Alabama's Morning News with JT
Ted Rossman says tipping is getting out of control
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Joining me now to talk about this is Bankrate senior industry analyst Ted Rossman. Ted, welcome to the show. Thanks for having me. So a new survey says that 59% of people have a negative view about tipping while 35% say tipping culture has gotten out of control. What are we seeing? People are annoyed. We found that the biggest complaint is that 37% of Americans believe businesses should just pay their employees better rather than relying so much on tips. We found 35% think tipping culture is out of control. That's up 5% points from last year. That's a pretty big change in just one year. 34% are annoyed about the pre-entered tip screens they encounter at coffee shops and food trucks and elsewhere. There's a lot of negative sentiment out there about tipping. Much of it tracks back to inflation. People feel like they're paying enough as it is and they're reluctant to fork over even more. That's what I've noticed because there was a time when I got a haircut just yesterday and it used to cost like $8 for a men's haircut and now cost $20 for a men's haircut. So it used to be when I get a haircut I would tip on that and I would usually tip 100% like I'd actually pay them like $20 for a haircut that was otherwise $8 because to me it's mostly about the service. But now if they're going to charge me $20 or I'm not going to give them another $20 on top of that I'll give them another maybe $8 maybe $10. So I'm getting stinjier I guess because it seems like the business is taking more but I don't think they're passing that on to their employees are they? What's interesting is that inflation is affecting both sides of this. So I mentioned that customers are annoyed about having to pay more. The business has higher costs as well and that's actually a big part of why they're asking for more tips because some are hesitant to raise prices more than they have. Others kind of view tipping as this hidden surcharge of sorts. Honestly it's a win-win for the business because if they can get the customer to foot the bill for more of the employees wages that's a big part of why we're seeing this proliferation of tip prompts whether it's at the coffee shop or I mean there are some really crazy examples out there. I was asked to tip at a self-checkout machine at Newark airport. I was asked to tip at a pick-your-own strawberry farm. Some people have told me that doctors and vets are starting to ask for tips like the doctor says I'm sorry you have cancer I'm going to need a tip. Yeah I mean gosh that would be a terrible example you know but yeah it happens. I feel like I hear of it more at the cosmetics or the sort of dermatology kind of places or you know somebody told me the other day that their veterinarian had a tip jar. I mean that feels like too much. I mean these are highly paid professionals. This is all tip creep and this is giving tipping a bad name and we're seeing a decline even at places we should be tipping. I don't think you always need to tip for a quick service coffee or sandwich but we should be tipping at a sit down restaurant and I think we should tip at the barber shop or hair salon. Well that makes sense because if you've got something where it's a I guess you call it a high touch industry where somebody is actually servicing you that their work product is going directly into helping you. You want to pay them for the effort they gave you especially if they did it in an exceptional way but to me that's what it's for, it's for exceptional service not just obligatory. Alright here's your sandwich and now I need my 25%. That seems just now it's just like you said it's just tip creep that's a new term. It seems like now we're going to go get a soda out of a Coke machine it'll be like here's your soda that's a dollar 25 and then here's another 25 cents for the guy who services this machine. You know where does it stop? It's part of a social contract. The federal tipped minimum wage is $2.13 an hour and it hasn't changed since 1991 so at a place like a sit down restaurant the staff is really depending on tips and our survey found that only about a third of Gen Z years always tip that seemed extraordinarily low only about half of millennials always tip at restaurants. It's 78% of Gen X and 86% of boomers if we're not tipping at a restaurant I feel like we are breaking that social contract and we are hurting the individual worker. Even if you don't think tipping is fair and we shouldn't do it don't take it out on the individual worker but I also understand the tip creep argument and sometimes so many people have their hand out for a tip that it feels overwhelming. And Ted I always like to make sure that people at a restaurant where they're going to touch my food or I can't see them touching the food that they know that I will compensate them well if they leave my food largely unharmed when it gets from the cook to my table. That's important yeah yes it's their job but it's also part of the expectation that a lot of these are independent contractors like they're not paid much of a salary they they pay their own gas they pay their own insurance and we actually saw a lot of people leave the service industry during the pandemic and not come back and I feel like this is all related. Well bottom line I think is a case by case I don't think there should be another thing it's a percentage because there are situations where I think 15% is not nearly enough and there's lots of times when I think 15% is way too much so it just it just really depends on the circumstance it depends on the service and I like the ability for me to decide if I think what you did was tip worthy and I'm still going to stand on if I ordered standing up it's not tip worthy. And I do understand that and that makes sense I mean I don't think you always need to tip for a counter service transaction. David Rosman he is a bank rate senior industry analyst thank you so much for joining us today on Alabama's Morning News. My pleasure thank you. 5280 exteriors James Hardy sighting is a low maintenance sighting made primarily of cement that resist flame spread and repels woodborne insects and woodpeckers. Through the month of July you'll receive free rigid foam installation with the purchase of whole house sighting that's installing additional insulation behind your sighting for free but only for the month of July call today for more details or visit 5280 exteriors.com 5280 exteriors.com a James Hardy preferred contractor 5280 exteriors the altitude of quality.