A new payment trend is sweeping across America, making for an increasingly uncomfortable experience: digital tip jars.
You order a coffee, an ice cream, a salad or a slice of pizza and pay with your credit card or telephone. Then an employee behind the counter rotates a touchscreen and slides it out in front of you. The screen has a few suggested tip amounts – usually 10%, 15% or 20%. There is also often an option to leave a custom tip or no tip at all.
The employee sits right in front of you. Other customers stand behind, waiting impatiently and looking over your shoulder to see how much you tip. And you need to make a decision in seconds. Oh lord, the stress.
Customers and employees today face a radically different tipping culture than a few years ago, with no clear standards. While consumers are used to tipping waiters, bartenders, and other service employees, tipping a barista or cashier may be a new phenomenon for many customers. It’s driven in large part by technological changes that have enabled business owners to more easily shift the cost of compensating employees directly to customers.
“I don’t know how much you’re supposed to tip and I’m studying this,” said Michael Lynn, a professor of consumer behavior and marketing at Cornell University and one of the leading researchers on American tipping habits.
In addition to the changing dynamics, customers were encouraged to tip generously during the pandemic to keep restaurants and shops running, raising expectations. Total tips for full-service restaurants are up 25% in the last quarter compared to a year ago, while tips for quick-service restaurants are up 17%, according to data from Square.
The shift to digital payments also accelerated during the pandemic, with stores replacing old-fashioned tip jars with tablet touchscreens. But these screens and digital tipping procedures have proven more intrusive than a low-pressure tip jar with a few bucks in it.
Customers are overwhelmed by the number of places where they now have the option to tip and feel the pressure of whether or not to add a tip and for how much. Some people intentionally walk away from the screen without doing anything to avoid a decision, say etiquette experts who study tipping culture and consumer behavior.
Tipping can be an emotionally charged decision. Attitudes to tipping in these new institutions vary widely.
Some customers tip anyway. Others feel guilty if they don’t tip or feel embarrassed if their tip is stingy. And others shun tipping for a $5 iced coffee, saying the price is already high enough.
“The American public feels like tipping is out of control because they’re experiencing it in places they’re not used to,” said Lizzie Post, co-president of the Emily Post Institute and the great-great-granddaughter of her namesake. “Moments when no tip is expected make people less generous and uncomfortable.”
Starbucks rolled out tipping as an option this year for customers who pay with credit and debit cards. Some Starbucks baristas told CNN that the tips add extra money to their paychecks, but that customers shouldn’t feel obligated to tip every time.
A Washington state barista said he understands if a customer doesn’t tip for a drip coffee order. But when he custom-makes a drink after talking to the customer for a long time about exactly how it should be made, “it kind of freaks me out if I don’t get a tip.”
“If someone can afford Starbucks every day, they can afford to tip at least some of those trips,” added the employee, who spoke on condition of anonymity.
The ability to tip is seemingly everywhere these days, but the practice has a troubled history in the United States.
Tipping spread after the Civil War as an exploitative measure to keep down the wages of newly freed slaves in service. Pullman was most notable for its tipping policy. The railroad company hired thousands of black porters, but paid them low wages and forced them to rely on tips to make a living.
Critics of tipping argued that it created an imbalance between customers and employees, and several states passed laws banning the practice in the early 1900s.
In “The Itching Palm,” a 1916 diatribe about tipping in America, writer William Scott said that tipping was “un-American” and argued that “the relationship between a man who tips and a man who accepts it is as undemocratic as the relationship of master and slave.”
But tipping service workers was essentially made law by the Fair Labor Standards Act of 1938, which created the federal minimum wage that excluded restaurant and hospitality workers. This allowed the tilting system to spread in these industries.
In 1966, Congress created a “sub-minimum” wage for tips. The federal minimum wage for tipped employees has stood at $2.13 an hour since 1991—lower than the federal minimum of $7.25—although many states require higher base wages for tipped employees. If a server’s tips don’t add up to the federal minimum, the law says the employer must pay the difference. But this does not always happen. Wage theft and other wage violations are common in the service industry.
The Department of Labor considers any employee working in a job that “usually and regularly” receives more than $30 per month in tips eligible to be classified as a tipped employee. Experts estimate that there are more than five million tipped workers in the United States.
How much to tip is completely subjective and varies by industry, and the relationship between quality of service and tip amount is surprisingly tenuous, Cornell’s Lynn said.
He theorized that a 15% to 20% tip became standard in restaurants because of a cycle of competition between customers. Many people tip to gain social approval or with the expectation of better service. As the number of tips increases, other customers start tipping more to avoid losing status or worsening service.
The gig economy has also changed tipping standards. An MIT study published in 2019 found that customers are less likely to tip when employees can autonomously decide if and when to work. Nearly 60% of Uber customers never tip, while only about 1% always tip, a 2019 University of Chicago study found.
What makes it confusing, Lynn said, is that “there is no central authority that sets tip standards. They come from the bottom up. Ultimately, it is what people do that helps determine what other people should be doing.”
Employees earning sub-minimum wages, such as restaurant clerks and bartenders, should almost always tip, say lawyers and tipping experts.
When customers are given the option to tip in places where employees earn an hourly wage, such as Starbucks baristas, they should use their discretion and take any guilt out of their decision, etiquette experts say. Tips help these workers supplement their income and are always encouraged, but it’s okay to say no.
Etiquette experts recommend that customers approach the touchscreen option the same way they approach a tip jar. If they were to leave change or a small tip in the jar, do so when prompted on the screen.
“A 10% tip for takeaway meals is a very common amount. We also see change or a single dollar per order,” says Lizzie Post. If you’re not sure what to do, ask the employee if the store has a suggested tip amount.
Saru Jayaraman, president of One Fair Wage, who advocates an end to the sub-minimum wage policy, encourages customers to tip. But tips should never count against service workers’ wages, and customers should require companies to pay workers full wages, she said.
“We should tip, but it should be combined with telling employers that tips should be on top, not instead of a full minimum wage,” she said.