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Why consumers are pushing back against gratuities

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  • The rise in tipping expectations has led to widespread consumer frustration and a phenomenon known as "tip fatigue."
  • The decline in tipping is significantly affecting the income of service workers who rely on gratuities.
  • The ongoing debate suggests a need for reevaluating tipping practices, potentially shifting towards higher base wages for service workers.

The practice of tipping, once a gesture of appreciation for exceptional service, has evolved into a source of frustration for many consumers. The phenomenon known as "tipflation" has seen tipping expectations rise dramatically, with some establishments now suggesting tips as high as 35%. This shift has led to widespread "tip fatigue," where customers feel overwhelmed by the constant requests for gratuities.

Tipflation refers to the creeping increase in tipping norms, which has left both customers and businesses grappling with new expectations. According to a report by Square, the average tip rate has jumped from 15% in 2019 to a record 22%. This surge can be attributed to the pandemic, during which consumers were more generous to support struggling service workers. However, as the pandemic recedes, the heightened tipping expectations have remained, causing frustration among consumers.

Elaine Swan, an etiquette expert, explains, "What we saw in the pandemic is that people were over-tipping because they knew the service industry was hit hard, but now that we are on the other side, previous generosity has now become an expectation".

Consumer Sentiment and Tip Fatigue

A significant portion of Americans believes that tipping has gotten out of hand. A recent survey by WalletHub found that nearly 75% of Americans think tipping has become excessive, especially with the predetermined point-of-sale options. This sentiment is echoed by Tim Self, an assistant professor of hospitality, who notes, "Customers are being asked to tip at more traditional service encounters and also app-based services, giving the perception that tipping is everywhere".

The constant pressure to tip has led to a phenomenon known as "guilt tipping," where consumers feel obligated to leave a gratuity even when service does not warrant it. This guilt is often exacerbated by digital payment prompts that suggest high tip percentages, making it difficult for consumers to decline.

Impact on Service Workers

The tipping backlash is not just a consumer issue; it has significant implications for service workers who rely on tips for their income. As of November, service-sector workers in non-restaurant jobs made 7% less in tips than a year ago. This decline is particularly concerning during the holiday season, a time when tips traditionally increase due to higher foot traffic and holiday generosity.

Rachel Carone, a waitress and cook, highlights the importance of tips for her livelihood: "Tips are how I am able to pay my bills and get gas to come to work because my wage isn't cutting it anymore because of inflation". The decline in tipping directly affects the financial stability of workers like Carone, who depend on gratuities to make ends meet.

The Future of Tipping

As the tipping backlash gains momentum, businesses and consumers alike are reevaluating the role of gratuities in the service industry. Some experts suggest that the solution lies in increasing base wages for service workers, thereby reducing the reliance on tips. However, small business owners argue that raising wages could lead to higher prices, which might drive away customers.

Ryan Goldhammer, the owner of Noble Pie, explains, "Big corporations like Starbucks and McDonald's have the finances to increase wages, but for small businesses like us, increasing wages would mean raising food prices, taking away power from the customer".

The debate over tipping is far from settled, but one thing is clear: the current system is under strain. As consumers push back against tipping norms, the service industry must adapt to ensure fair compensation for workers without alienating customers.

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