Why Businesses Can’t Stop Asking for Tips
Employers far beyond restaurants rely on the practice to avoid paying higher wages; testing customer limits
Employers far beyond restaurants rely on the practice to avoid paying higher wages; testing customer limits
American businesses have gotten hooked on tipping.
Tip requests have spread far beyond the restaurants and bars that have long relied on them to supplement employee wages. Juice shops, appliance-repair firms and even plant stores are among the service businesses now asking customers to hand over some extra money to their workers.
“The U.S. economy is more tip-reliant than it’s ever been,” said Scheherezade Rehman, an economist and professor of international finance at George Washington University. “But there’s a growing sense that these requests are getting out of control and that corporate America is dumping the responsibility for employee pay onto the customer.”
Some businesses that are new to tipping said they have turned to the practice to try to retain workers in a competitive job market while also keeping their prices low. Asking for tips allows them to increase worker pay without raising their wages.
Consumers seeing tip prompts at every turn say they are overwhelmed—and that worker wages should be business owners’ responsibility, not theirs.

Sixteen percent of the 517 small businesses surveyed by employee-management software company Homebase for The Wall Street Journal ask customers to leave a tip at checkout, up from 6.2% in 2019.
Payroll company Paychex, which provides software for thousands of businesses in leisure, hospitality, retail and other service industries, said more employees are receiving tips as a portion of their pay than at any time since the company started tracking tipping in 2010. As of May, 6.3% of workers whose employers used the software earned tips, compared with 5.6% in 2020. The number remained relatively flat between 2016 and 2020.
As of June, service-sector workers in non-restaurant leisure and hospitality jobs made $1.35 an hour in tips, on average, up 30% from the $1.04 an hour they made in 2019, according to an analysis of 300,000 small and midsize businesses by payroll provider Gusto.
Tips now increase wages for service workers by an average of 25%, compared with 20% between 2019 and 2020, according to Gusto. In May, the average hourly service-industry worker earned $16.64 an hour in base wages and $4.23 an hour in tips.
During pandemic lockdowns, customers of many service businesses began tipping to acknowledge workers who put themselves at risk. Rehman said that made businesses reliant on the practice. Employers with already tight margins say there’s no going back.
“With businesses still preparing for the possibility of a recession, they don’t want to lock into higher wages,” said Jonathan Morduch, a professor of public policy and economics at New York University. “Tipping gives them more flexibility.” He said the practice pushes the financial risk that employers would ordinarily shoulder onto workers.

“Businesses are happy to let workers earn more from tips, especially when there’s no pressure to raise the tipped minimum,” he said, referring to the $2.13 an hour plus tips many bar and restaurant workers across the country earn.
Holding on to workers has been especially difficult in the services sector, particularly since the pandemic. Lodging and food service have had the highest quit rate for workers since July 2021, consistently above 4.9% per three months, the U.S. Chamber of Commerce said in a May 2023 report. The quit rate for the retail trade industry isn’t far behind, around 3.3% so far in 2023. In May 2023, the overall quit rate for workers was 2.6%, according to the Bureau of Labor Statistics.
Dan Moreno, founder of Miami-based Flamingo Appliance Service, decided in 2020 to add an option for customers to tip his employees, reasoning that his home-repair technicians were taking health risks by entering customers’ homes during the pandemic.
About one-third of customers now leave a tip of between 10% and 20%, Moreno said. The requests add an average of $650 a year to his 182 technicians’ salaries, about 1% of their total yearly income.
Rising costs, he said, persuaded him to retain the option after the pandemic abated.
“You wouldn’t believe the margins we operate with,” he said. Competition for workers is fierce. Were he to eliminate the gratuity prompt, he said, he would have to raise prices beyond the 18% he already has, on average, since 2019—likely costing him clients.
He knows the requests might turn off some customers, but as the son of a repair technician and a former technician himself, he said, he tries to do as much as he can for his workers.
Within the food-service industry, tips as a share of compensation are rising faster at limited-service establishments such as bakeries and coffee shops than at full-service ones, according to Gusto.
At the Main Squeeze Juice Co. in Mandeville, La., tips add $3 to $5 to workers’ hourly pay, which starts at $10. Owner Zachary Cheaney said he added the option when he opened the location in 2020.
“We can’t just say, ‘Oh, we’re going to charge $2 extra’ instead of having tips, because we have a duty to our customers to have a very fair price point,” said Cheaney, who also consults for Main Squeeze’s corporate office. If customers think the price is too high, he said, they won’t return. Asking them to tip, he said, is different because it’s optional.
“If customers completely stopped tipping, we would be forced to pay employees more, and it would be hard on us as business operators in this crazy environment of rising costs,” he said.
The juice bar’s general manager, Tiffany Naquin, said tips make up about one-tenth of her $46,000 annual pay. Workers like tips, she said, “in all industries. It’s that little extra.” Knowing a customer will see a gratuity screen at the end motivates employees, she said. “If you give employees incentives, they are going to give you better work,” she said.

