October 1, 2026
Tipping has been part of the American experience since the middle of the 19th century. Whenever you eat at a restaurant, stay at a high-end hotel, or, in modern times, have your bags picked up at an airport baggage claim, you generally pay for the service. It has been customary in our country for a long time, and one of the few countries that still accepts it as a form of income. Now, however, every time you go into any establishment, it is either included in your final bill or they force percentage options when payment is required. Has it gone too far?
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This practice originated in Europe (primarily England), where patrons of establishments would offer a financial reward for prompt service, and it spread throughout the continent. Over time, gratuity was incorporated into the final charge for service, and the practice has largely been removed from European life. In most of Asia, it is considered rude to expect tips for providing and receiving service, especially in Japan. It is accepted in some parts of the African continent. In the United States, it proliferated after the Civil War as a way for businesses to reduce expenses, and workers had to rely on patrons' payments to ensure they were compensated. In today's modern experience, tipping has gotten absurd. You now have tipping options (generally given to you even if you didn't request it) whenever you order a coffee from Starbucks or any small business, and at concession stands at major sporting events. I mean, if I make the effort to come to a game and walk up to buy food and a drink, what exactly am I tipping for? For staff to turn around and pick up the food item from a counter with a heat lamp? Ridiculous.
From a historical perspective, newly emancipated slaves did not receive a salary or compensation for hours worked at all, and tips were their only method to get paid. The Shriver Center on Poverty Law believes that tipping was introduced and accepted as a business practice to avoid paying former slaves their earned income for time in service.
While that could be one reason that tipping thrived in America over the years, I think it was also a protective business practice that allowed restaurants, where margins are small, to increase profits. Labor laws (such as minimum wage) excluded workers in the service economy. Congress has passed laws that protect this business practice, even though federal guidelines for the subminimum wage are $2.13 per hour and have not increased since 1991. Some states have a slightly higher subminimum wage, like Illinois, which is $4.95 per hour. The assumption is that wait staff will see tips as their primary revenue driver as compensation for their service. This assumes that the patron will pay 18% - 20% as a sign of appreciation for that service. If the patron doesn't leave a tip, then the server will not make money on their efforts. The Shriver Center also points out the low income of those who are wait staff, particularly women and minorities, who are vulnerable and survive just above poverty thresholds.
Part of the reason for this is the extensive effort that the National Restaurant Association and other industry groups are working to lobby on behalf of their industry to protect the tip credit system and other issues important to them. The association has spent close to $66 million since 1998. They have their reasons, and I believe one is to ensure overhead doesn't become unmanageable when running a business on those small margins (3%-5%). If business expenses become too high, those costs would be transferred to the consumer. As a result, when prices are too high, especially during a downturn in the economy, people choose not to eat out or order takeout. I guess one way to protect costs is to make sure the onus is on the server to maximize tips, which shifts labor costs onto the customer, rather than the restaurant itself.
The excessiveness of tipping started during the COVID-19 pandemic, when restaurants were the first to do this. It was partly understood as a way to help those small businesses stay open during difficult economic times, and most people tapped into their altruistic desire to help others who are struggling. Servers at certain restaurants saw large tips during the most challenging times during COVID-19 shutdowns. Perhaps all businesses saw the capitalist opportunities, hoping that desire to seek out tips or 'rounding up' would improve the bottom line. This shamelessness is perpetuated by grocery chains like Vons or Sprouts. Before paying the bill, the card reader would put forth a question: would you like to round up to help to assist a) starving children, b) a local food bank, or c) some other charity? In most cases, I say yes, because like most people, I want to help those who are struggling in life. At the same time, ask the large, multi-billion-dollar company: How much do they contribute?
On top of that, when you order food from one of the delivery companies, Uber Eats, DoorDash, or Grubhub, there are add-on costs (delivery fee, sales tax, service fee, driver benefits) in addition to a requisite tip. So, an order that initially costs $30, with those additional amounts, balloons to almost $50. These companies treat their drivers as subcontractors who do not receive any ancillary benefits (health, car insurance, gas subsidies, etc.) to offset their efforts for working for these multi-billion-dollar behemoths. Any efforts to unionize drivers have been met with intensive and well-funded lobbying campaigns to kill any legislative protections for those drivers.
