Here’s why so many businesses are asking you to tip

Photo (c) Grace Cary - Getty Images

Hint: It’s not the employees’ idea

Earlier this year we noted that an increasing number of businesses were asking for a tip. It became so frequent that many consumers complained of “tipping fatigue.”

Since our story appeared, there has been no decline in tipping requests. In a new report, the Wall Street Journal concludes it is not employees who are asking for an extra payment – it’s the businesses they work for.

Tip requests have expanded far beyond restaurants and hair salons. Just making a purchase at a farmer’s market or a gift shop can carry the expectation of leaving a tip. It’s a practice many businesses encourage because they can avoid paying their employees more.

“The U.S. economy is more tip-reliant than it’s ever been,” Scheherezade Rehman, an economist and a professor of international finance at George Washington University told the Journal. “But there’s a growing sense that these requests are getting out of control and that corporate America is dumping the responsibility for employee pay onto the customer.” 

From the business’s point of view, encouraging tips for their employees may help them with retention. If employees' pay remains the same but they get a little something extra each week, the business can keep its prices low and maintain a competitive edge.

But some consumers say they feel uncomfortable when there’s a tip jar on the counter, or when they are promoted to pay a tip when entering their payment information.

A record number of employees get tips

The Journal cites a report from Paychex, a company providing payroll services to businesses, showing more employees are working in jobs where they get tips than at any time since the company began tracking that data in 2010. The report shows there was little increase in that number from 2016 to 2020.

Of course, in 2020 the COVID-19 pandemic hit and many consumers became increasingly generous, rewarding workers who had to be in a business location and often having to wear a mask all day. The pandemic may be over but the requests for tips continue.

While many consumers may be growing weary of the practice, Debby Mayne, etiquette guide for the resource website About.com, urges consumers to try to have a little empathy when they’re asked for a gratuity.

"The pizza delivery guy is out there braving the elements,” she told AARP. “There's a reason why you didn't go get that pizza yourself."

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