Checkouts that include a tip screen are more awkward for customers than for workers, she said. She understands if someone declines to tip, she said, and she wouldn’t let that affect the quality of service.
Morduch, the New York University economics professor, said that while most people tend to think of tips as steady income, many businesses fluctuate seasonally—which means employee pay goes up and down. Service workers who receive tips, he added, are often lower income and struggle to deal with such volatility.
Saru Jayaraman, a labor advocate and director of the Food Labor Research Center at the University of California, Berkeley, said that boosting tips without increasing base pay is bad for workers. If customers stop tipping, she said, worker pay effectively declines, which it wouldn’t if employees got a raise.
“Employers think they’re being smart by using tipping instead of raising wages,” she said. “But really they’re risking losing staff, because it’s pissing consumers off and the employees are the ones who have to deal with it.”
A May survey of about 2,400 Americans by financial services company Bankrate found that consumers are tipping less often than they did at the height of the pandemic. Forty-one percent of respondents said businesses should pay their employees better rather than rely so much on tips. Roughly a third said tipping culture is out of hand.
Denver retiree Mary Medley, though, said she sees being a generous tipper as part of her economic responsibility. For her, it isn’t about how difficult a task was, but whether she can lighten someone else’s financial burden, even a little.
“It’s not my job to figure out where it goes or how it gets distributed,” she said. “But if they’re giving me the opportunity to participate in supporting a business in a tangible way, I’ll do so.”
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Quantum computing is moving from theory to real-world investment. Professor David Reilly says it could reshape finance, security and global technology infrastructure.
For decades, the world’s computing power has quietly expanded at an astonishing pace.
From the first transistor developed at Bell Labs in 1947 to modern processors containing billions and even trillions of transistors, each generation of technology has been faster, smaller and more powerful than the last.
But according to quantum physicist and technology entrepreneur David Reilly, that era of effortless progress is beginning to slow.
Reilly, CEO of Sydney-based Emergence Quantum and Professor of Physics at the University of Sydney, says the computing infrastructure underpinning modern economies is approaching fundamental physical limits.
And that could have enormous implications for finance, artificial intelligence and global investment.
Speaking at an industry event organised by Kanebridge International, Reilly said many critical parts of modern society depend on computing and the infrastructure used to process information.
For years, the technology industry relied on a steady improvement known as Moore’s Law, where the number of transistors on a chip doubled roughly every two years.
More transistors meant more computing power, allowing faster software, smarter devices and ever-larger data systems.
Today, however, those gains are slowing.
“It feels to me very innate that I’m going to just find that next year there’s going to be another breakthrough,” Reilly said.
“But if you look at the data…there’s a slowing down, a roll off in performance that started some 10, 20 years ago.”
Rather than making chips dramatically faster, manufacturers are now largely increasing computing capacity by packing more transistors onto each processor.
The approach works, but it comes with growing complexity, higher costs and increasing energy demands.
That challenge is already visible in the massive data centres being built to support artificial intelligence.
In the race to dominate AI, companies are constructing vast computing facilities that consume huge amounts of electricity and water. Reilly described this expansion as a “brute force” approach driven by the global competition to develop advanced AI systems.
Yet the demand for computing power continues to accelerate.
Artificial intelligence, advanced robotics, healthcare research, pharmaceuticals and cybersecurity all require far more processing capacity than today’s systems can easily deliver.
The question now facing the technology sector is whether traditional computing can keep up.
That is where quantum computing enters the conversation.
Unlike conventional computers, which process information using binary switches that represent ones and zeros, quantum computers exploit the unusual behaviour of particles at the atomic scale.
Reilly describes them as a fundamentally different type of machine.
“So a quantum computer is a wave computer,” he said.
Instead of processing information through simple on-off switches, quantum systems can use wave-like properties of particles to process many possible outcomes simultaneously.
Those waves can interact in complex ways, reinforcing correct solutions while cancelling out incorrect ones. In theory, this allows quantum systems to tackle certain types of problems dramatically faster than classical computers.
The concept may sound abstract, but its potential applications are significant.
Quantum computers are expected to transform areas such as materials science, chemical modelling and pharmaceutical development.
They could also help solve complex optimisation problems in logistics, finance and risk management.
For financial institutions in particular, the technology could offer new tools for detecting fraud, analysing market behaviour and optimising portfolios.
But the shift will not happen overnight.
“One message to take away is that quantum is not going to suddenly solve all of your problems,” Reilly said.
Instead, he said quantum systems will likely complement existing computing technologies as part of a broader and more diverse computing ecosystem.
One key change already emerging is how computing systems are physically designed.
Many next-generation technologies, including quantum processors, operate far more efficiently at extremely low temperatures. As a result, future data centres may rely heavily on cryogenic cooling systems to manage heat and energy consumption.
Reilly believes that the shift will gradually reshape the computing industry.
“Over the next five years, you’re going to see data centres go cold,” he said.
“And as that happens, they almost drag with them new compute paradigms.”
Emergence Quantum, the company he co-founded, is focused on developing technologies to support that transition, including cryogenic electronics and integrated hardware platforms designed for quantum computing and energy-efficient systems.
For investors and businesses, the technology remains in its early stages. But the scale of global interest is growing rapidly.
Governments, research institutions and technology companies are investing heavily in quantum research, betting it could become a foundational technology for the next generation of computing.
For Reilly, the moment feels similar to earlier technological turning points.
In the 19th century, new discoveries in thermodynamics helped drive the development of steam engines and the Industrial Revolution. In the 20th century, advances in electromagnetism led to radio, television and eventually the internet.
Quantum physics, he suggests, could represent the next chapter in that story.
“Today we have, as a society, in our hands new physics that we’re just beginning to figure out what to do with,” Reilly said.
“But I think it’s an exciting time to be alive and watch what happens over the coming decades.”
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