I totally relate to "as cost goes up the default options become less attractive". I don't mind the typical options being a bit high (when did 20% become the low end??) but I'll opt out and put in my own amount when the bill is above say $20.
I'm not even too old and remember the time when 10% was considered a decent tip (at restaurants, cabs), and 12-15% would be reserved for exceptional service. And tips were always calculated pre-tax. Now 20% on the total amount has become the default. How did we get to this?
Credit card entry screens showing 10%, 20%, and 25% as default options is probably "nudging" people to the point where bigger tips are becoming culturally accepted.
That, and cultural forces in some political circles (which are fairly popular in New York) that encourage tipping to make up for what are perceived as unfairly low wages. It's an instance of people attempting to put their money where their mouth is, so to speak.
Sit down restaurants no longer offer anything less than 20. Ironically however, fine dining restaurants (especially michelin stars) explicitly ask you to not tip, because they pay their staff well. You can still do it, but every bill comes with a disclaimer that you don't have to.
Maybe. There are plenty of establishments that expect (even prod) you to tip the same high percentage when the base price is already hundreds of dollars so nobody should need pay compensation.
I've been to lot of fancy restaurants and the server is most definitely expecting a tip. Where are you located?(for reference I'm talking about America).
I'm mostly seeing 18%, 23%, 27% or variations of that which clearly seems to be a nudge towards the higher amount, relying on the social pressure of the server standing right over you holding the screen out to you vs the old way of leaving the booklet at your table to fill out after they've left.
In a more brazen example I've been promoted to take my seat and use a qr code to order, it then requires me to pay up front on my phone (while providing my PII in the form of an email and phone number), and then asks me to tip before I've even had a server so much as introduce themselves or bring me water.
I'm all for servers making a living wage and paying higher prices to support it, but the current path this seems to be taking is really an unpleasant experience as a customer.
We got to this because service worker wages grew slower than necessary-for-life expenses like food, shelter, medical care, childcare, education, etc.
Meanwhile, many professional wages grew much faster than all of those things.
This is also the reason for why many ski towns in 2022 are unable to find enough staff to keep either the resorts, or the restaurants open. Nobody working those jobs can afford to live in those towns anymore, so you get a bunch of millionaires going off to vacation in their winter dachas, only to discover that there's nobody there to cater to them.
OK, but the wages also grew slower than necessary because the income was padded by tips, reducing pressure on the business to raise wages to retain employees.
When restaurant servers don't get any tips it makes steady-wage jobs like warehouses or grocery stores relatively more appealing compared to customer-facing jobs.
> OK, but the wages also grew slower than necessary because the income was padded by tips, reducing pressure on the business to raise wages to retain employees.
Tips are better for the business, because it lets them price-differentiate, and thus serve more customers. The more meals a restaurant serves, the more money it gets, regardless of how well or poorly the customers tip.
Over the past 40 years, businesses had a lot more bargaining power than service workers, and have obviously optimized their operations in a way that benefits their bottom line.
If you don't like these outcomes, you have a few options.
1. You can curtail business bargaining power by empowering workers.
2. You can curtail business bargaining power across the board, by raising wage and benefit floors through legislature.
3. You can curtail the rising delta between service wages and living costs, by having someone else (the middle class, the rich, corporations, Uncle Bezos, importers, ???) pay for the difference.
4. You can curtail the rising delta between service wages and living costs, by setting price ceilings on living costs through legislature.
5. You can curtail the rising delta between service wages and living costs, by bringing costs down, via creating a competing low-cost provider through legislature.
... Or you can shrug your shoulders, and just pay your 20-25% gratuity for the exact same level of service that used to earn a 10% gratuity.
Businesses don't have to pressure employees into taking tips rather than wages. Employees almost never pay taxes on (cash) tips... it's a feature, to most service employees.
Even when I pay the check with a credit card, I will frequently tip in cash at a sit-down restaurant or bar (which I’m not going to at the moment as they aren’t much fun currently, but hope they’ll return in force this year).
People who would would rather let the person receiving the tip decide if the government deserves a cut tip cash. And as others have said, using the employer's card processing flow gives the employer opportunities to do less than great things.
> Nobody working those jobs can afford to live in those towns anymore, so you get a bunch of millionaires going off to vacation in their winter dachas, only to discover that there's nobody there to cater to them.
This seems like a price stickiness problem. If there’s demand from tourists buy food, but not enough staff, the restaurants can raise their prices and raise the wages they offer. At some point, either demand to go to restaurants goes down because people don’t want to pay (so the staff aren’t needed), or wages increase enough that the staff can afford to live. The end state isn’t peachy for everyone (the ski area becomes a place that only the most wealthy can afford to visit) but at least the problem of understaffing is solved.
I feel like this problem grew as the ability for the middle class to enjoy leisurely actives grew. There was a time when the MC grew, and could spend money and things were great. It was unsustainable, but it took a while for the prices to catch up - eg. ski towns had housing before ski'ing was generally popular, and slowly it was bought faster than replenished and now that skiing is popular, the demand far outstrips supply. Over time they priced out service work, and now we'll need to swing back to a state where the middle class no longer can afford those luxuries, and the service workers have to be more middle class because they're paid so well to cover the costs.
