Tipping culture has gotten completely out of control!
Tipping began as a way to pay extra on top of your bill as a thank you to someone who was providing exemplary goods and services. This was reserved for hair stylists, bartenders, food delivery workers, cab drivers, or others in these types of freelance professions. However, we’ve now reached the point where people who don’t work in these types of professions are now asking for, and in some instances, expecting tips and I think this is a slippery slope.
The concept of gratuity existed long before 2020, but during the Coronavirus pandemic tipping reached a fever pitch. Tipping was looked at as a way to prop up businesses that were hit hard during Covid and a show of support to help them stay afloat, meet payroll, and in general keep their lights on. The Paycheck Protection Program created by the Trump Administration did a lot to help benefit smaller businesses and independent contractors, but there was a large swath of companies who didn’t qualify for PPP loans and still felt the pinch on their bottom lines. So, many businesses began adding the ability to tip to their standard business transactions.
If you’ve been to coffee shops, fast food restaurants, or even dealt with auto mechanics, there’s a good chance that you’ve had this interaction. You order a particular good or service and then you begin the checkout process. But before your order is processed, the person on the other side of the counter spins around an iPad, Square, Clover, or some other point-of-sale system asking you to confirm what amount you’d like to leave as a tip. Sometimes there isn’t even this privacy barrier, as the cashier will simply ask for the percentage you would like to add on top of your bill. And if you choose not to tip, especially when ordering food, this is probably happening to your meal. Yuck.
I wish this was simply a bump in the road and that tipping would eventually correct itself, but I feel like it will only get worse. There seems to be an increase in what’s deemed as an appropriate tip, with 15% being replaced by 20-25% currently. And with credit card processing fees increasing more and more establishments may begin to look to customers to explicitly absorb these processing fees or offset this via tips. Tipping percentage and credit card merchant fees are only the tip of the iceberg. I feel like there’s something even more sinister in the works here.
There are two different minimum wages in this country, and neither has changed since 2009. The one you primarily hear about is the $7.25 minimum wage. States are allowed to go over this $7.25 threshold if they feel so inclined but federally they are not required to. However, there is also a $2.13 minimum wage for tipped employees. A tipped employee is defined by the government as anyone who receives over $30 a month in tips, with the goal being that through tips and $2.13 per hour, you should equal up to the $7.25 threshold. This $2.13 amount has not changed since 1938! It would present a significant cost savings opportunity if businesses were able to increase the number of workers that meet this tipped employee criteria.
In the era of publicly traded companies, we live in a neverending cycle of companies finding creative ways to maintain profitability and attractiveness for shareholders. Some of these ways to cut costs and increase profit are legal, and some of them, like Wells Fargo for example, are less ethical. However, the fact remains that executives are exhausting every possible method at their disposal to keep their companies looking good for Wall Street. And what better way to achieve that goal than to slash minimum wages for employees by 340%?!?
The first step would be to slowly normalize tipping for all goods and services. Then, after enough time has passed, you would be able to collect enough data points to argue that your workers should be reclassified as tipped employees. Finally, you would need to provide this data to your army of lobbyists who can work on your behalf to get Congress to amend the appropriate legislation. Once that is completed, each company would be able to adjust its financial forecasts to show this new $2.13 minimum wage amount and reduce its labor costs across the board by massive margins.
When I was in Ireland last month, I realized that tipping is only an American thing. No one in Ireland expects or anticipates tips, so if you do tip them it’s a pleasant surprise. Their country pays them a living wage and they can provide for their basic wants and needs without needing tips to make ends meet. But in our country, we often have to foot the bill for any government shortcomings. We see this in our healthcare companies and we see it in our public school funding among other things. We keep finding new ways to maximize profits at the expense of the common person.
When will enough be enough?
The most sinister part about it is employees have reported they don't even see a majority of those tip add-ons, many business owners keep it instead of distributing it fairly, leading some workers to go as far as to ask that you tip in cash (like the old school tip jar).