Our Hot Takes On Tipping – Epic Financial Journey

Tipping is a deeply ingrained aspect of our culture here in the United States. While seemingly a simple act of gratuity, in reality it’s a much more complex and often contentious aspect of the service economy. This practice has become more prevalent over the past 5 – 10 years and has turned into a source of much public controversy.

Some of the changes in modern tipping culture include:

Expansion to more areas. In the past tipping was limited to a small subset of services such as bars, full-service restaurants, hospitality (hotel staff), personal care services (hair stylists, barbers, nail technicians), and food delivery (primarily pizza). Today the practice has expanded to include tipping for counter service or takeout, at retail kiosks, and even unexpected locations like auto repair shops, movie theaters, and medical offices.
Increase in tip amount. In addition to the sheer number of locations now soliciting tips, the “standard” (or expected) tip has increased over the years. A 10% tip was once considered the bare minimum with 15% reserved for those providing exceptional service. Today the floor for tipping in most cases starts at 20%.
New methods for solicitation. Tip jars or a blank space at the bottom of bills were once the prevalent ways to ask for tips; in most cases it was completely up to each customer how much to tip. Nowadays, tip collection has morphed into prompts and “suggested tip amounts” on digital kiosks/devices. In many cases, patrons have to actually enter “$0” for the tip amount or choose a “no tip” option instead of simply overlooking this step.

So with all the changes in tipping culture these days, what’s our take on this practice? Similar to everyone else, our thoughts are shaped by our personal experiences and even our own perceptions of this practice over the years.

Scout

TLDR – While I wouldn’t say that I’m necessarily “stuck in the past”, tipping once had a lengthy yet stable history that has drastically changed for the worse. In my opinion, tipping is now out of control and I don’t like it one bit.

Tips as a Monetary Reward

Growing up, even when I was ignorant of money, much less actually in control of my own finances, I was still aware of tipping since it was such a huge part of typical American culture. This was a practice that I observed every time my family & I would go to dinner at a restaurant. Whenever I went to the barber for a haircut, my parents would include a tip. On the rare occasion we ordered Domino’s pizza, my parents would be sure to tip the delivery driver.

Although not something my parents ever came out and explicitly told me, I always associated tipping as a bonus for providing service above & beyond the bare minimum. The exact amount of tip was based on how well someone performed their job and/or how nice & friendly they were. It wasn’t uncommon for my parents to provide little or no tip to restaurant servers who were either rude or disinterested in serving us (by either visibly showing indifference or actually rarely coming to check back with us during the meal).

In addition, because I related tips to level-of-service, I was always confused when my dad & I would stop at Starbucks and there was a tip jar on the counter. He would order a drink, pay the cashier, then wait a few minutes for someone to make his coffee and call out his name for pick up. In my mind, I had absolutely no clue why anyone would have the audacity to ask for a tip for simply doing their job, let alone for performing such a quick & easy task.

In high school my first job was at a local barbecue restaurant where I primarily worked at the front counter taking orders, delivering food to sit-down customers, and bussing tables. While this was not a full-service restaurant by any means, there was always a tip jar kept by the cash register. I never expected tips, but when someone did leave money I was always grateful and felt that I had actually earned it by being friendly and/or providing exceptional service. Of course these experiences reinforced my personal views on tipping that I had formed when I was younger.

Recent Over-The-Top Changes

I started to notice the exponential rise of tipping within the past decade, especially since COVID-19. While tipping had been traditionally limited in scope and bound to distinct areas of the service sector, it suddenly felt like EVERYONE was asking for tips.

I swear that every single time I’ve made a purchase ANYWHERE in the past few years there have ALWAYS been prompts for a tip; especially prominent have been automatic pop-up screens on digital kiosks at checkout. I’ve seen tip requests at ridiculous locations such as fast food restaurants, retail stores, concession stands, and even concert merchandise stands. The one thing all of these have in common is that employee effort is very minimal (and usually quick), therefore in my opinion, not warranting any special monetary compensation.

In addition to the growing number of cases where tips are now requested, it has also started to feel increasingly aggressive & invasive. In the past, tipping was primarily a silent & private act where a server would perform their duties then passively let the customer decide whether or not to leave cash on the table or throw money into a tip jar. Nowadays, many servers actively solicit tips by directly asking customers, which I really don’t like because 1) I’m a very private person and 2) I don’t like being made to feel guilty or ashamed if I choose not to partake.

Tipping is NOT a Right

Now, while I do believe that everyone deserves to be paid fairly, I also believe appropriate compensation should be tied to how well a person performs their job. This holds true especially when it comes to tips. Recalling my experiences and my thoughts growing up, tipping is a reward for those going above and beyond.

On the contrary, nowadays it feels like many people view tipping as an entitlement; regardless of the quality of service (and I’ve seen plenty of poor service), countless employees feel that every customer has an obligation to tip. My response to that is a firm “NO, that’s NOT how it works”. As a private sector employee my entire career, my compensation was ALWAYS based on how well I performed my job with absolutely ZERO guarantees of raises or bonuses. So that’s why I completely reject the idea of anyone in the service sector stating that tipping is a right.

The tipping point (pun intended) came a few years ago when I was on vacation buying ice cream for my kids at an outdoor, walk-up kiosk. The server asked what flavor of ice cream we wanted along with the type of cone, then handed it to us ~25 seconds later. After stating the amount owed and taking my credit card, this person had the insolence to immediately ask how much tip I wanted to leave! Outraged, I thought to myself “A tip?! For doing your 30-second job adequately?! No, that’s not how this is supposed to work…”

Evolving Practices Over Time

With all this outrage, you may think that I’m absolutely opposed to tipping. In reality, my attitude towards tipping and my actual practices have remained fairly consistent over the years. No matter what cultural changes are swirling around me, in my mind tipping is still reserved for very specific areas of the service sector and it’s a practice still intended only as a reward for those who provide quality service.