A dacha is a vacation home. Seasonal, year-round, summer, winter, all depends on how you like to vacation.
Since it's an Eastern European term, and since winter in much of Eastern Europe sucks, it's commonly associated with a seasonal summer home - but can refer to any vacation property.
That's not entirely true though. Ski resort towns have always had a problem with hiring enough staff because:
1. Towns are located in space constrained location that you mostly want to reserve for paying guests
2. It is a seasonal business and cannot guarantee wages throughout the year
3. The jobs can be very hard to do
4. A large portion of the staff is full of young people who want to ski a lot and make money to support the lifestyle
In fact, ski towns and resorts do much more for workers than you realize
1. Beyond wages, you get subsidized housing and food either on prem (If your job is crucial enough) or in the nearby towns
2. Resorts pay for a continuous well oiled public transport system better than all of the country, mostly to make sure the employees can come in on time very easily. In certain locations, these rides are free or subsidized to employees
3. For the young kids that take up jobs on resorts because they just want to ski for a couple months, if they're employees, they get access to the lifts and other perks that supports their hobby.
4.Some resorts also guarantee year long pay and better benefits if you are one of the specialized staff (the person who operates the snow plow up the mountain)
Ski resorts rely heavily on H2-B visas (temporary foreign workers) but as more and more companies recognized the benefits of such workers, the total number of applications grew far beyond the available visas... meaning ski resorts get fewer and fewer successful applications granted.
Epic Passes have significantly lowered the cost of a season ski pass. Getting a free pass was a big part of the wage equation when such passes were very expensive -- less so when they only cost about 700.
Since the pandemic, housing prices in secondary/tertiary locations has exploded, more than in central cities. Lake Tahoe area, for example, is through the roof... decent housing is in such demand that it's unaffordable.
Perhaps some wages grew slower because they received tips? Generally wages are set at a market-clearing price. People were willing, for decades, to take positions as waiters, waitresses, bartenders, etc, because tips were a big portion of their take-home pay... and was also subject to reduced taxation.
Maybe not tipping at all would increase pressure for better labour laws and minimum wages and everybody could benefit from it rather than following some weird social norm of who gets the tips.
Do you tip the cashier at the grocery store? What about the people replenishing the shelves? Why not?
Worth noting that waitstaff would have a lower minimum wage than cashier or shelf-stocker, with expectation that they make it up in tips, so it's not just social norm.
Love this question because it puts the issue in very stark relief.
No, fast food workers shouldn't be tipped. No one "should" be tipped. If people are paid a living wage then scrabbling for tips becomes obsolete and tipping leaves the realm of "should" and progresses closer to its Platonic ideal of being a purely voluntary act used to express exceptional appreciation for a job well done.
What? That doesn't put any pressure on the situation for better labor laws.
The only people who would be shafted are servicepeople, not owners. Even with a successful boycott servicepeople would still be getting paid less, even if from the owner's pockets.
What pressure do you imagine would reach those in power? Why are you trying to shove market-based thinking where obviously no reason exists?
People refusing to work for salaries that are too small, employers jack up their prices by the equivalent of what used to be tips and offer better salary.
Tipping is an unegotiated unilateral contract. It is basically a power trip.
A local restaurant chain here adverised that they had increased staff salary and would automatically charge 15% (normal tip around here) of the bill for service to everybody to compensate. This way, the prices on the menu stayed competitive with other restaurants, they were able to pay their staff better, and customers would end up paying the same as before. They had to stop the experiment within a month of two because people stopped going to their restaurants. Why? What's the difference? Basically people no longer had their little power trip.
A strike makes a lot more sense then, because the workers have cause to negotiate for backpay. Withholding tips only shrinks their claim.
Yeah the tips-being-power-trip thing holds true too. People love to make their opinions known. But of course so few of the things customers usually have issues with are the server's fault: food's not cooked right, rice costs extra, etc. Customers take their anger out on servers and the owner/manager doesn't care either way because they're still getting paid.
The same complaint can be levelled against the "faux hubris" of your comment, but it doesn't make for great discussion.
it would be more compelling if you made arguments to explain your statements of certainty, and left out the weird generalizations about "typical HN comment" as if HN is some monolith as opposed to a discussion board comprised of individual commenters
And now the hyper-individualist "there is no such thing as statistical tendencies nor homogenizing feedback loops" take-haver rears its head. Welcome home, HNer.
As for the arguments you demand, I think it would be more efficient for everyone if you -- individual you! -- took up the mantle and accessed (for yourself!) the copious amounts of research and analysis present across the known universe, instead of repeating exactly the mistake that GP makes in assuming this conversation is not happening everywhere all of the time.
i made no demands, I'm not the one making the initial assertions, and you don't even have any idea to what extent we may agree/disagree on these issues
I'm in my 50s, when I was young 15% was normal at restaurants.
20% is an easy mental calculation, so that's what I do most often these days. I round up to the next dollar or sometimes next multiple of 5 depending on the total amount of the check.
The tipped minimum wage hasn't changed since 1991. At around 88-89, the difference (in 2014 dollars) between tipped minimum wage and the minimum wage was 40% in 2014 it was 71%.
The tipped minimum wage is so small that it is basically zero. If menu prices rise then that same 15% tip rises as well. Comparing the tipped minimum wage and the ordinary minimum wage is not really a complete story.
