[Originally published January 8, 2021]
Tipping is a unique phenomenon. It is, by definition, a voluntary decision to express gratitude, but is also an almost universal practice in certain settings. In restaurants, over 80% of Americans say they tip regularly, making it a bit of an unspoken requirement.
Of course, tipping is more than just a loss for the customer. Though many people tip out of gratitude, tipping is also, in theory, done to ensure better service from employees. But is this really as prominent as common sense would dictate? Apparently not. A survey of Americans in 2010 asking for motivations behind tipping found that only 13.6% of people tip in order to avoid poor service in the future. More common reasons are much less rooted in self-interest. A majority of Americans surveyed said that tipping was driven by feelings of gratitude or obligation. In fact, 84.7% cited tipping being a social norm as a motivator. In other words, people mostly tip because they feel like they “should”, without expecting much in return.
Is tipping a good practice? It depends on who you ask. For many food service employees, tipping is a crucial source of their income. Many states have lower minimum wages for restaurant workers who expect to be tipped, meaning that tips are required for these workers to earn as much as, say, their kitchen counterparts. Some could argue that it’s unfair that servers must rely on the generosity of their customers to earn a living wage.
On the other hand, tipping, in theory, incentivizes waiters to provide better service and provides a benefit to working on busy days which would otherwise be undesirable. These facts benefit both customers and employees. It is also important to remember that when a restaurant eliminates tipping, they usually make up for their employee’s lost income by raising costs or charging a service fee that is added onto the bill. With so many people accustomed to tipping, these extra fees could be viewed negatively, even if the final bill costs the same overall.
Personally, I like the system that my Chipotle and many other restaurants have devised, where tips are pooled and evenly distributed among all the workers. In this way, people who aren’t working with customers, such as cooks and dishwashers, receive some extra compensation for their work. It also allows for workers to continue benefitting from busier shifts, instead of simply doing more work for the same pay, which would be the case if tipping were eliminated.
Source: The Economics of Tipping – Ofer H. Azar