Despite the cost of everything going up, inflation hasn’t stopped people from tipping.
During the three months ending June 31, the average same-store tip amount was up nearly 10% compared to last year, according to a report from Toast, which sells digital payment platforms to restaurants. (Same-store tips refers to the tips at the stores that were on the platform from the first quarter of 2021 through the first quarter of 2022.) In the three months through June, the average in-person tip was 19.7%, according to the report.
The habit of tipping workers generously may be here to stay even as inflation stays high. Inflation is currently up 8.5% in July compared to last year.
Customers tipping workers increased during the pandemic, as covid-19 put a spotlight on the treatment of workers, particularly, those in customer-facing roles, who worked throughout a public health crisis while office workers were able to work from home.
Tipping options have become more prevalent with digital payments
At the same time, digital payments make tipping more easier and convenient, which comes with its own controversy—making some people feel obligated to tip even at places that are nearly or totally self-service. More businesses have access to mobile payment systems, such as those provided by Toast or Square, which come with default tipping options that customers can easily swipe on and percentages that are calculated for them. This year, Starbucks and Sweetgreen announced they will roll out tipping across card and digital payments.
When there’s pressure to raise wages, businesses can use the promise of tips to reduce labor costs or keep menu prices lower, Tashlin Lakhani, an assistant professor at Cornell SC Johnson College of Business, previously told Quartz. Last year, leisure and hospitality workers saw some of the biggest wage gains, as employers raised wages to better attract and retain workers.
That said, tipping also encourages an unfair pay system, particularly, toward minorities and women, and pushes the responsibility for fair wages on to customers. In other words, tipping should not be the answer to increasing workers’ wages. To achieve better and more stable pay, labor advocates argue, restaurants need to pay higher wages or the minimum wage for restaurant workers, where, in many states, wages for tipped employees are set below the standard minimum wage, needs to be reformed.