I'm not trying to give a complete story (if you are interested in a more complete story, I do suggest the linked article), just context as to how/why norms around tipping can change.
> The tipped minimum wage is so small that it is basically zero
That depends on the state. For example, all west coast states have the same minimum wage regardless of tipped or non-tipped. See https://en.wikipedia.org/wiki/Tipped_wage
> In the state of Alaska, California, Minnesota, Montana, Nevada, Oregon, Washington, same minimum wage are applied for both tipped and non-tipped employees. Tips collected by employees in these states will not offset employer's obligation to pay the wage, and tips is the additional income beyond the wage paid by employer.
There’s no stigma around giving more tip than expected, and there is stigma around giving less. This asymmetry drives tips upwards over time.
You might tell your low tipping friend they’re being rude, driving the bottom end up, making average higher, meaning a really generous tip has to be even higher.
I've also noticed, and I can't say why this is, that the service or quality hasn't improved. You see the server two or three times. They probably don't write anything down and at least one plate is wrong somehow. A drink is missed. The only time I think I see a server more often is if I get a beer. They love asking me if I want a refill on those.
Is it really a matter of skill? I've never really considered tipping by 15% anyway, but shift-right, halve, and add back to get 15% doesn't seem fundamentally more difficult than shift-right and double. Just more tedious. Anyway, nowadays everybody has a calculator on them at all times so this couldn't be the reason.
However, as I've become more wealthy, I think of it as a (happily paid) extortion tax. _Fight Club_ taught me that the service class can anonymously hurt me. I strive to be overly polite and non-demanding, and tip 20%+ to be the good customer and avoid any vengeance.
I'm not cynical about much in life, but with tipping, I view it as cheap insurance.
Another commend focused on the difference between median wages and waitstaff wages - in my mind I tip more not because they make less, but because I have more discretionary income.
Not to say that what you're doing is wrong or unappreciated by the people serving you but I think you're basing way too much of your daily life on a movie.
I am not even old and remember tips meant appreciation of service rendered.
Now tips are requested upon payment before service rendered. In front of workers and next customers. Minimum wage subsidies passed on to the consumer through social coercion, and maybe some insurance that nobody will spit in your coffee after you pay (but do the barista and the cook actually know how much you tipped?)
Forty years ago, when I was a 19 year old dishwasher and I went out with my wait staff friends, they made a point of tipping 20% instead of the then-customary 10% because they knew what their servers went through and wanted to show meaningful appreciation and help their friends keep their rent paid, etc. I picked up the 20% habit from them. I don't know if what we are seeing is 40+ years of word of mouth, but I don't know that it isn't.
For the first time ever, I saw an 18% tip automatically added to the bill at a casual restaurant in Ft. Lauderdale. Party of 2 and there was absolutely no hint it would be added from the menu or server. I caught that it was there by accident because I am not in the habit of checking the receipt in detail and they were clearly trying to dark pattern me into tipping twice. From now on I will be more careful if restaurants think they can get away with that.
South Florida restaurants have been doing that for decades. Especially South Beach Miami. They get so many European and South American visitors who don't even consider American-style tipping, so they started adding it automatically. I agree, however, that it should be much more visible, or that waitstaff should clearly state out loud, a suggested tip is already added. But I think that since 90+% of customers are vacationers and not locals, the restaurants don't feel like they are jeopardizing repeat business by not mentioning it.
Places put local service fee pass-throughs (e.g. for local pay regulations), and still expect you to tip, which is a form of double tipping. Also these states already require employers to pay tipped employees full state minimum wage before tips [1]:
AK, CA, MN, MT, NV, OR, WA
So no principled justification to tip in those places, unless you like to tip for every service for some reason.
> So no principled justification to tip in those places, unless you like to tip for every service for some reason.
While they may make minimum wage, in this day and age, minimum wage is well below what you might make otherwise at a non-tipping establishment. Tipping is still expected at restaurants in Washington state, and is still the main source of income for most servers (the minimum wage they earn is less than the tips they receive, and if it weren't for tips, they wouldn't bother doing the job for minimum wage).
I'm against the requirement to tip as a way of doing business, but will do it as long as it is expected. Ideally, we'd do things more like Europe or Japan.
You aren't wrong, but cultural expectations are hard to beat.
However, these days, everyone barring McDonalds asks for a tip. I eat/take out less because of it, but I'll tip at least 10% even if there is no service involved.
The thing I really hate are 18% service charges tacked onto the bill and...a note that you should still tip in spite of the service charge. I mean, what?
Tipping is governed by two separate races to the bottom:
* Buying social prestige amongst your group by showing generosity.
* Buying better service by showing generosity.
Both these result in motivation in favor of tipping more and against tipping less. Both of these require your tips to be above average, and not everyone can be above average.
What makes it somewhat tricky is that tipping to show generosity is a type of virtue signalling. And virtue signalling generally doesn't work if you admit you are doing it for self serving reasons. Since the best liars believe their own lies, our brain is resistant to acknowledging that these are the true reasons behind tipping. It prefers to pick justifications that align with the virtue being signalled.
Regardless of the debate of whether tipping should be the norm, I've found that nearly all of the suggested tip amounts are generated using the after tax price.