Because of the desire for many businesses to keep their expenses low, tipping was a countermeasure to allow employees to be paid by other means. However, I believe there will be a backlash to all of this excessive tipping. While people do want to show their altruistic side, I think forcing people to tip (by providing options while standing in front of them) will push that kindness away. If there is a sense of entitlement for tips, even if the service is not good, future generations will not feel empowered to show gratitude for excellent service because it was not earned.
It is unlikely Congress is going to pass a serious increase in the federal minimum wage, which has not kept up with the cost of inflation each fiscal year. The last increase was in 2009. While it has been legislated in left-leaning states like California ($15 per hour), the benefits, or lack thereof, are still being debated. The rest of the country, including right-leaning and moderate states, will get pushback from businesses against any real increase. Most chain restaurants will be able to absorb future cost increases, such as Applebee's and Outback Steakhouse, which will be passed down to the consumer as usual. For smaller, single brick-and-mortar establishments, increased costs will lead to fewer staff being hired and potentially push them out of business.
The only solution from here on out is to only tip when you dine at a sit-down restaurant, and the service is good to excellent. People need to make a conscious choice when they buy coffee, boba tea, bagels, or sandwiches, or for take-out orders, to not leave any tip. Eventually, these places will get the hint. It also depends on the restaurant's location. Study data by Michael Lynn at Cornell University showed that whether to remove or keep tipping depended on several factors. In some restaurants, tipping was used as a metric to 1) motivate servers to deliver quality effort, 2) measure performance, and 3) identify dissatisfied customers. It was assumed that quality service led to high tip amounts, but the data showed that was not always the case. Tips between 5% and 20% were left regardless of quality of service, meaning there was no definitive data point as to why servers received higher tips. It appeared to be luck in some cases, and completely random as to whether a customer would reward quality service.
Restaurant managers could not make the assumption that tip averages for a server are indicative of excellent performance. The BBC ran a story which showed that restaurants that removed tipping had a mixed bag in terms of a consistent and reliable customer base, and that despite that inconsistency in tip income, some wait staff preferred to receive tips as opposed to a set salary. Customers were also turned off by the increased prices because they subconsciously did not realize the reason for that cost and where it went. Sticker price shock came first.
The intent of eliminating tipping was that certain restaurant owners wanted increased income for their staff. That was the intent, but it brought about its own problems. Restaurants that are owned by large business groups, such as Union Square Hospitality Group (created by Danny Meyer, founder of Shake Shack), experimented with a no-tipping policy, but ended it after it made their restaurants less competitive and complicated their business model during a time of economic uncertainty and stagnation. In contrast, smaller brick-and-mortar restaurants, as noted in an Eater article by Katherine Campo Bowen, found that removing tips brought all sorts of challenges: pay disparity between front-of-house employees (servers and waitstaff) and kitchen cooks, high staff turnover, and fewer diners. Labor costs and patrons' desired feeling of power to determine someone's final income were among the many reasons cited for reversing course and admitting failure.
Americans who patronize businesses must either be open to accepting higher costs of goods and services to offset increased minimum wages, or to being taxed more themselves (income, sales, and administrative fees) to see wages for those in the service industries rise along with a higher quality of life. It also comes down to choice. Both restaurants and patrons can either choose to have tipping and also decide to eat at restaurants that add cost to offset tipping servers. Until public sentiment changes, tipping culture, with all of its positives and negatives, will stay for now.
If restaurants do keep tipping in place, it should be a reward for giving you their best attentive service, which makes the meal enjoyable, and a sign of appreciation by voluntary choice. For all other businesses, which include driving or walking to a location and placing an order, do not require any reward. If anything, those establishments should tip us for choosing them.
