started to increase.

High Cost Of Living Is Pushing People To Tip (A Lot) Less

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Inflation And Good Tips Don’t Always Align

Out of the 2,437 people polled, nearly a third felt reported feeling annoyance when presented with a pre-set tipping screen when paying with a card while a further 30% believe that “tipping culture” has gotten out of control.

The number of people who tip after a certain service has also been on the decline — from 2019 to 2023, the percentage of those who said “always” when asked how often they tip after eating at a restaurant fell from 77% to 65%. The last year saw the biggest drop as, in 2022, that number was at 73%.

Between 2022 and 2023, the number of people who said they always tip fell from 66% to 53% for hair stylists, 57% to 50% for food delivery people and 43% to 40% for taxi drivers. For situations in which the expectation to tip is less strong, the percentages stayed the same — 22% for coffee shop baristas, 17% for furniture and home appliance repair workers and 13% when picking up food themselves.

At the same time, a greater number of restaurants without traditional “server staff” have been installing pre-set “tipping screens” that present the customer with suggestions of percentages to tip — 18% of survey responded said they tended to tip less or not at all when presented with these options.

More Tip Opportunities Than Ever

“Inflation and general economic unease seem to be making Americans stingier with their tipping habits, yet we’re confronted with more invitations to tip than ever,” Ted Rossman, a senior industry analyst for Bankrate, said.

As they are more likely to give tips rather than receive them, 40% of households earning above $100,000 a year said that tipping culture is out of control while only 23% of those earning below $50,000 did so.

But in a sign that the story is more complicated than “being stingier with money,” 41% said they feel employers should pay workers more instead of relying on tips to do it for them while 16% said they’d be willing to pay higher prices to eliminate tipping.

Overall, 66% of respondents felt negative emotions toward tipping expectations in the form they currently have in the U.S while 15% are frequently confused about when and how much to tip.

“Few topics elicit as many passionate opinions as tipping,” Rossman said. “There’s so much confusion regarding who to tip, and if so, how much. A lot is changing, as technology makes it easier to tip some people and harder to tip others – as travelers who are short on cash can attest.”

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