When I was young my dad pointed this out to me when it would happen on restaurant receipts, and then I'd have to listen to him tell the waiter who clearly did not care. But especially now, nearly all of the suggested tip amounts are calculated after tax is included. After seeing it done so much I think this has become the norm, and don't even check the pre-tax vs post-tax math anymore.
Let's say the bill was $100. Let's say tax is 6%. Let's say your dad wanted to tip 20%. Your dad is talking to the waiter over a mere suggestion of $1.20 that the waiter has zero control over.
In my experience, I'd say half the bills I get have suggested tips and of those I can count on one hand how many suggested the tip on post tax amounts. I used to give an exact pretax 20% tip, just on principle, but one day just I realized it was kind of silly to worry over such little amounts. Forget principles, the day I can't afford to tip well is the day I can't afford to dine at a restaurant.
Why is tipping even calculated as a percentage? It's not like the work done by the waiter is suddenly 10x harder or more deserving of reward when they're bringing a plate with a $100 dish rather than a $10 dish.
First of all, the final bill is typically larger because more dishes were brought. Second, if that is not the case, waiters are expensive places expect more, because those places are more expensive and hire better waiters who do more and better work.
>First of all, the final bill is typically larger because more dishes were brought
I suppose that makes sense in certain cases (eg. you getting appetizer + drink + main + desert vs just a main), but utterly broken in others (eg. you getting a $15 main vs a $25 main). If tips were truly based on service it'd be a flat fee per plate or something, that varies per restaurant.
When a restaurant brings a bill that's six times larger than the one to the next table, that's usually because twelve people sit at your table and need service, and two people do at the next.
> Tip menu suggestions can “actually increase the wages of workers without necessarily making life terrible for consumers or taking money away from them,”
Isn't anything that increases the wages of workers via increased tips definitionally taking money away from consumers? (If you argue that they get $1 of utility by not having to think about the amount to tip, you might not be taking utility away from them, but you're still taking money away from them.)
It's bending over backwards to promote how tipping is actually for the tipper's benefit. And that recommending large tips via touch screen menus is so helpful in saving them the time to do mental math.
Then the author places an arbitrary value of $1 on that mental math (???) to exclaim that large suggested tips saves the passenger both time and (fictional) money! Welfare has increased by more than 200,000 (completely made up dollars) per day!
Assuming you need to tip (and given that 97% of riders tip, it seems like you do), not having to calculate the amount is clearly a benefit. The author didn't just make up that $1 value, it's derived from the situations in which riders choose a custom tip instead of using a default option.
>not having to calculate the amount is clearly a benefit.
Why? Calculating a tip isn't something that has a failure state because even if you give the wrong amount it won't matter. On top of that the exercise of calculating the tip is beneficial for your long term mental acuity.
I'm not sure why doing a simple calculation that doesn't benefit me and has no failure state is a benefit. It's a benefit for the tippee maybe, but not the tipper.
Doing work incorrectly is still doing work. The presence or absence of a failure state doesn't matter, what matters is the time and mental effort you have to expend.
It's not a lot of effort, but $1 also isn't a lot of money.
>On top of that the exercise of calculating the tip is beneficial for your long term mental acuity.
If you can honestly say that you think most people enjoy doing math, I don't know what to tell you.
The machine should allow people who don’t like doing mental math to select from some pre-calculated numbers, then also give the option of playing a mini game that presents the user with math problems, riddles, visual logic puzzles, and memory tests. This will generate millions of dollars in expected utility, so the taxi companies are morally obligated to do it.
It doesn't provide $1 worth of value to anyone but some of the highest earners for whom such a "time savings" of seconds might be valuable.
It's primary value is to the person being rolled because they aren't paying for anything.
Automating something people weren't getting laid to do provides value to someone else not the person paying.
Maybe it's not controversial so much as misguided and looking at the picture from the wrong perspective. Who is it providing value to? What did that person save through the automation and how much is that worth if you actually parse out how many such "value periods" they experience in a day.
The idea that a very simple division question is worth $1 when everyone has a cell phone they already paid for in their pocket to do division for them is ludicrous when you realize there are tens of thousands of such time periods in a day but very few people are making tens of thousands of dollars a day.
Taking 10 or 15 percent of a number even if you get it wrong is not difficult and does not take any appreciable time. If you assign that 1 dollar to every instant of every day you will not find a real daily value for your time. The idea of $1. Ring appropriate is crazy.
Let's say you took 10 seconds to calculate it which is generous and also time to lunch it into a phone. There would be more than 36 thousand of such time/labour units in a given twenty four hour period. Unless you hang around with CEO's you aren't making 36 thousand a day to hand it out so easily.
If it takes you 30 seconds to calculate the tip that $1 is at a $120/hour rate.
Most people don't take home that amount ($250k/year). Would hope most people could do the math in under 15 seconds as well, doubling that rate. A far more reasonable "value" would be 10 cents.
This is actually a pretty good economic analysis that you are projecting you own biases onto. I take it you are not a tipper and disagree with tipping in general?
The article plausibly establishes that tipping is a cultural norm, hence people wish to tip. It establishes a threshold beyond which the rider will manually enter a tip rather than use the menu from statistics from millions of rides. It derives the “arbitrary” $1 amount from the difference in tips once the manual methods are used.
