Guilt-Tip

“Tip fatigue” is spreading as Americans grow frustrated with ubiquitous prompts

Wednesday, July 26, 2023 by Snacks
How it feels deciding between 18% and 25% (Liz Hafalia/Getty Images)

How it feels deciding between 18% and 25% (Liz Hafalia/Getty Images)

$4 bottle of juice, 20% tip… Call it tip anxiety. Tipping prompts are popping up seemingly everywhere, from bakeries to repair shops — even at airport self-checkout machines. Payments screens from companies like Square and Toast are now ubiquitous in the US, letting merchants who’d never asked for tips before add a preset gratuity. A lot of folks say they feel pressured to tip on small purchases as screens display their selection to everyone in the checkout line.

  • Tip fatigue is growing: Two-thirds of Americans have a negative view of tipping, with 30% saying tipping culture has gotten out of control, a recent Bankrate survey suggested. 

  • Tips vs. wages: 41% of respondents said they believe businesses should pay employees more rather than relying so heavily on tips. 

“Tip creep” is intensifying… as businesses far beyond restaurants rely on tips to keep workers without raising wages. The trend took off during pandemic lockdowns, when customers upped gratuity to hospitality, service, and essential workers, who were putting their health at risk. But after the pandemic waned, the trend has remained. Some employers with slim margins are still relying on tips to stay profitable, rather than locking themselves into more wage increases. 

  • Wage growth for the lowest-paid US workers has fallen sharply postpandemic, after this group saw faster-than-average record pay gains in 2020-22. 

  • Leisure and hospitality workers made an average of $21/hour last month, up from $16.50 in June 2019.

THE TAKEAWAY

There may be a limit to tip creep... As tips and other fees inflate the cost of everyday purchases, consumers may grow hesitant to even go out, opting to brew their coffee at home and order things online instead of spending in brick-and-mortars. Americans are already tipping less often than they did at the pandemic’s peak. Worker comp could suffer from tip fatigue if employers don’t raise wages. But higher wages could = even higher prices.

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