Why the U.S. Can’t Quit Tipping

Why the U.S. Can’t Quit Tipping

Picture this: You’re purchasing an office chair online, and as you’re about to check out, you’re faced with an unexpected question – “Do you want to leave a tip? 25%, 20%, 18%?” You can’t help but wonder, “When did tipping culture become so ubiquitous?” The truth is, in today’s world, you’re asked for a tip nearly everywhere, from drive-throughs to even when buying a sweatshirt. If this has ever left you feeling frustrated, you’re not alone.

A survey by Bankrate found that a third of people are annoyed by those pre-entered tip screens, and they believe that tipping culture has spiraled out of control. Businesses and cities have tried to move away from tipping, but it seems that we’re not on the cusp of tipping’s demise anytime soon. But why is this the case? Dr. Mike Lynn, a Cornell psychologist who studies consumer behavior, has some answers.

Dr. Mike Lynn has dedicated his research to tipping, and he’s arguably the leading expert on the subject. He’s here to help us understand why the United States has become so dependent on tipping, why tipping is nearly everywhere, and why it’s unlikely to disappear completely.

The Origins of Tipping Culture

Tipping became popular after the Civil War, particularly as formerly enslaved Black Americans started working in service positions, such as waiters and railroad porters. The railroad industry deliberately paid them low wages, with the expectation that they would rely on tips. This influx of service workers receiving low wages contributed to the growth of tipping.

By the early 1900s, as minimum wages were being established, tipped workers were initially excluded from these regulations. It wasn’t until 1966 that tipped workers were given their own minimum wage, which stood at $2.13 since 1991. This discrepancy in wages between tipped and non-tipped workers is a crucial factor driving the tipping culture. Consumers are aware that servers earn a substandard minimum wage, which fuels their willingness to tip generously.

The Tipping-Price Relationship

Dr. Lynn’s research found that the lower the wages servers are paid, the higher the percentage tip. This phenomenon suggests that people tip more when they know that workers are being paid less. However, 41% of people, as per the Bankrate survey, believe that businesses should pay their employees better rather than relying so heavily on tips.

Interestingly, when given hypothetical menus with two different scenarios – one where tipping is not allowed but menu prices are 15% higher, and one with regular prices that encourage tipping – people overwhelmingly perceive the latter menu as more expensive. This paradox illustrates that our tipping habits are not always logical or rational. We tend to rely on quick and dirty heuristics, a phenomenon known as “price partitioning,” which makes things appear less expensive when hidden costs like tips are added at the end.

Why Tipping Is Everywhere Now

In recent times, factors like inflation and full employment have put service establishments in a bind. They need to compete for employees, which means paying them more. But paying employees more leads to price hikes, which customers are already grappling with due to inflation. Tipping, Dr. Lynn argues, is a way for businesses to address this issue, allowing them to show a good faith effort in paying employees more while keeping prices somewhat stable for customers.

Who and How Much Do We Tip?

The Bankrate study reveals that the vast majority of people still tip servers or waitstaff at sit-down restaurants. This is likely because they understand that these workers rely on tips for their income. However, the picture changes when it comes to self-service or counter service. Not as many people tip when getting coffee, and even fewer do when picking up takeout.

The rise of new technology and payment methods has somewhat obscured the behavioral norms around tipping. Just because someone asks for a tip doesn’t mean it’s customary, and it certainly doesn’t mean everyone else is doing it. The issue is further complicated by the fact that tipping was once considered un-American. Polls in the 1800s and 1900s showed that Americans wanted to get rid of tipping. Today, two-thirds of Americans have a negative view of tipping, yet it remains deeply ingrained in American price models and policies.

In conclusion, while tipping culture might be here to stay, where and how much you tip is ultimately up to you. The next time you’re faced with a tipping prompt, consider the context and your own values. Tipping is a complex issue, deeply rooted in history, economics, and social norms, but the power to change it lies in your hands.

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