HISTORY99 - Tipping

The practice of tipping for services seems to be on a lot of people’s minds these days, particularly with the recent aggressive solicitations for higher tips in restaurants.  So, before getting emotional about what restaurants are try to do to us, I thought an article on history of tipping would be enlightening.

 

After a short introduction, I will cover the origins of tipping in Europe in the 15^th and 16^th centuries, early tipping in the U.S. in the mid-19^th century, anti-tipping initiatives in the late 19^th and early 20^thcenturies, the swing back to tipping in early to mid-20^th century, our modern tipping culture today, and the future of tipping.  I will end with some reflections on what I’ve learned and/or my opinions on tipping.

I will list my principal sources at the end.

 

Introduction

A tip (also called a gratuity) is a sum of money customarily given by a customer to certain service workers for the service they have performed, in addition to the basic price of the service.

Tips and their amount are a matter of social custom and etiquette, and the custom varies among countries and settings. 

In the U.S. and Canada, it is customary to tip servers in bars and restaurants, taxi drivers, hair stylists and so on (see below).  The customary amount of a tip can be a specific range or a certain percentage of the bill based on the perceived quality of the service given.

It is illegal to offer tips to some groups of workers, such as U.S. government workers and police officers, as the tips may be regarded as bribery.  

These days, the expectation in U.S. restaurants that diners will tip their servers is a key part of the culinary economy: tips subsidize a server’s or bartender’s salary at the vast majority of the nearly 650,000 restaurants in the country.

Over the past few years, tipping has gotten complicated.  The rise of touchscreens presents an opportunity to tip 15, 20, or 25%, or more, for everything from a cup of coffee to a candy bar. 

The origins and evolution or tipping are tied to medieval European nobility, post-Civil War reconstruction, and prohibition.  Its rise is directly tied to the emergence of the restaurant as an industry.

 

Origins of Tipping

Most sources trace the beginning of the practice of tipping to Europe in the late Medieval period around the 15^th and 16^th centuries.  Tipping was a master-serf custom wherein a servant would receive extra money for having performed superbly well.  By the 17^th century, it was expected that overnight guests to private homes would provide sums of money, known as vails, to the host's servants who provided good service.  Soon afterwards, customers began tipping in London coffeehouses and other commercial establishments.  Tips were left in European taverns to ensure quick and good service.  

Wealthy Americans discovered tipping for themselves in the 1850s and 1860s while traveling in Europe.  American travelers brought the practice back to the states as a way to feel aristocratic. 

 

Early Tipping in the U.S.

Except for wealthy Americans, eager to mimic European customs, tipping was almost nonexistent in the U.S. before the Civil War.  But it took root as a business strategy in during the Reconstruction Period  in the American South, after the abolition of slavery and the American Civil War. 

Freed slaves were limited in their job choices. Many who did not end up sharecropping worked in menial positions, such as servants, waiters, barbers, and railroad porters.  These were pretty much the only occupations available to them. 

Some service companies started to use freed slaves, paid them zero or low wages, then encouraged customers to leave tips.  The Pullman Co. is a good example.

George Pullman founded the Pullman Co. in 1859 and started operating luxury sleeping cars on the country’s growing network of railways.  In 1868, Pullman began hiring Black men, most of them former slaves, to serve as porters.  Pullman paid them minuscule wages; they were treated harshly and often subject to abuse.  But Pullman encouraged wealthy passengers of those luxury cars to leave them tips.  As Pullman cars made their way across the country, the practice of tipping spread too.

Numerous other companies adopted similar practices and by the turn of the century, tipping had become common.

Tipping as a business strategy in the U.S. began in the Reconstruction Period following the Civil War.

 

Anti-Tipping Initiatives

As soon as tipping began to spread in America, so did opposition to it. 

The public resented tipping, feeling like they had to pay for things twice.  Eating out was already expensive, so why should struggling Americans have to pay more on top of the bill? 

Organized labor leaders also opposed the practice, even if their rank-and-file benefited from tips.  

Proprietors regarded tips as equivalent to bribing an employee to do something that was otherwise forbidden, such as tipping a waiter to get an extra-large portion of food.

Journalists in the late 19^th and early 20^th century frequently described tipping as un-American, and the tip itself as something bestowed upon a social inferior, which flew in the face of democratic values.  “A man must be a born snob who enjoys the servility and likes to revel in the bought smile of porters … who sell civility by the pennyworth,” the New York Times wrote in 1884.

 

A January 1915 article in the Seattle Star about Anne Morgan's anti-tipping efforts.

America's anti-tipping hall of fame includes millionaires John D. Rockefeller and Andrew Carnegie, who were stingy tippers, and Ralph Waldo Emerson, who famously said, "I sometimes succumb and give the dollar, yet it is a wicked dollar, which, by and by, I shall have the manhood to withhold." 