I don’t see any methodology issues on the surface.
I am happy to tip based on social norms, but I despise dark patterns, and that's what's being used here to try and inflate tips.
Nobody is rationalizing a larger tip saying, "I will tip more to avoid doing mental math." What is happening is they are busy getting out of a cab and being forced to either spend a minute or two fighting an annoying touch screen to enter the amount they'd like to tip, or to just give in and give 20-30%.
Note that suggested tip amounts did not center around the cultural norm of 20%. Instead, that is the lowest suggested tip. This is weaponized behavioral economics put to use, in this case to push up tips.
Exactly this is a UI dark pattern that forces consumers into a specific option, not an economic utopia of helping the working class via social norms
The fact this is turned into a paper like this shows the disconnect between reality and economics research.
To compare and contrast, I could see a skilled growth product design expert looking at this data and say, despite an existing cultural norms of 15% tipping, through our UX design we have altered behavior away from the norm by making lower tip options difficult and time consuming to choose.
> The fact this is turned into a paper like this shows the disconnect between reality and economics research.
I am not even sure if this is even an economic paper. After all, Donkor is an assistant professor of marketing at Stanford Graduate School of Business, and not in the economics department.
Something you "feel obliged to do" is pretty the definition of a cultural norm. People WISH to tip to fulfill the obligation that they feel because of the cultural norm.
I LITERALLY wish to tip when I go to restaurant. Some of that is cultural norms, some of it is knowing the wait staff is underpaid, some of it is signalling, etc.
That in no way takes away from the fact that I desire to give the tip, it only explains why I feel that way.
> Donkor found that around 60% of people chose a tip from the menu, indicating that most passengers preferred not to have to calculate a tip in their heads.
That assumption seems to be quite a stretch. Naively I would think that major drivers for this behavior are saving time and comparatively terrible custom tip experience.
Personally I love doing mental math, but still use preselected tip in situations with external pressure. For example when there is a line of people behind me in a coffee shop or I am trying to get out of taxi fast so the driver is not waiting on me.
Can you pinpoint these "MANY unfounded assumptions" in the research paper? I read the paper but I don't see where the author is making these assumptions.
It think it's telling that most customers picked 20%, the lowest on the menu. I would conclude that the menu presents a nudge towards establishing 20% as the lowest socially acceptable tip. Selecting a custom tip lower than 20% runs the risk of upsetting the driver, possibly leading to a verbal or physical altercation.
ITT: people that are high wage earners in the industry with the highest potential upward mobility that want to argue about the basis and percentage of tips for people doing the work with the least possible upward mobility.
Tipping, at a minimum, is social grease, and to the extent that you want it to be, redistributive economics with near zero administrative overhead.
>Tipping, at a minimum, is social grease, and to the extent that you want it to be, redistributive economics with near zero administrative overhead.
The "zero administrative overhead" also makes it massively unfair. Why does the waiter at a fancy restaurant make hundreds per night in tips, but the grocery clerk make $0?
Both took the job with an awareness of whether the job was tipped or not? I don’t see the issue; if the grocery clerk would prefer to be a waiter at a fancy restaurant, they should apply to such a role.
Yeah but something tells me that someone who's in favor of "redistributive economics" isn't the type of person who thinks "Both took the job with an awareness of whether the job was tipped or not" and therefore it doesn't matter what they earn.
I personally don't care for the arbitrary nature of it. I want Uber to cost more so that people on the brink of financial ruin aren't trading equity in their vehicle for quick cash. I want my restaurant bill to include the cost of a living wage for the staff. I do "tip" my 20%, even when the service is absolute dogshit, because the waiter didn't overcook my food, and the kitchen staff didn't forget my order.
My biggest issue about tipping is the arbitrariness of it. Why do delivery people get tips (pizza, waiter, porter, taxi, etc), yet other low income workers don't? If you worked low income jobs without tips, the entitlement of the tipping workers is off putting. Also this is an international audience that may have tips, but not the different minimum wages for tipped workers that is unique to the USA. Within the world of low income workers, there becomes a split of the untipped and tipped, and the tipped are basically the higher paid ones, which feels hypocritical when they complain about it while your sitting there without it.
Then you get into the naked racism, ageism and sexism that tipping exposes in who gets tips and what the tipping professions think of those various groups too.
Move on to later in life when you have better jobs, and the entitlement of the tipping classes and tipping alumni makes you eye roll inside because you never had that favor.
The original Uber "no-tip" model was just great. For the users but the drivers as well (not getting exploited by the medallion racket). Sad to see we’re reverting to tipping.
> If the cost of computing an acceptable tip is around a dollar
That seems more than a bit high..$1 for something that takes 10-30 seconds max, assuming you can't do it in your head and pull out your phone calculator?
That was a confusing point in the article for me. I thought it meant that people doing mental math would tip on average $1 more than a computed option.
I do not understand why when I pick up food it asks for me a 20% tip. Maybe I'm off base but isn't, as a bare minimum, the job of someone making a pizza to make a pizza? As someone who has worked in the restaurant industry for a number of years, and been part of a chain closure because a manager was stealing tips, I do not understand why anyone would tip for pickup. As someone whose prepared the food for pickups, I can say 100% that none of us in the kitchen thought what we were doing deserved more money than the rate we were being paid.
