You’re probably familiar with the routine by now. You make a purchase and go to swipe your card, but before you can, the checkout clerk turns the screen toward you and asks you to respond to a few questions, namely how much you’d like to tip. While you’re probably accustomed to tipping in places like restaurants, bars, and hair salons, you might be surprised by requests for gratuities in less traditional situations like ‘pick your own’ orchards or even automatic car washes where there aren’t attendants. What’s going on? The answer to that question is a lot! During the early days of the pandemic when going out to eat suddenly meant ordering takeaway, many people, recognizing that restaurant workers were putting themselves at risk, opted to increase their usual gratuities. Later, tips became an important supplement to wages that may not have been keeping pace with rapidly rising inflation.
Perhaps one of the most significant factors facilitating the rise in size and requests for tips is point-of-sale (POS) technology and comfort levels with using technology. During the pandemic, contactless payment largely replaced more traditional forms of payment and many businesses implemented POS technology that was not previously as widely used. Indeed, the screen with its preloaded tip amounts that often start at 20 percent and rise from there, has become all too familiar, even in situations where tipping is not traditional. While many consumers are happy to tip even in less traditional situations, others, faced by the screen and the individual waiting for it to be completed, feel pressured to leave a gratuity even when they feel it’s not warranted. Have service providers become too emboldened when it comes to requests for gratuities? Have we reached a tipping point?
Discussion Questions:
1. How do you feel about tipping? Have you felt pressured to tip in situations where you don’t think a gratuity is warranted? Are you more likely to tip when you are face-to-face with the requestor as compared to situations where you are not? What does this tell you about social pressure and purchasing?
2. In the past, certain industries such as restaurants relied on tips as an important component for wages. Does this pay model still make sense given that wages have risen, and some fast food workers now receive wages as high as $22 per hour?
3. Are POS requests for tips a way for employers to keep their costs down? If companies increase wages in an effort to limit the need for tips, what are the implications for cost, profit, price, and more broadly, inflation?
Sources| CNBC: https://www.cnbc.com/2023/04/01/how-tipping-in-the-united-states-got-out-of-control.html, https://www.cbsnews.com/news/tipping-culture-etiquette-evolving-with-gratuity-screens-everywhere/; AP News: https://apnews.com/article/tipping-fatigue-business-c4ae9d440610dae5e8ff4d4df0f88c35; Forbes: https://www.forbes.com/sites/madelinehalpert/2022/09/05/new-california-law-could-bump-fast-food-wages-up-to-22-an-hour/?sh=65a16a8a7af1; Upsplash: Photo by Sam Dan Truong on Unsplash