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Whether you’re dining at a Michelin-starred restaurant or using a self-serve kiosk, most commercial transactions today conclude with an invitation to tip. But while the opportunity is ever-present, Americans are tipping less this year due to inflation and general economic unease, a new Bankrate survey found.
Adults are tipping less for a range of services where it’s common to offer a gratuity. Hairstylists and barbers are seeing the greatest drop — a 13% decline in tips compared with 2022, according to the personal finance site, which surveyed people on their own tipping habits. Servers at sit-down restaurants and food delivery workers are also seeing significant reductions, with their tips down 8% and 7%, respectively.
“We’ve hit an inflection point where people are getting annoyed about how much things cost, combined with a growing proliferation of businesses asking for tips,” Ted Rossman, senior industry analyst with Bankrate, told CBS MoneyWatch. “I think a lot of people are saying enough is enough.”
Who tips worst?
Gen Z, Millennials and men stand out for being the worst tippers, while older generations and women tip more generously, according to the survey. Rossman said young adults and men tend to be “boom or bust tippers,” but when they do tip they tend to offer more than older adults and women.
People who work in the service industry tend to tip better, reflecting their appreciation for the lengths some employees go on behalf of their customers.
Perhaps not surprisingly, the main factor influencing young adults’ tipping habits is income — given that employees who are earlier in their careers generally have less money to go around.
“Some of it is showy, inherent to men mostly,” Rossman said. “Sometimes we tip because it’s expected, and sometimes it’s out of guilt. But it’s hard to generalize when we talk about these larger demographics.”
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Growing resentment
One reason for the tipping overload could be businesses’ efforts to retain workers while keeping their own expenses low, Rossman suggested.
Since the pandemic, smaller businesses in particular have found it harder to find and retain workers, and many states’ minimum wages have increased. That’s increased the pressure on employers to keep raising pay for their own workers, many of whom are seeing their incomes eaten up by inflation.
“Employers are actually more affected by inflation, as on a percentage basis states have raised the minimum wage and wages are the No. 1 line item for most businesses,” Rossman said. “Service industry wages have risen more than white-collar wages, which affects the bottom line. Certainly, inflation is hitting consumers, but I actually think the employer side of the coin might be driving this trend.”
One thing is clear: The ubiquity of digital payment apps that invite consumers to tip appears to be breeding some consumer resentment. Two-thirds of those polled expressed a negative view about tipping, Bankrate found, while 41% of respondents said businesses should pay their employees better rather than relying so much on tips to boost workers’ income.
Meanwhile, just 16% of adults say they would be willing to pay higher prices if tipping were eliminated altogether.
