A new checkout trend is sweeping across America, making for an increasingly awkward experience: digital tip jars.
You order a coffee, an ice cream, a salad or a slice of pizza and pay with your credit card or phone. Then, an employee standing behind the counter spins around a touch screen and slides it in front of you. The screen has a few suggested tip amounts -- usually 10%, 15% or 20%. There's also often an option to leave a custom tip or no tip at all.
Adding to the changing dynamics, customers were encouraged to tip generously during the pandemic to help keep restaurants and stores afloat, raising expectations. Total tips for full-service restaurants were up 25% during the latest quarter compared to a year ago, while tips at quick-service restaurants were up 17%, according to data from Square.
Some customers tip no matter what. Others feel guilty if they don't tip or embarrassed if their tip is stingy. And others eschew tipping for a $5 iced coffee, saying the price is already high enough. "If someone can afford Starbucks every day, they can afford to tip on at least a few of those trips," added the employee, who spoke under the condition of anonymity.The option to tip is seemingly everywhere today, but the practice has a troubled history in the United States.
But tipping service workers was essentially built into law by the 1938 Fair Labor Standards Act, which created the federal minimum wage that excluded restaurant and hospitality workers. This allowed the tipping system to proliferate in these industries. The gig economy has also changed tipping norms. An MIT study released in 2019 found that customers are less likely to tip when workers have autonomy over whether and when to work. Nearly 60% of Uber customers never tip, while only about 1% always tip, a 2019 University of Chicago study found.
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