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no one knows how much to tip anymore

(CNN) — A new payment trend is sweeping across the United States, making the experience increasingly awkward: digital tipping.

You order a coffee, an ice cream, a salad or a slice of pizza and pay with your credit card or with your phone. Then a clerk standing behind the counter turns a touch screen and slides it in front of you. The screen has some suggested tip amounts, usually 10%, 15%, or 20%. There is also usually an option to leave a custom tip or not tip at all.

The worker is right in front of you. Other customers are standing behind you, waiting impatiently and looking over your shoulder to see how much you leave as a tip. And you have to make a decision in seconds. Oh lord, the stress.

Customers and workers today are faced with a radically different tipping culture than the one that existed a few years ago, with no clear rules. Although consumers are used to tipping waiters, bartenders and other service workers, tipping a barista or cashier may be a new phenomenon for many shoppers. It is driven in large part by changes in technology that have allowed business owners to more easily pass the costs of workers’ compensation directly onto customers.

“I don’t know how much you’re supposed to tip and I study this,” said Michael Lynn, a professor of consumer behavior and marketing at Cornell University and one of the leading researchers on tipping habits in the United States.

Adding to the changing dynamics, during the pandemic customers were encouraged to leave generous tips to help keep restaurants and stores afloat, raising overall expectations on the subject. Total tips for full-service restaurants increased 25% over the past quarter compared to a year ago, while tips at fast-food restaurants increased 17%, according to Square data.

The transition to digital payments has also accelerated during the pandemic, prompting stores to replace old cash tip jars with touch-screen tablets. But these screens and procedures for digital tips have proven to be more intrusive than a cash tip jar with a few dollars in it.

Customers are overwhelmed by the number of places where they now have the option to tip and are feeling pressure as to whether and how much to add a tip. Some people deliberately walk away from the screen without doing anything to avoid making a decision, say experts who study tipping culture and consumer behavior.

Tipping can be an emotionally charged decision. Attitudes toward tipping in these new settings vary widely.

Some customers tip no matter what. Others feel guilty if they don’t tip or ashamed if the tip is poor. And others avoid tipping for a $5 iced coffee, saying the price is high enough.

“The American public feels that tipping is out of control because it is required in places they are not used to,” said Lizzie Post, co-chair of the Emily Post Institute and a great-great-granddaughter of her namesake. “Situations where tipping is not expected make people less generous and more uncomfortable.”

Starbucks this year launched a tipping option for customers who pay with credit and debit cards. Some Starbucks baristas told CNN that tips add extra money to their bills, but customers shouldn’t feel obligated to tip every time.

A barista in Washington state said he can understand if a customer doesn’t tip on a coffee order. But if he makes a custom drink after spending time talking to the customer about exactly how it should be made, “I’m a little disappointed when I don’t get a tip.”

“If someone can shop at Starbucks every day, they can afford to tip at least a few of those different experiences,” added the employee, who spoke on condition of anonymity.

“Anti-American”

The option of tipping exists seemingly everywhere today, but the practice has a troubled history in the United States.

Tipping became popular after the Civil War as an exploitative measure to keep the wages of newly freed slaves in the service area low. Pullman was the company most notable for its tipping policy. The railway company hired thousands of black porters, but paid them low wages and forced them to rely on tips for a living.

Critics of tipping argued that it created an imbalance between customers and workers, and several states passed laws in the early 20th century to outlaw the practice.

In “The Itching Palm,” a 1916 rant about tipping in the United States, writer William Scott called tipping “un-American” and argued that “the relationship between a man who gives a tip and a man who accept is as undemocratic as the relationship between master and slave.

tip

A Starbucks store.

But tipping service workers became law through the Fair Labor Standards Act of 1938, which established a federal minimum wage that excluded restaurant and hospitality workers. This allowed the tipping system to proliferate in these industries.

In 1966, Congress created a “sub-minimum” wage for tipped workers. The federal minimum wage for tipped employees has remained at $2.13 an hour—lower than the federal minimum of $7.25—since 1991, although many states require higher base wages for tipped employees . If a server’s tips do not meet the federal minimum, the law says the employer must make up the difference. But this does not always happen. Wage theft and other violations of wage practices are common in the service industry.

The Department of Labor considers any employee who has a job in which they “customarily and regularly” receives more than $30 a month in tips to be eligible to be classified as a tipped worker. Experts estimate that there are more than five million tipped workers in the United States.

Tipping Tips

Tip amount is completely subjective and varies by industry, and the link between service quality and tip amount is surprisingly weak, said Cornell’s Lynn.

According to him, a tip between 15% and 20% in restaurants became the standard due to a cycle of competition among customers. Many people tip to gain social approval or in the expectation of better service. As tip levels increase, other customers begin to tip more to avoid losing status or risking poor service.

The gig economy has also changed its rules around tipping. An MIT study published in 2019 found that customers are less likely to tip when workers have autonomy over the need to work and when to do so. Nearly 60% of Uber customers never tip, while only about 1% always tip, according to a 2019 University of Chicago study.

What makes it confusing, Lynn said, is that “there is no central authority that sets the tipping standards. They come from the bottom up. Ultimately, it is what people do that dictates what other people should do.”

Workers who earn sub-minimum wages, such as restaurant servers and bartenders, should almost always be tipped, tipping experts and advocates say.

When given the option to tip at places where workers earn by the hour, like Starbucks baristas, customers should use their discretion and remove any blame from their decision, experts say. Tips help these workers supplement their income and are always encouraged, but it’s also okay to say no.

Etiquette experts recommend that customers approach the touchscreen option the same way they would a tip jar. If you were to leave change or a small cash tip in the jar, do so when prompted on the screen.

“A 10% tip for takeout is a very common amount. We also see change or a single dollar per order,” said the Lizzie Post. If you’re not sure what to do, ask the worker if the store has a suggested tip.

Saru Jayaraman, president of One Fair Wage, which advocates ending sub-minimum wage policies, encourages customers to tip. But tips should never work against service workers’ wages, and customers should demand that companies pay workers full wages, he said.

“We have to tip, but it needs to be combined with telling employers that tips should be above, not in lieu of, the full minimum wage,” he said.

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