In the US, tips are considered part of income, because hourly wages are usually not enough. Up to 20 percent of the bill is now given – or even demanded. Experts speak of tip inflation.
Should I really tip the clerk for handing me a bottle of water over the counter? Or the barista when she hands me a coffee to go? For some time now, this question has mostly been asked when buying something in the USA. Because almost everywhere when paying with the card, the display prompts you to add a tip to the amount.
It started with the corona pandemic. Similar to Germany, many customers in North America wanted to support employees in restaurants or delivery services with a small bonus, explains Professor Michael von Massow from the University of Guelph in Canada. “When we got back to normal, many thought it would go away, but it didn’t.”
Suggested tip amounts
More and more tips for less and less service. This so-called “tipflation”, i.e. tip inflation, is becoming an ever-growing phenomenon in North America. A lot of people have been doing this for a long time. An evaluation by the payment service provider “Square” showed that Americans gave 17 percent more tips in restaurants in the last quarter of 2022 than in the same period last year. Even in the case of fast food outlets without a great deal of service, there was an increase of 16 percent.
For shop owners, the system has the advantage that they save on staff costs. Instead of hoping for a big raise, employees must hope that customers will continue to tip generously.
It helps that card payments are becoming more common in North America. Instead of asking if customers want to tip and having them type in an amount themselves, amounts are suggested directly – a low, a medium and a high, Professor von Massow explains. “Psychologically we tend to be more in the middle and maybe give more than we actually wanted.”
Tip shows “character of the customer”
According to political scientist Holona Ochs from Lehigh University in Pennsylvania, tipping has a completely different status in the United States than in Europe. Together with colleagues, she interviewed service staff from various areas: “We found that employees do not see their tip as a reward for good service, but as an expression of the customer’s character.” This is exactly what the tip system is based on with suggested amounts: Who would want to appear particularly stingy in front of their companion in the restaurant?
But slowly, some Americans are growing dissatisfied that more and more people are demanding higher and higher tips. The average amount has continued to grow over the years to around 20 percent of the bill. Many waitstaff depend on tips to survive because in much of the United States they earn a lower minimum wage than other workers. In the capital, Washington DC, for example, it’s only $6 an hour for those who receive tips.
Economic researchers fear, however, that the willingness to tip more and more could come to an end as the “tip lation” increases, and that there will then be a kind of distribution battle – with negative consequences for customers as well. According to von Massow, some of the service employees interviewed said: “We look at the customers at a table and estimate what the bill will be and how much they will probably tip.” Von Massow fears that young people or people who belong to a minority could be served and advised less well than others as a result.