Even when I order in person at the local Thai place (there’s no wait service, you just order and they call your name when your food is ready), the person at the counter always asks “do you want to leave a tip?” They also do this when I get coffee at Biggby. I don’t mind having the option available, but I think it’s a dark pattern where you feel pressured to say yes or disappoint the person at the counter.
That said there’s one restaurant near me which uses Toast, which makes the dining experience so much nicer imo. I just ask for the receipt, scan the QR code with my phone, pick one of the suggested tips and pay with apple pay. I wish every restaurant used it
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[ 1.8 ms ] story [ 221 ms ] threadThat, and cultural forces in some political circles (which are fairly popular in New York) that encourage tipping to make up for what are perceived as unfairly low wages. It's an instance of people attempting to put their money where their mouth is, so to speak.
1. 20%
2. 25%
3. No tip
4. Custom tip
Dark patterns.
In a more brazen example I've been promoted to take my seat and use a qr code to order, it then requires me to pay up front on my phone (while providing my PII in the form of an email and phone number), and then asks me to tip before I've even had a server so much as introduce themselves or bring me water.
I'm all for servers making a living wage and paying higher prices to support it, but the current path this seems to be taking is really an unpleasant experience as a customer.
We got to this because service worker wages grew slower than necessary-for-life expenses like food, shelter, medical care, childcare, education, etc.
Meanwhile, many professional wages grew much faster than all of those things.
This is also the reason for why many ski towns in 2022 are unable to find enough staff to keep either the resorts, or the restaurants open. Nobody working those jobs can afford to live in those towns anymore, so you get a bunch of millionaires going off to vacation in their winter dachas, only to discover that there's nobody there to cater to them.
When restaurant servers don't get any tips it makes steady-wage jobs like warehouses or grocery stores relatively more appealing compared to customer-facing jobs.
Not a great cycle.
Tips are better for the business, because it lets them price-differentiate, and thus serve more customers. The more meals a restaurant serves, the more money it gets, regardless of how well or poorly the customers tip.
Over the past 40 years, businesses had a lot more bargaining power than service workers, and have obviously optimized their operations in a way that benefits their bottom line.
If you don't like these outcomes, you have a few options.
1. You can curtail business bargaining power by empowering workers.
2. You can curtail business bargaining power across the board, by raising wage and benefit floors through legislature.
3. You can curtail the rising delta between service wages and living costs, by having someone else (the middle class, the rich, corporations, Uncle Bezos, importers, ???) pay for the difference.
4. You can curtail the rising delta between service wages and living costs, by setting price ceilings on living costs through legislature.
5. You can curtail the rising delta between service wages and living costs, by bringing costs down, via creating a competing low-cost provider through legislature.
... Or you can shrug your shoulders, and just pay your 20-25% gratuity for the exact same level of service that used to earn a 10% gratuity.
It doesn't make it good, at a system level.
This seems like a price stickiness problem. If there’s demand from tourists buy food, but not enough staff, the restaurants can raise their prices and raise the wages they offer. At some point, either demand to go to restaurants goes down because people don’t want to pay (so the staff aren’t needed), or wages increase enough that the staff can afford to live. The end state isn’t peachy for everyone (the ski area becomes a place that only the most wealthy can afford to visit) but at least the problem of understaffing is solved.
Isn't a dacha a summer house?
Since it's an Eastern European term, and since winter in much of Eastern Europe sucks, it's commonly associated with a seasonal summer home - but can refer to any vacation property.
1. Towns are located in space constrained location that you mostly want to reserve for paying guests 2. It is a seasonal business and cannot guarantee wages throughout the year 3. The jobs can be very hard to do 4. A large portion of the staff is full of young people who want to ski a lot and make money to support the lifestyle
In fact, ski towns and resorts do much more for workers than you realize
1. Beyond wages, you get subsidized housing and food either on prem (If your job is crucial enough) or in the nearby towns 2. Resorts pay for a continuous well oiled public transport system better than all of the country, mostly to make sure the employees can come in on time very easily. In certain locations, these rides are free or subsidized to employees 3. For the young kids that take up jobs on resorts because they just want to ski for a couple months, if they're employees, they get access to the lifts and other perks that supports their hobby. 4.Some resorts also guarantee year long pay and better benefits if you are one of the specialized staff (the person who operates the snow plow up the mountain)
Ski resorts rely heavily on H2-B visas (temporary foreign workers) but as more and more companies recognized the benefits of such workers, the total number of applications grew far beyond the available visas... meaning ski resorts get fewer and fewer successful applications granted.
Epic Passes have significantly lowered the cost of a season ski pass. Getting a free pass was a big part of the wage equation when such passes were very expensive -- less so when they only cost about 700.
Since the pandemic, housing prices in secondary/tertiary locations has exploded, more than in central cities. Lake Tahoe area, for example, is through the roof... decent housing is in such demand that it's unaffordable.
Do you tip the cashier at the grocery store? What about the people replenishing the shelves? Why not?
Do you tip cashiers at the grocery store? It'd be really easy, why are you not doing it?
