Aight, help me out here… Do Americans really think tipping is out of control? Word is we’re asked to leave bigger tips and hand over gratuity in situations that don’t exactly seem tipworthy. It's definitely a subject business owners should understand.
In fact, I’ve had a few recent experiences with tipping that made me do a double-take.
The other day I was paying for takeout. When I went to tap my credit card on the point-of-sale thingy, there was a prompt to leave a tip. Nothing new there. But the amounts? The default was 30%, with 25% and 35% the other tipping options.
Here’s another one for you.
I dropped by this funky boutique to buy a gift. While the cashier put it in a bag and rang me up, I noticed a tip jar next to the register. That’s normal tipping culture these days?
It got me poking around for more answers. Meanwhile, we launched a poll on tipping in the United States, asking 600 American respondents who were adults at the time of the pandemic a range of tipping-related questions.
You’ll find their responses throughout this post.
For starters, Nearly 78% of respondents strongly agreed or agreed they’re being asked to tip in situations where they haven’t been in the past.
Going back to my takeout tip suggestion, nearly 84% of respondents strongly agreed or agreed suggested tip amounts are larger than they have been in the past.
And as for the worker in that funky boutique, just over 7% respondents indicated they were likely to tip retail cashiers.
Turns out, the actual truth about tipping in America today is a bit more complex. Still, it’s a worthy exploration — especially if you’re operating a business with the potential for tips.
What’s the idea behind tipping, anyway?
Most business owners would agree tips are a means to ensure workers providing a better quality of service get paid more — the better the service, the larger the tip, the higher the wage.
Nearly 77% of respondents strongly agreed or agreed there are jobs that should include tips.
We’ve actually got laws around this at the federal and state levels.
What the feds say about tipping
U.S. law stipulates separate federal minimum wages for tipped and untipped positions. Workers in non-tipped jobs are entitled to at least $7.25 an hour. But if you earn at least $30 per month in tips, minimum wage is only $2.13 an hour. The states do have room to set their own rules.
Those are the basics, but there are some nuances.
If you’re paying an employee minimum wage for a tipped position but their total earnings don’t amount to the non-tipped hourly, the business owner (you) have to make up the difference. There’s also rules concerning taxes and such, but it gets real mathy.
What the states say about tipping
Most states also separate minimum wage for non-tipped and tipped positions like bartenders or baristas. The exceptions are Alaska, California, Minnesota, Montana, Nevada, Oregon and Washington — if you live there, minimum wage is the same, regardless of tipping.
And in some of the other 43 states, minimum wage is significantly greater for either type of job.
For example, in Arizona it’s $14.70 per hour and $11.70 per hour, respectively, for non-tipped and tipped jobs. Compared with federal law, that’s about double for non-tipped workers and more than four times higher if you get tips.
What could be driving changes in tipping?
Let’s get out of the numbers-weeds and back to the original point. What the heck is going on with our tipping system today? There are a few popular theories explaining why tipping has outstripped general price increases:
- The COVID-19 pandemic
- New technology
- A phenomenon called “tipflation”
Unfortunately, we don’t have an official manual on human behavior, so it’s hard to deliver a quantitative answer.
But we do have Reddit.
The COVID-19 pandemic
As we endured the pandemic and lockdown, there emerged a distinct sense of, “We’re all in this together.” Some businesses closed or drastically limited operations. Workers faced reduced hours or even long stretches without work at all.
Given the spirit of togetherness, it made sense to leave a few bucks in the jar even if the job wasn’t traditionally tipped. After all, just showing up and risking infection made you a hero.
But, as this theory goes, the practice continued when things started returning to normal.
Customers got used to shelling out a little extra, workers became more reliant on gratuity, and people saw tipping become more normal across the board. In a reply on this thread, Reddit user rosesarejess recalls:
New technology
With more Americans joining the cashless economy, it’s common to see new tech like point-of-sale (PoS) devices. According to data from the Pew Research Center, 41% of Americans say none of their purchases in a typical week are paid for using cash.
You could argue that habits are changing as electronic checkouts become the norm. Now, tipping could just be the digital version of thoughtlessly dropping change.
And if you check Reddit, you’ll see a debate over whether this kind of tipping is due to default PoS settings or something more sinister is afoot. On a related thread, Reddit user prylosec muses:
Tipflation
This one sorta combines the two theories. An outpouring of generosity during the pandemic inadvertently set a new baseline upon which gratuity continues to increase.
Rapid adoption of PoS devices means a greater variety of businesses are — deliberately or not — floating the idea of leaving a tip, creating a new, strange sort of tipping hierarchy.
If 25% is now a decent tip at an ordinary restaurant, how much do you give the tech who installed your windshield? And who do you tip more, that tech or your massage therapist? Yeesh.
Sounds like Reddit user LondonMonterey999 is taking a stand, commenting in a thread:
So, who gets tipped nowadays?
