America’s tipping culture has gone from rewarding service to fee insanity
I love old-school tipping; that is, letting a service provider know that you appreciate their outstanding service, whatever the realm may be, with a generous gratuity. It’s a great way for individuals to reward service providers who work hard and to signal your personal appreciation of the effort they have put in to your interaction.
However, tipping has morphed from a signal of good work to something that resembles a socialist experiment or the dreaded school group project: everyone expects the same outcome, regardless of their effort or the service they deliver.
When you order a cup of coffee at a counter today, they often present a screen asking you to include a tip. If tipping were acting as a price signal, as it should, then we would not know what to tip at the time of ordering. The tip would be given to a specific individual at the end of the experience, after you received your coffee, so that you could properly evaluate the experience and service to see if a tip is warranted, and if so, how much you would want to give.
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Making tipping an obligation upfront takes away the agency and valuable price signaling of tipping. In fact, it may be pooled with other tips and split by the group instead of rewarding the person who provided the service.
Tips, it seems, are being added to anything and everything. While it makes sense to tip your bellman who helps you with your bags to your room at a hotel, it does not make sense to tip on your e-commerce purchase, something I have seen popping up online from various retailers.
Additionally, many service businesses are abusing tipping, as well as other “service fees” and charges, to obfuscate pricing. Instead of raising their prices, some businesses are adding dressed-up fees to their bills. Customers want transparency in pricing, not to have to guess what the bill might be after all the added charges and fees.
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Cruise ships are adding “crew appreciation” charges. Restaurants are adding “surcharges” for reasons like “offsetting rising costs.” That’s something that has typically been handled by increasing prices on the menu, transparently. Adding fees to the end of the bill doesn’t create loyalty; it feels like a business is pulling a fast one on you. Moreover, nobody likes to feel like they have been nickeled and dimed by a business.
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Many of these charges are touted as “optional,” with the businesses noting that customers can ask to have them removed from their bills. That seems more like a humiliation ritual than a good business policy. A customer shouldn’t have to go out of their way not to be inundated by extra charges.
Now, of course, I do have sympathy for businesses and service workers. There are certainly some customers who do not tip appropriately, even when service is outstanding. If that’s the case and your employees aren’t making enough, a more sincere solution would be to raise your prices and pay employees higher wages, being straightforward and not appearing like you are taking advantage of customers, which is likely to affect tip amounts, too.
Tipping is a time-honored tradition, and we should hold it as such. That means treating service providers well and tipping generously for very good service, where it is customary. It also means pushing back on non-transparent pricing tricks and distorting traditional tipping customs that have morphed into fee insanity.
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