Tipflation

Tipflation is often said to have been incited during the COVID-19 pandemic, where in the United States, numerous measures introduced by federal and state officials such as stay-at-home orders forced the closure of many smaller businesses, especially restaurants. Customers have been noted during the pandemic to tip generously to smaller businesses and lower-wage workers.

Tipflation further traces its origins to the increase of digital payment systems and the creation of digital tip jars. Many reports on the increased phenomenon of tipflation involves the technology developed by fintech firms such as Square (a subsidiary of Block), Toast, and Clover (a subsidiary of Fiserv), the three largest makers of digital tip software. All three companies manufacture integrated hardware and software services which not only have expanded the ability for small businesses to accept payments by card or contactless, and at the merchant's discretion come with prompts to add gratuity.[1]

These systems, most frequently in the form of a tablet, can request a tip prior to receiving the full completion of a paid service. The format of the tablet also displays, either directly through the screen or through hand movement patterns, how much a person tips to not only the employee, but also everybody else waiting in line.[1] Guilt-tipping is often coined to describe the social pressure that this situation creates.[2][3] Etiquette researchers, such as Diane Gottsman, has phrased this phenomenon as consumers being "overwhelmed by the little piece of technology looking them in the face".[4] An article from Vox also has raised concerns that tips collected through digital payment systems can also be subject to digital payment systems' fees as part of the overall revenue collected.[5]

Starbucks in particular has been seen as a battleground for the changes in American tipping culture. As a concession to its baristas, who have began to organize in 2022, the Seattle-based coffee company started to offer tips to its baristas within the app and at payment terminals. Customers who pay at the register are now required to either select a tip amount on a card processing device, or for mobile orders, can add tips later on. The tipping system implemented by the company and baristas places all tips within a single collection pot, divided up equally to all employees who currently work during the time that the tip is received. The new systems have been widely criticized by customers, slamming the system as "awkward", intrusive, and likewise to digital payment systems, being intrusive and severely increasing the social pressure to tip. Additionally, these credit card tipping benefits are only being provided to Starbucks stores which have not unionized, further dividing the company's baristas.[6][7][8][9]

The culture of tipping has been described as "radically different" and similar phrasing by American media outlets, beginning mostly in 2023. Previous customary tipping amounts have further been escalated, with 15% tips being exchanged in favor of occasionally 30% tips.[10][11] Some occupations which are now widely requesting gratuities are ridesharing drivers like those for Uber and Lyft, food delivery drivers, and baristas at coffee shops.[12][13]

Beginning in the 1980s, the economy of the United States began to shift from a manufacturing based economy to a service economy. By 2021, the service sector contributed 77% of the nation's GDP.[14] This change has resulted in younger generations entering service jobs at higher numbers compared to prior generations, contributing to differing views on tipping. Millennials on average leave larger tips at 26% or higher while Gen Z tips more frequently at 51% of the time compared to 42% for Baby Boomers and Gen X.[15] With the average age of workers in the service industry being 29 years old, Millennials make up 49% of the service workforce while the National Restaurant Association estimates that 82% of Zoomers' first jobs are in restaurants.[16][17] The tipping behavior among younger generations is believed to be due to their overrepresentation in service jobs compared to prior generations. Their understanding of the jobs and the challenges that workers face in these jobs prompts them to be more sympathetic toward workers and causes them to tip larger and more frequently than prior generations.