Tipping even became an election issue, when William Howard Taft, who prided himself on never tipping his barber, ran for president in 1908, was projected as "the patron saint of the anti-tip crusade."

The movement gained momentum: anti-tipping associations were formed.  The tipping abolitionist campaign came to a boil in 1915, when three states (Iowa, South Carolina, and Tennessee) passed anti-tipping laws, joining three other states (Washington, Mississippi, and Arkansas) that had already passed similar bills.  Georgia soon followed. 

The writer William Scott opposed tipping so vociferously that he wrote a book about it in 1916, The Itching Palm, that railed against the practice and its negative impacts on society.  He blasted the practice of tipping waiters as a means for restaurant owners to shift their labor costs onto their customers.  He called tipping, “a cancer on the breast of democracy.”

The anti-tipping movement in the U.S. spread to Europe with the support of the labor movement, which led to much reduced tipping practice in most European countries today.

 

The Swing Back to Tipping

Two events began to change the public attitude on tipping in the U.S.

First, hotels, that served as the nation’s first restaurants, separated their meal services from the bills of hotel guests, so meals were billed separately.  Hotel owners had opposed tipping when meals were included in the hotel bill, because customers sometimes gave tips to get more food out of servers.  When the shift was made to a separate bill, the tips could be used to supplement wages.

Second, the introduction of Prohibition in the U.S. in 1919 had an enormous impact on hotels and restaurants, who lost the revenue of selling alcoholic beverages. The resulting financial pressure caused proprietors to welcome tips, as a way of keeping wages low.  

Tipping grew more and more accepted in industry journals, notably Hotel Monthly.  In a 1921 essay in the publication, Chicago journalist Wallace Rice called tipping patriotic.  The article was titled, “Proving that tipping is good American today.”

The state laws against tipping all proved ineffective.  By 1926, each of the states that banned the practice had rescinded those rules.

In 1938, tipping was enshrined in American law under President Roosevelt’s Fair Labor Standards Act, which established a minimum wage, the 40-hour workweek, and banned child labor.  In addition, under this Act, an employer had to pay each employee the minimum wage, unless the employee were "engaged in an occupation in which the employee customarily and regularly received more than $30 a month in tips.”  If the employee's wage did not equal the minimum wage, including tips, the employer had to make up the difference.  Additionally, employees were allowed to keep all tips, either individually or through a tip pool that included only "employees who customarily and regularly receive tips.”  In so doing, Congress codified the tipping practice.

Note:  The practice of tip pooling means that a group of employees at an establishment share the tips that they’ve made individually.  Employees’ tips are “pooled” together and then distributed evenly amongst qualifying employees.

In 1966, Congress created the “tip credit,” which legally allows restaurants to pay restaurant workers a sub-minimum wage, accepting that tips will get them over the minimum wage threshold.  Congress set the tip credit as a percentage of the minimum wage, ranging between 40 and 60%.

Tip credits permitted restaurants to pay workers a subminimum wage.

 

In 1996, Congress froze the subminimum wage for tipped workers at $2.13 an hour (That’s $4.03 in 2022 dollars, and remains the same in 43 states, 26 years later.)  Many states, however require higher subminimum wage amounts for tipped employees.

U.S. states have varying approaches to pay tipped employees.

 

In 2018, the U.S. Department of Labor updated tip pooling laws to include back-of-house staff in tip pooling.  With this change, wait staff generally take home the majority of tips, but cooks and dishwashers can be included in the tip pool.

 

Modern Tipping Culture

The original European practice of tipping has become uniquely American.  Customers tip out of a sense of duty and of generosity.  Far from being uprooted, tipping’s roots are deeper than ever today.  However, in the last few years, there is evidence of tipping fatigue.  Have we reached a tipping point?   

Restaurants.  These days, tipping is a pure social norm at restaurants.  According to the Council of Economic Advisors, 98% of customers at full-service restaurants leave a tip. 

Tipping is a social norm at restaurants today.

But tipping remains a deeply divisive issue.  Many waiters at fine-dining restaurants prefer the tip system because it means a higher income - but it's harder for those who toil away in diners and lower-end eateries to earn a livable wage.  No-tip restaurants have a fixed service charge that is divided among the whole staff, including the kitchen.  As a result, waiters get less, but the back-of-the-house staff - traditionally left out of tipping - get more.

Tipping might be discomforting to some people because it adds the necessity of figuring out the tip amount each time.   But technology has helped increase the number and frequency of tips.  Rather than needing to calculate it themselves, would-be tippers can quickly select an option from tip screens these days.

Even if a tipped worker provides excellent service, studies have shown that certain biases can affect tipping, especially against women and women of color.  Tipping creates a dining system where people of color, elders, women, and those of foreign descent get worse service.  White servers routinely make more than their nonwhite counterparts. One Fair Wage - a nonprofit organization of restaurant worker that campaigns to improve tipped wage laws by advocating for higher wages - reports that 50% of all women and 58% of women of color reported insufficient tips to meet the full minimum wage. 

