Tech Matters: How to manage tipping in the digital age
Tipping has become fraught with confusion, according to a pair of newly released surveys by the Pew Research Center. Contributing to consumer stress is the proliferation of digital tipping mechanisms that seem to be just about everywhere you pay for a meal or a service. While how much you tip and when you do it is up to you, it’s eye-opening to understand how others are making this seemingly simple decision. And with the holiday season about to begin, it’s a good time to make a plan.
Tipping has a long and not-so-generous past. In the years leading up to the Civil War, the custom made its way to our shores from wealthy American travelers returning from Europe who wanted to emulate the upper crust by doling out tips to service providers. The practice lost favor in Europe because of its elitist nature but found a foothold in the U.S. After the war, it was a tactic used by the railroads and restaurants — the main employers of newly freed slaves — to keep wages low.
The federal minimum wage was introduced in 1938 but did not include food servers because they earned tips. Then in 1966, the Fair Labor Standards Act established a subminimum wage for tipped workers, which rose to $2.13 an hour in 1991 and remains the same today. Employers must pay the subminimum wage, add tips as a credit, and then must pay the difference if the total is less minimum wage at $7.25 an hour.
Is it any surprise that we are seeing more and more digital screens with tip amount choices in all kinds of establishments, far beyond the traditional sit-down restaurant where a 15%-20% tip has been the norm for years? No wonder diners are feeling pressure around tipping.
Pew reported about 72% of survey respondents said tipping is expected in more places today than it was five years ago and relatively few have a great deal of confidence about when and how much to tip. Only about a third say it’s extremely or very easy to know whether or how much to tip for different types of services.
The public is more likely to oppose than favor suggested tip amounts. More Americans oppose (40%) than favor (24%) businesses suggesting tip amounts to their customers, whether it’s on the bill or on a checkout screen. Another 32% are neutral. However, there’s much more consensus around automatic service charges: 72% oppose these fees on bills. (Hotels frequently include at least a 20% service charge on meals, so look carefully at the bill before you tip.)
The majority of Americans tip at sit-down restaurants with servers, at salons, for food delivery and for ride-share services. They largely skip the tip at coffee houses and fast-casual restaurants where you order at a counter and the food is typically delivered to your table. Pew drilled down on the amount of the tip at sit-down restaurants and found 57% of Americans say they tip 15% or less for an average meal, 12% tip 18% and about one-fourth said they’d tip 20% or more.
And yes, the increase in digital payment methods such as apps, handheld devices and kiosks introduced largely during the pandemic have been widely adopted. For instance, Starbucks rolled out a tipping feature on its payment screens to customers paying with a debit or credit card. Digital buttons prompt customers to tip $1, $2, $5, a custom amount or nothing. Walking away from a tip jar is easy but tapping “nothing” with the barista and others watching can be uncomfortable.
Apps have nailed the tipping process but their methods vary. DoorDash includes a tip screen that starts at 25%, but you can tap “other” and type in your own amount. But be warned, the company began testing a new policy on the first of this month. If you try to place an order without leaving a tip, you may see this pop-up: “Orders with no tip might take longer to get delivered-are you sure you want to continue?” You’ll then see the tip screen again. The delivery people (Dashers) receive all of the tips, along with a base pay of $2 to $10 per order based on distance, estimated duration and the desirability of the order, according to DoorDash.
Instacart is the king of grocery delivery and adds an automatic 15% tip to your order. The only option you have is to increase the tip after your order has been delivered. If you use these types of services, understand the various tipping policies and also check for the inevitable service charges. Both of these things should be taken into account when you’re comparing delivery services.
Be generous with your tips this holiday season. Inflation is hitting us all but for those working subminimum wage jobs, those tips will really make a difference.
Leslie Meredith has been writing about technology for more than a decade. As a mom of four, value, usefulness and online safety take priority. Have a question? Email Leslie at email@example.com.