No, fast food workers shouldn't be tipped. No one "should" be tipped. If people are paid a living wage then scrabbling for tips becomes obsolete and tipping leaves the realm of "should" and progresses closer to its Platonic ideal of being a purely voluntary act used to express exceptional appreciation for a job well done.
The only people who would be shafted are servicepeople, not owners. Even with a successful boycott servicepeople would still be getting paid less, even if from the owner's pockets.
What pressure do you imagine would reach those in power? Why are you trying to shove market-based thinking where obviously no reason exists?
Tipping is an unegotiated unilateral contract. It is basically a power trip.
A local restaurant chain here adverised that they had increased staff salary and would automatically charge 15% (normal tip around here) of the bill for service to everybody to compensate. This way, the prices on the menu stayed competitive with other restaurants, they were able to pay their staff better, and customers would end up paying the same as before. They had to stop the experiment within a month of two because people stopped going to their restaurants. Why? What's the difference? Basically people no longer had their little power trip.
Yeah the tips-being-power-trip thing holds true too. People love to make their opinions known. But of course so few of the things customers usually have issues with are the server's fault: food's not cooked right, rice costs extra, etc. Customers take their anger out on servers and the owner/manager doesn't care either way because they're still getting paid.
it would be more compelling if you made arguments to explain your statements of certainty, and left out the weird generalizations about "typical HN comment" as if HN is some monolith as opposed to a discussion board comprised of individual commenters
20% is an easy mental calculation, so that's what I do most often these days. I round up to the next dollar or sometimes next multiple of 5 depending on the total amount of the check.
The graph at the bottom of this article may be interesting this context, it's from 2014, but it's all I could find with a quick search: https://www.epi.org/publication/waiting-for-change-tipped-mi...
The tipped minimum wage hasn't changed since 1991. At around 88-89, the difference (in 2014 dollars) between tipped minimum wage and the minimum wage was 40% in 2014 it was 71%.
That depends on the state. For example, all west coast states have the same minimum wage regardless of tipped or non-tipped. See https://en.wikipedia.org/wiki/Tipped_wage
> In the state of Alaska, California, Minnesota, Montana, Nevada, Oregon, Washington, same minimum wage are applied for both tipped and non-tipped employees. Tips collected by employees in these states will not offset employer's obligation to pay the wage, and tips is the additional income beyond the wage paid by employer.
You might tell your low tipping friend they’re being rude, driving the bottom end up, making average higher, meaning a really generous tip has to be even higher.
What constitutes rudeness is evidently more variable than I realized. Even among friends.
Maybe you mean to say that the base hourly rate was not inflation adjusted?
/s because the ship has sailed.
It amazes me that people can't calculate this, even roughly. Its a tip, it doesn't need to be exact
However, as I've become more wealthy, I think of it as a (happily paid) extortion tax. _Fight Club_ taught me that the service class can anonymously hurt me. I strive to be overly polite and non-demanding, and tip 20%+ to be the good customer and avoid any vengeance.
I'm not cynical about much in life, but with tipping, I view it as cheap insurance.
Another commend focused on the difference between median wages and waitstaff wages - in my mind I tip more not because they make less, but because I have more discretionary income.
Now tips are requested upon payment before service rendered. In front of workers and next customers. Minimum wage subsidies passed on to the consumer through social coercion, and maybe some insurance that nobody will spit in your coffee after you pay (but do the barista and the cook actually know how much you tipped?)
AK, CA, MN, MT, NV, OR, WA
So no principled justification to tip in those places, unless you like to tip for every service for some reason.
[1] https://www.dol.gov/agencies/whd/state/minimum-wage/tipped
While they may make minimum wage, in this day and age, minimum wage is well below what you might make otherwise at a non-tipping establishment. Tipping is still expected at restaurants in Washington state, and is still the main source of income for most servers (the minimum wage they earn is less than the tips they receive, and if it weren't for tips, they wouldn't bother doing the job for minimum wage).
I'm against the requirement to tip as a way of doing business, but will do it as long as it is expected. Ideally, we'd do things more like Europe or Japan.
However, these days, everyone barring McDonalds asks for a tip. I eat/take out less because of it, but I'll tip at least 10% even if there is no service involved.
* Buying social prestige amongst your group by showing generosity.
* Buying better service by showing generosity.
Both these result in motivation in favor of tipping more and against tipping less. Both of these require your tips to be above average, and not everyone can be above average.
What makes it somewhat tricky is that tipping to show generosity is a type of virtue signalling. And virtue signalling generally doesn't work if you admit you are doing it for self serving reasons. Since the best liars believe their own lies, our brain is resistant to acknowledging that these are the true reasons behind tipping. It prefers to pick justifications that align with the virtue being signalled.
When I was young my dad pointed this out to me when it would happen on restaurant receipts, and then I'd have to listen to him tell the waiter who clearly did not care. But especially now, nearly all of the suggested tip amounts are calculated after tax is included. After seeing it done so much I think this has become the norm, and don't even check the pre-tax vs post-tax math anymore.
In my experience, I'd say half the bills I get have suggested tips and of those I can count on one hand how many suggested the tip on post tax amounts. I used to give an exact pretax 20% tip, just on principle, but one day just I realized it was kind of silly to worry over such little amounts. Forget principles, the day I can't afford to tip well is the day I can't afford to dine at a restaurant.