The only differences from my parents that I’ve implemented are larger tip amounts and providing a higher floor (i.e. a higher minimum-level of tip that I leave regardless of service level).

Larger tip amount. Rather than a uniquely personal choice, I’ve followed the larger cultural lead when determining how much to tip. I had seen my parents leave a standard 10% tip for “good service” at a restaurant with 15% reserved for “exceptional service”. Over the years I started enacting a personal rule of 15% for “good service” and 20% for “exceptional service.”
Higher minimum tip. While my parents were okay with leaving little or no tip for poor service, I still tend to tip 15% at a bare minimum. Although I’ve truly had terrible service from time-to-time, I nonetheless begrudgingly leave some money because I’m fully aware that much of a server’s take-home pay is based on customer tips. Having worked a bit in the service industry, I do have a soft spot for those still in it.

An Unknown Future

Tipping has become such a hot-button topic recently for so many people and I completely understand because I feel the exact same way. While I personally think it would be nice to roll back some of the current craziness, unfortunately I just don’t see that ever happening. As the old saying goes, “the genie is out of the bottle”. This doesn’t mean that I’ll stop tipping completely, but rather I’ll continue to stick to my guns and tip well for those that deserve it (by providing high-quality service), while ignoring those that don’t.

The Squire

Tipping has always seemed to be such a strange concept to me. I have only ever worked in retail and government agencies where I was promised a wage, received the wage, and got no more and no less. I’ve never received bonuses for doing exceptional work or got paid less for not meeting some kind of quota or standard. If I would have done a subpar job, I would have been put on an improvement plan, and lost my job if my work continued to suffer.

When I was a kid I was told that someone working in the service industry & working for tips had a completely different way of getting paid than people in other industries. They typically had a much lower starting wage and without tips, these workers made very little money; but with good tips they could do really well, kind of like their way of getting a bonus.

I pictured in my head people serving food at restaurants counting their tips at the end of the day – I imagined that depending on how well they got tipped would decide what they could buy at the store on the way home to feed their family. Knowing that we were partially responsible for how well they lived their life, I’ve always felt that if I was doing okay financially that I should contribute more in general to these people in the service industry.

However, I’ve never taken the time to research this and actually look at the minimum wages for these types of jobs. So this all could be incorrect presumptions on my part, or laws or wages could have changed for these workers over time.

My History with Tipping

We didn’t go out to eat very often growing up, but when we did I’m pretty sure my parents aimed for a 15% tip in general for good service, but gave more or less depending on how the service went. When I was on my own, I copied my parents and typically tipped around 15%-20% depending on service. Slowly over time I’ve increased my average percentage to closer to 20%-25%.

Since getting married and having kids, and especially since COVID, we stopped eating out or ordering in as often, so many times we could go more than a month without even being asked to give a tip.

More recently we’ve been trying to go out a little more often, maybe more like 2-3 meals as a family a month, and we’ll grab pizzas or fast food or I’ll get coffees from time-to-time to bring home. When we go on a trip we tend to go out more often too. It does seem that even at some fast food restaurants I’ve seen tips being asked for, which I didn’t think was the case before, but can’t say for sure.

A Real Treat

I think going so long without eating out and then starting back again made me really appreciate the experience and variety of food available from many of these restaurants. It also made me feel bad that we hadn’t contributed toward the jobs in the industry for so long. A lot of good businesses had to shut down because of people like us not purchasing food from them during COVID.

Actual cost

I try to factor tips into the meal when we go out by just adding an extra 25% for each menu item, so that I’m not surprised when the bill comes and I add the tip. I also try to remember that the actual cost of food, just like everything else, has gone up over time.

So if our family of four goes out 5 times a month to more expensive restaurants at $100 per trip before tip, we may be spending another $100 on combined tips, making it about $600 for the month on restaurant spending.

If we are worrying too much about the cost or don’t feel like our outing experiences are getting the expected joy, we know we can usually save a few dollars by reducing the tips, but we can save much more by going out just one fewer time. Going to less expensive restaurants lets us go out more often.

Side note: Because restaurants cost so much, we have been factoring this into our costs when traveling. When traveling with a larger group for an extended period of time, we will often rent a house or get a hotel room with a kitchen that costs much more on a nightly basis, but allows us to spend much less on food.

Is Tipping Going Too Far?

I think every business has to make a decision on how they are going to make money. I wonder if the increase of expected tips is a new attempt at forcing employees to change from just providing a service to becoming partial sales people in order to get bigger “bonuses,” though I’m curious if the percentage of tips skipping the employees and going directly to the employer has changed over time.

More and more service oriented businesses are implementing a recommended tipping system that is making people feel obligated to give bigger tips and for more things. This may be geared toward a bigger bottom line for the company, and it may also help entice employees that they can make more money. It’s hard for me to know, but it might depend on the business.

I’m trying to not let this added pressure sway the amount of tip I give, but it is something I consider when going out. I’m still a bit naive about how the service industry and employees are compensated, and yet I am very thankful for the services they provide. Going out to a restaurant is a fun treat and is typically worth the experience, especially when we limit our trips.

I think that if people get fed up enough with tipping at some of the establishments, that the tips that people leave will decrease and these businesses will have to change their models back. I wouldn’t be surprised if some places lower their suggested tips and perhaps raise the prices of their products.

I wouldn’t be surprised if the tipping culture changes in the future.

Reader Questions

What are your thoughts on the current tipping culture? Have you noticed any changes over the years (either for better or for worse)?

Leave your answers or comments below – or email us directly at info@epicfinancialjourney.com