Good question, and it’s a good one for our survey respondents. We asked them to pick from a list of jobs, selecting all that apply, that often get tips. Let’s take a look:
| Job | Respondents (%) | Count |
| Servers (e.g. Waiters, Bartenders, Baristas) | 89.83% | 539 |
| Retail Cashiers | 7.17% | 43 |
| Delivery Drivers | 64.33% | 386 |
| Taxi Drivers/Rideshare Drivers | 63.33% | 380 |
| Landscapers | 12.50% | 75 |
| Tattoo Artists | 26.50% | 159 |
| Hair Stylists/Barbers | 68.83% | 413 |
| Handymen | 22.00% | 132 |
| Valet Parking Attendants | 55.17% | 331 |
| Massage Therapists | 25.00% | 150 |
Have you checked your point-of-sale system lately?
If you’ve read this far and you’re using a PoS device for your business, now might be a good time to evaluate checkout flow. The Redditors we just heard from make it seem like there’s room for improvement.
More than 85% of respondents strongly agreed or agreed that point-of-sale devices have increased the occasions on which they are asked to tip.
Let’s focus on a couple areas where you can deliver a better experience with a PoS device — like GoDaddy Smart Terminal. We’ll look at tweaking the customer-facing screen and setting up better options for tipping.
The customer-facing screen
This is what customers are looking at when you hand them your PoS device, and it can make an important impression. Consider adding something to personalize the transaction, like your logo, an engaging image, or even a catchy message.
Here’s one: Can I give YOU a tip? You’re awesome!
- For instructions on customizing the customer-facing screen with GoDaddy Smart Terminal, go here.
The tipping part
We just learned that tip screens can be a pretty touchy subject. The default setting varies from device to device (with GoDaddy, it’s off), so it’d be wise to ensure you’re deliberately asking your customer for tips by turning this option on or off.
Then, consider which percentages or amounts are reasonable.
- For instructions on enabling and disabling tipping with GoDaddy Smart Terminal, go here.
- For instructions on adjusting tip amounts with GoDaddy Smart Terminal, go here.
How tipping got started in the U.S.
Most sources point to Europe in the Middle Ages. Traveling lords and ladies staying at inns or whatnot would offer small payments called “vails” to servants who went above and beyond.
“Canst thou putteth more salsa on mine cheese crisp? Perf.” (Flippeth coin.)
It continued overseas in one form or another until arriving in the U.S. around the time of the Civil War, when we saw more European train riders. You could say they spoiled the local staff.
In the present day, we asked our survey respondents the highest amount they were comfortable tipping. Here’s how it shook out:
| Tip percentage | Respondents |
| 5% or less | 8.67% (52) |
| 10% | 13.33% (80) |
| 15% | 22.83% (137) |
| 20% | 36.33% (218) |
| 25% | 15.33% (92) |
| 30% or more | 3.5% (21) |
The practice gained a firmer foothold in the U.S. when Prohibition hit and many beverage-industry workers found themselves out of a job. (Sound familiar? Funny how history can have a way of repeating itself.)
Tipping as we know it today took shape in 1966, when Congress passed rules allowing restaurants to pay workers a lower minimum wage to account for tips.
What’s tipping like with our North American neighbors?
It’d be nearly impossible to run down tipping practices everywhere in the world. But it’s tempting to peek over our borders to see what the neighbors are doing.
Canada
In Canada (except Quebec) minimum wage is the same whether you get tips or not. While minimum wage varies depending on location, the federal $17.75 CAD per hour isn’t quite a living wage nearly anywhere in the country.
That leaves Canadian tippers a bit similar to those in the U.S. And Canadian Redditors have gripes about tipping, too. Replying to this thread, meditatinganopenmind offers their own take:
Mexico
Minimum wage in Mexico is also the same regardless of tips. But there are a couple important distinctions. First, residents of the Free Zone of the Northern Border, where commerce with the U.S. is increased, command a higher minimum wage.
And with tourism such an important industry in Mexico, service industry workers in areas that see a lot of tourists might expect more in gratuity — even from their fellow citizens. Redditor edcRachel offers her explanation in this thread:
Closing thoughts on tipping in the United States today
Thanks for riding along. We covered a lot, but the concepts of tipping and wages go down so many rabbit holes, we’d never again see the light of day if we tried to explore everything. For example, we didn’t cover the gig economy or get much into labor law.
And we shouldn’t assume every opinion shared online is the ironclad truth. Sites like Reddit can be dumpster fires of heated opinions, but they do offer valuable “person on the streets” perspectives, whether that’s a negative view of tipping or positive one.
Hopefully, this humble post offered a good overview of the miasma of factors that influence tipping practices in the U.S. today
Oh, one last thing… Kinda wish I’d left a buck for that cashier at the funky boutique.
