Tips are a touchy subject for customers who dole them out and for service industry workers who rely on them to make ends meet.
It seems that more businesses, from bakeries to coffee shops, are prompting you to add gratuity when you order and pay. You’ve probably experienced that awkward moment when the cashier turns the iPad around and you have to choose which percentage to give.
Meanwhile, mysterious service charges have been showing up on some restaurant checks, and it’s not always clear if that extra money is making it into workers’ hands.
Here’s why tipping culture has changed so much in recent years — and how to navigate it.
Why are more businesses asking for tips?
More businesses that didn’t previously require tips now do so. So-called “tipflation” has faced pushback from some customers, who say paying the extra percentage shouldn’t be necessary for buying something as simple as a muffin.
What’s driving this phenomenon? Businesses who want to keep workers’ real wages low, while allowing them to earn enough to make ends meet, explains Eli Wilson, a sociologist at the University of New Mexico. He adds that new customer interfaces, like iPad-based payment systems, make it easier to automatically prompt people for extra funds.
“If businesses find a way that they can have customers front more of the bill — pay more of their workers’ wages — they're gonna rationally take advantage of that equation,” says Wilson. “And I think the thing that's really fueling everything … is the advent of new technologies that make it easier and easier to do that.”
What are “service fees,” and who are they benefiting?
Some businesses have also started including automatic “service fees” on their bills, which range between 3-20% of the total check.
Restaurants often say these fees are used to supplement the cost of increasing employee wages, or providing health care and other benefits.
But at the end of the day, they’re not the same thing as tips, says Wilson.
“One crucial difference is that service fees are essentially the property of management, right?” he says. “It's something that can be added at management's discretion to a given check or bill. And workers don't really have any say or control over where that money ends up going.”
Earl Wintron, a former Hollywood busser and member of the service workers’ union Unite Here Local 11, says he once worked at an upscale hotel restaurant that charged a 5% service fee so the business could offer employees insurance. But that insurance was far outside of his price range.
“I never saw anything from it,” says Wintron. “I have Covered California just because it's something that I could afford. … That 5% service fee, it didn't go anywhere.”
Wilson says that while service fees are not inherently a bad idea, transparency is key for making sure they are actually paying for the cost of service.
“If we consider them a way to get away from tips, and yet build in the very real cost of paying our service workers a livable wage … service fees can potentially be a good thing,” he says.
Do you need to give a tip every time you’re asked for one?
Jules Martinez Hirst, founder of Etiquette Consulting Inc., says when it comes to over-the-counter transactions, the decision is really up to the customer.
“When someone goes above and beyond to assist you, or you have a complex order, or maybe it's someplace that you frequent, then yes, of course, go ahead and give a tip of $1 to $2,” she says. “But if it was just somebody pulling out a bagel from the back, and putting it in a bag and giving it to you, and that was it, then no you don't need to tip.”
However, at sit-down restaurants, it’s still essential to tip between 18-20% every time, says Hirst, even if there’s a service fee, or if the meal was more expensive than you expected. Calculating that cost ahead of time is up to the consumer.
“[Restaurant workers] still don't make minimum wage, or they make just minimum wage because they are relying on the tips, where the person behind the counter might make minimum wage and above,” she says.
Wilson notes that ultimately, the critical thing is to push for more livable wages for all service workers.
“We have to keep our eye on the prize,” he says. “And certainly tipping is making that a complicated equation. I have friends and even family members on the business side of things, and there's no one-size-fits-all, very easy solution here. … But certainly livable wages, that's got to be key.”