- If you've felt like tipping is more prevalent, you're not alone: It became a norm during the pandemic.
- According to the WSJ, businesses saw how tipping changed post-2020, and started to rely on it.
It's become a meme: Someone staring you in the eyes as they turn around a screen for you to choose a tip on.
It speaks to the ubiquity of tipping in the US, as consumers find themselves presented with tipping screens just about everywhere — even at a self check-out. Some say that tipping has gotten "out of control," according to a May Bankrate survey, with 41% of respondents saying that they "believe businesses should pay employees better rather than relying so much on tips."
That might be in part because today's tipping culture, which extends well beyond restaurant servers or delivery drivers, was formed during the pandemic, according to a new Wall Street Journal article. In 2020, as in-person industries suddenly turned service workers into essential workers, people began tipping more — and on things they might not have tipped on previously.
With those tipping norms upended, businesses began to rely on that flow of tips, Scheherezade Rehman, an economist and professor of international finance at George Washington University, told the Wall Street Journal.
And now, businesses are trying to avoid making the larger wages those tips have augmented their responsibility, as the economy cools. Jonathan Morduch — a professor of public policy and economics at New York University — told the Wall Street Journal that as businesses prepare for a potential recession, "they don't want to lock into higher wages." Making pay reliant on the whims of tippers means businesses can stay flexible, and they don't have to take on the potential risks of actually increasing their costs.
As Insider's Andy Kiersz and Jacob Zinkula reported, the rise of tipping everywhere may be pegged to workers getting more expensive. Wages have been on the rise, and with workers feeling the burn of inflation and plenty of job openings, it's still costly to compete for new employees.
"Businesses are being squeezed and hoping that their customers will, in effect, be willing to pay more on a voluntary basis," Laurence Kotlikoff, an economics professor at Boston University, previously told Insider.
Currently, some service workers are subject to what's called the tipped minimum wage. That wage is $2.13, far below the federal minimum wage of $7.25 an hour, and means that paychecks are primarily driven by the tips workers receive, rather than an hourly rate.
"Businesses are happy to let workers earn more from tips, especially when there's no pressure to raise the tipped minimum," Morduch told the Wall Street Journal.
But making workers' pay essentially contingent on customers' generosity — some of whom might be in a similar work situation, or also feeling the sting of increased costs — likely isn't a viable long-term strategy. The Fed doesn't think businesses' fears of a recession will come true. Customers are getting fed up with offloaded costs, and, even in a slightly cooling labor market, there's plenty of jobs to be had. Those ones might just actually pay more.
Are you tired of tipping, or relying on tips? Contact this reporter at jkaplan@insider.com.