Our Tipping Culture — a Viewpoint from a Tipped Worker Perspective
This year, while working part-time as a Starbucks barista and a rideshare driver for Lyft, I transitioned from being the one giving tips to the one receiving them. I often receive questions from friends about how much to tip or whether giving a smaller tip would make service workers upset. This shift has made me reevaluate the tipping economy in the United States from the perspective of a tip-earning worker.
The tipping culture, originally from Europe, began with placing money in a small tip jar labeled “To Insure Promptness: TIP” as a request for swift service when placing an order. Over time, tipping became a way to express gratitude and satisfaction after receiving service. However, when tipping was first introduced, it faced criticism as bribery and for burdening customers with workers’ wages, leading to temporary bans. Nevertheless, tipping rapidly spread, primarily in hotels and restaurants, and is now an integral part of the U.S. economy and culture.
Just over a decade ago, when I was planning a business trip to the United States, one thing I did was to go to a bank and to prepare one-dollar bills. Handing out a dollar was customary for services like carrying luggage at hotels, house keeping, or requesting a wine opener or a pair of slippers. In restaurants, tipping around 15% was considered generous then. However, after the pandemic, the phenomenon known as “tipflation” (tip + inflation) has become a reality, with tipping rates rising to 25% or even higher, at 28%. Moreover, tipping culture has changed. Customers are subtly encouraged or forced to select predefined tipping rate options when settling the bill, and they are often requested to make an “upfront” payment of 20–28% tips for a cup of a take-out coffee via tablet payment screens. A recent survey revealed that six out of ten Americans feel that the tipping culture in the U.S. has become out of control and express their discontent.
In reality, the minimum wage system has a significant impact on the tipping ecosystem. The United States has various minimum wage levels set by the federal government, each state, and even individual cities. Minimum wages for workers who receive tips and those who do not are also separately defined. Typically, workers in restaurants/bars where tips can be earned receive a much lower hourly wage than those working in places without tipping. For example, in Georgia, a state where many Koreans have recently immigrated, the minimum wage for non-tipped workers is $7.25, while the minimum wage for tipped workers is astonishingly low at $2.13. Given this situation, workers who rely on tips have no choice but to depend on them. Customers might think that tip-earning workers are making good money. However, in reality, the income of tip-earning workers is uncertain and unstable.
To address the issue of these unstable tipped workers, some states have also applied the same minimum wage to tip-earning and non-tip-earning workers. California is one of the few states, where both tip-earning and non-tip-earning workers receive the same minimum wage of $15.50 (Year of 2023). In Mountain View, where Google headquarters is located, the minimum wage is $18.15. This is the second-highest amount among all California counties. It’s worth noting that in this county, if an individual’s annual income is lower than $126,000 (approximately 190,000,000 KRW), they are officially classified as low-incomers. This illustrates how high living costs are in terms of rent and daily expenses. Given this situation, most part-time workers I have met usually have two or more jobs and work for about 55 to 60 hours a week. Many of my ride-share driver colleagues are on the road for 12–14 hours every day.
Recently, significant changes are foreseen in the U.S. tipping economy. Two weeks ago, the Chicago City Council decided to phase out the minimum wage for tip-earning workers. Tip-earning workers will receive the same minimum wage as non-tip-earning workers. The change which is happening in Chicago, the third-largest city in the United States, is making everyone nervous about how it will affect the entire U.S. tip-based labor economy. While welcomed by workers, business owners are concerned about potential temporary cost increases.
Based on what I have experienced at Starbucks and Trader Joe’s as a part timer, I believe their wage system benefits both workers and employers, creating a win-win situation. Starbucks and Trader Joe’s pay wages that are above the minimum wage, regardless of getting tips or not. Employees who are securing stable wages are not fixated on tips and are more likely to provide consistent, quality service. Customers are satisfied with high service quality, return more often, and this cycle leads to increased revenue. This approach is considered the most fundamental and systematic way to provide workers with stable income. This is a viewpoint from the perspective of tip-earning workers.
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