The Tipping Backlash Has Begun

US: People are cutting back on tipping, frustrated by ubiquitous requests for gratuities.

As of November, service-sector workers in non restaurant leisure and hospitality jobs made $1.28 an hour in tips, on average, down 7% from the $1.38 an hour they made a year prior. The data is according to an analysis of 300,000 small and medium-size businesses by payroll provider Gusto.

The tipping slowdown is a gloomy development for all types of workers who rely on holiday tips as a chunk of their annual income. It reflects a broad frustration with the proliferation of tip requests at dry cleaners and bridal boutiques and even self-checkout machines that have sprung up since the pandemic.

Mary Medley, a Denver retiree who described herself to The Wall Street Journal in July as a unilaterally prolific tipper, is one of those who has become more discerning in recent months.

“It feels not as good to tip now that it’s popping up everywhere,” says Medley, 70 years old. “What started out to be a way to acknowledge excellent personal service feels like it’s become a way to help supplement worker compensation.”

There is a cost to the tipping slowdown, however, say economists and business owners. When people tip less, workers suffer, says Jonathan Morduch, a professor of public policy and economics at New York University.

“We’re in a situation where workers still want and expect and need tips to some degree,” Morduch says.

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Some businesses are raising worker pay in part as a response to lower gratuities.

Dan Moreno, founder of Miami-based Flamingo Appliance Service, says he has noticed a slowdown in customers leaving tips for their repair people since the Journal spoke with him in July. The average base wages for his techs have gone up about 10% since then, though he hasn’t eliminated the prompt from point-of-sale machines.

“I don’t know if that’s because customers are just over it. I’ll tell you, personally, I’m a little bit over it,” Moreno says of how his own tipping habits have changed over the past year.

Meanwhile, governments have started to get involved.

In October, Chicago became the second-largest U.S. city to vote to require tipped workers to make the full minimum wage. The full federal minimum wage is $7.25 an hour, while the federal tipped minimum wage many bar and restaurant workers earn is $2.13 an hour. Legislation to get rid of tipped minimums is moving in eight states and measures are on the ballot in an additional four, according to worker-advocacy organisation One Fair Wage.

“There’s an ongoing rejection of the whole system by both workers and consumers who have been increasingly pissed about it,” says Saru Jayaraman, director of the Food Labor Research Center at the University of California, Berkeley and president of One Fair Wage, an advocate for higher wages for restaurant workers.

Restaurant workers earned an average of $3.83 an hour in tips and overtime in November, according to technology company Square, up 8% from the previous year. Between November 2020 and November 2022, that amount rose 50% from $2.36 to $3.54 an hour.

While governments, workers and owners wrestle with what to do about tipping, consumers have embraced the humour in tipping’s massive expansion into so many parts of life. Jokes mocking tipping’s proliferation have spread on social-media sites. In one image, a police officer holds out a tablet with different tip options after giving someone a speeding ticket. In another, someone pretends to ask for a tip for letting a stranger pet her dog.

Garrett Bemiller, a 26-year-old who works in communications, started to question his standard practice of always leaving 20% after being asked for a tip at a self-serve checkout station at an OTG gift shop in New Jersey’s Newark Liberty International Airport in April.

“We all know how absurd it is that it almost relieves some of that guilt in saying no,” he says.

He now always hits “No Tip” when he’s buying a black coffee—even when friends are watching.

Holiday tips

One area people might not cut back is tipping for the holidays.

Of the 2,413 U.S. adults surveyed by financial services company Bankrate, 15% said they planned to leave more-generous tips for workers including housekeepers, child-care workers, landscapers and mail carriers this year. About 13% said they planned to leave less.

Median amounts are so far up from last year across the six types of service providers Bankrate asked about.

“It seems that people view holiday tipping differently, perhaps because of the holiday spirit and also because of the regular interaction with many of these service providers,” Bankrate analyst Ted Rossman says.

Bemiller plans to give the super in his New York City building $100—not because he feels like he has to, but because he wants to.

“She helps me so much throughout the year and that tip seems genuinely justified,” he says.