Meanwhile, tipping has spread from full-service restaurants to limited-service operations, including drive-throughs, pick-up counters, and buffets.  Tipping for restaurant delivery services is commonly accepted these days.  See below.

Another common food establishment “pull” for tips is the tip jar, a container, commonly a glass jar, into which customers are encouraged to put a gratuity.  A tip jar is usually situated at the point-of-sale.  Establishments such as Jersey Mike's and Smashburger find that a communal tip jar can raise hourly income by $4 to $6 an hour.  Starbucks, as part of its effort to drive up income for its employees, is also implementing tipping. 

Typical tip jar.

 Other Places We Tip.  Besides tipping at restaurants and food establishments, our modern tipping culture includes tipping for an almost endless list of service providers including bartenders; valets; grocery delivery people; barbers and hair stylists; manicurists; tattoo artists; hotel housekeepers; taxi, uber and Lyft drivers; house cleaners; flower deliverers; professional movers, furniture and appliance deliverers; wedding officiants; car washers, travel tour directors and bus drivers; curb-side baggage checkers; landscapers, and many more.  What it really comes down to is, Americans commonly tip for almost any service that is performed well.

Tipping Fatigue.  With the rapid rise of tipping culture post-pandemic, consumers face more opportunities to tip for a wider range of services than ever before, a trend also referred to as “tip creep.” 

Indeed, the pressure to tip has increased recently - a feeling now known as “guilt tipping.”  Nowadays, many Americans feel the pressure to tip everywhere - even when you’ve served yourself. 

Recent surveys show shoppers are experiencing “tip fatigue” and starting to tip less - and resent “guilt tipping” even more.  What was once a gesture of appreciation has quickly become a source of annoyance.

Surveys show that our tipping culture has gotten out of hand.

 

Customers really dislike a restaurant practice of automatically adding an extra 20% to a restaurant bill. 

Customers also resent electronic screen tipping payment prompts with predetermined options that can range between 15% and 35% for each transaction.  The guilt kind of washes over you.  Customers denounce “tipping screens” on social media, saying that it's too much. 

Tipping prompts are particularly annoying.

 

The tip jar has also become a source of controversy.  Customers may feel discouraged from patronizing establishments using them.  They may also feel that tip jars are inappropriate at certain types of establishments such as movie-theater concession counters, dry cleaners, take-out restaurants, gym locker rooms or grocery bagger's work stations.  Many feel social pressure to use them, or that they are paying too high a total price when purchasing a simple item.

 

Future of Tipping

The is no simple answer to the future of tipping, but it depends on technology, government policy, and public opinion.  The reality is, making $2.13 is not a living wage.  And studies show that restaurants do not always follow tip credit laws, and pay employees the amount needed to earn federal minimum wage if tips are not high enough.

Rather than leaving it up to individual restaurants or states to ensure equitable pay, some experts have suggested that federal laws are a fair and efficient way to ensure that service workers are paid fairly.

Finally, a new chapter in the history of tipping might be on its way.  An organization called Restaurants Advancing Industry Standards in Employment (RAISE) is working to enact legislation, at both the state and national level, to eliminate sub-minimum wage payments for tipped workers.

 

Reflections

Here are a few of my (and Pat’s) opinions on the tipping culture today:

1.        With the tipping laws (minimum wage) the way they are today, I’m comfortable tipping for well-performed services.

2.       I do tip more for exceptional service and less for perfunctory service.

3.   I don’t appreciate being prompted for the amount of a tip, and especially seeing the options getting larger, e.g. 20% minimum and 35% maximum.   I also don’t like having the percentage tip prompts for a bill that includes tax.

4.       It’s often not clear who (serving staff, kitchen, admin) is getting the tip money.

5.       I strongly object to an extra line item on a restaurant bill for kitchen staff.

6.       At our local car wash, they solicit a tip before the service is performed - unbelievable.

  

Sources

My principal sources include:  “The History of Tipping in Restaurants:  The Complicated Past, Present, and Future,” 7shifts.com; “Gratuity,” and “Fair Labor Standards Act of 1938,” en.wikipedia.org; “In the U.S., tipping has a complex and controversial history,” restaurantbusinessonline.com; “It’s the Legacy of Slavery: Here’s the Troubling History Behind Tipping Practices in the U.S.,” time.com; “The Anti-Tipping Movement,” and “When Tipping Was Considered Deeply Un-American,” npr.org; “Americans have hated tipping almost as long as they’ve practiced it,” nationalgeograhic.com; “The history of tipping - from sixteenth-century England to United States in the 1910s,” sciencedirect.com; “How to Tip in All Situations,” ramseysolutions.com; “Tipping fatigue is real: Most Americans say it’s gotten out of control,” qz.com; plus, numerous other online sources.