I suppose that makes sense in certain cases (eg. you getting appetizer + drink + main + desert vs just a main), but utterly broken in others (eg. you getting a $15 main vs a $25 main). If tips were truly based on service it'd be a flat fee per plate or something, that varies per restaurant.
When a restaurant brings a bill that's six times larger than the one to the next table, that's usually because twelve people sit at your table and need service, and two people do at the next.
Isn't anything that increases the wages of workers via increased tips definitionally taking money away from consumers? (If you argue that they get $1 of utility by not having to think about the amount to tip, you might not be taking utility away from them, but you're still taking money away from them.)
It's bending over backwards to promote how tipping is actually for the tipper's benefit. And that recommending large tips via touch screen menus is so helpful in saving them the time to do mental math.
Then the author places an arbitrary value of $1 on that mental math (???) to exclaim that large suggested tips saves the passenger both time and (fictional) money! Welfare has increased by more than 200,000 (completely made up dollars) per day!
Seriously, wtf, Stanford Business?
Why? Calculating a tip isn't something that has a failure state because even if you give the wrong amount it won't matter. On top of that the exercise of calculating the tip is beneficial for your long term mental acuity.
I'm not sure why doing a simple calculation that doesn't benefit me and has no failure state is a benefit. It's a benefit for the tippee maybe, but not the tipper.
It's not a lot of effort, but $1 also isn't a lot of money.
>On top of that the exercise of calculating the tip is beneficial for your long term mental acuity.
If you can honestly say that you think most people enjoy doing math, I don't know what to tell you.
It's primary value is to the person being rolled because they aren't paying for anything.
Automating something people weren't getting laid to do provides value to someone else not the person paying.
Maybe it's not controversial so much as misguided and looking at the picture from the wrong perspective. Who is it providing value to? What did that person save through the automation and how much is that worth if you actually parse out how many such "value periods" they experience in a day.
The idea that a very simple division question is worth $1 when everyone has a cell phone they already paid for in their pocket to do division for them is ludicrous when you realize there are tens of thousands of such time periods in a day but very few people are making tens of thousands of dollars a day.
Let's say you took 10 seconds to calculate it which is generous and also time to lunch it into a phone. There would be more than 36 thousand of such time/labour units in a given twenty four hour period. Unless you hang around with CEO's you aren't making 36 thousand a day to hand it out so easily.
$1 for nothing or value is a lot ofoney.
Most people don't take home that amount ($250k/year). Would hope most people could do the math in under 15 seconds as well, doubling that rate. A far more reasonable "value" would be 10 cents.
The article plausibly establishes that tipping is a cultural norm, hence people wish to tip. It establishes a threshold beyond which the rider will manually enter a tip rather than use the menu from statistics from millions of rides. It derives the “arbitrary” $1 amount from the difference in tips once the manual methods are used.
I don’t see any methodology issues on the surface.
Nobody is rationalizing a larger tip saying, "I will tip more to avoid doing mental math." What is happening is they are busy getting out of a cab and being forced to either spend a minute or two fighting an annoying touch screen to enter the amount they'd like to tip, or to just give in and give 20-30%.
Note that suggested tip amounts did not center around the cultural norm of 20%. Instead, that is the lowest suggested tip. This is weaponized behavioral economics put to use, in this case to push up tips.
The fact this is turned into a paper like this shows the disconnect between reality and economics research.
To compare and contrast, I could see a skilled growth product design expert looking at this data and say, despite an existing cultural norms of 15% tipping, through our UX design we have altered behavior away from the norm by making lower tip options difficult and time consuming to choose.
I am not even sure if this is even an economic paper. After all, Donkor is an assistant professor of marketing at Stanford Graduate School of Business, and not in the economics department.
More like feel obliged to tip.
I LITERALLY wish to tip when I go to restaurant. Some of that is cultural norms, some of it is knowing the wait staff is underpaid, some of it is signalling, etc.
That in no way takes away from the fact that I desire to give the tip, it only explains why I feel that way.
That assumption seems to be quite a stretch. Naively I would think that major drivers for this behavior are saving time and comparatively terrible custom tip experience.
Personally I love doing mental math, but still use preselected tip in situations with external pressure. For example when there is a line of people behind me in a coffee shop or I am trying to get out of taxi fast so the driver is not waiting on me.
Tipping, at a minimum, is social grease, and to the extent that you want it to be, redistributive economics with near zero administrative overhead.
The "zero administrative overhead" also makes it massively unfair. Why does the waiter at a fancy restaurant make hundreds per night in tips, but the grocery clerk make $0?
Then you get into the naked racism, ageism and sexism that tipping exposes in who gets tips and what the tipping professions think of those various groups too.
Move on to later in life when you have better jobs, and the entitlement of the tipping classes and tipping alumni makes you eye roll inside because you never had that favor.
There are biases of course. Beautiful people get better tips.
That seems more than a bit high..$1 for something that takes 10-30 seconds max, assuming you can't do it in your head and pull out your phone calculator?
That said there’s one restaurant near me which uses Toast, which makes the dining experience so much nicer imo. I just ask for the receipt, scan the QR code with my phone, pick one of the suggested tips and pay with apple pay. I wish every restaurant used it