Tipping in America is going out of control!

Recently while scrolling through Instagram, came across a really interesting meme.

This left me chuckled. But after a moment, I found myself recalling all the memes and YT shorts making funny content on something very similar. It caught my attention, and as usual I did some digging. And to my surprise, there is more to tipping in America than just tipping. And, that is exactly what this newsletter issue is all about. So, let’s get started!

As usual, a little history first.

The practice of tipping has its roots in 17th Century Europe, where it was initially used as a means to reward good service and ensure better treatment from service providers. This custom was particularly prevalent in England, where patrons would give small sums of money, known as "tips," to servants and workers who provided exceptional service. Over time, this practice became ingrained in European social norms and was seen as a way to express gratitude and secure favorable service in the future.

The concept of tipping eventually crossed the Atlantic Ocean and began to take hold in America during the 19th Century. Initially, tipping was met with suspicion and resistance by many Americans, who viewed it as an undemocratic and aristocratic practice that contradicted the nation's values of equality and fairness. Critics argued that tipping created a hierarchy between patrons and service workers, undermining the principle that all individuals should be treated with equal respect and dignity. Despite this initial resistance, the practice gradually became more accepted and widespread, eventually becoming an ingrained part of American culture and the service industry.

Now you might argue that tipping is a good things as it probably helps people in earning more. What is the issue?

Tipping is a generous practice to show appreciation for good service, but it raises concerns when businesses exploit it to reduce their expenses. The public increasingly perceives that companies are shifting financial responsibilities onto customers, effectively asking them to subsidize employee wages. This practice raises ethical questions about fairness and transparency, potentially undermining consumer trust and satisfaction. Unfair or opaque business practices can erode confidence in the industry, prompting calls for stricter regulations.

Fun Fact: In a Bankarte survey, 37% of respondents said that businesses should pay their staff better, rather than relying on tips (Ouch!)

What are the affects?

As consumer awareness increases, there is a growing perception that individuals are being exploited through what has been termed the "tipping scam." A recent survey conducted by Bankrate provides insights into this phenomenon. Below are some statistics:

1. 59% respondents report they have at least one negative view of tipping

2. Compared to 2021, the tipping has reduced from 59% to 51% for food delivery partners.

3. For taxi rideshare, it has gone from 48% to 41%. From 28% to 22% for housekeepers and from 23% to 20% for baristas.

The most frustrating aspect is being expected to tip at places where there's no human interaction whatsoever.

How big is this problem?

To give you some perspective, in 2018 alone, US workers raked in over $38 Billion in tips! Wow, that’s a very big tip.😂 

It is such a hot topic that it has even made its way into the presidential campaigns! Both former president Trump and Vice President Kamala Harris have a proposed slashing taxes on tips.

So, what to do next?

It’s simple, “DO NOT TIP“. I know adhering to the principle of not tipping when one does not feel compelled to do so can be challenging. However, it is entirely acceptable to decline tipping if the services provided are not up-to the mark. It is also advisable to ignore the preloaded tipping suggestions on tablet touchscreens.

Concerns about others observing your actions during a transaction should not influence your decision. As previously noted, there is a growing awareness of the phenomenon known as "Tipflation," and it is likely that others share similar sentiments. Probably, demonstrating the courage to refrain from tipping may, in fact, inspire others to follow suit.

Well, that’s it for this issue. I hope this edition was useful to you and added some value to your knowledge base, and hopefully spread some awareness too.

I will see you again soon with another interesting story. Until then,

Keep thinking!