Tipping

Many, or most service industry workers, rely on tips to pay their living expenses. Unfortunately there are still a large number of American who are not tipping, and that greatly hurts low income families, the undereducated, immigrants, young people, or others who tend to make up service employees who depend on that extra money.

While there are multiple studies on this topic of who does and who doesn’t tip (all of which show consistent results), there was another survey done in September 2019 by CreditCards.com It showed the differences in tipping of various groups, including men, women, millennials, and others.

Some of the data is below. What is unfortunate is that many people who reply on tips, often to pay the bills, their rent, buy food for their family, etc. are impacted when you don’t tip. For example, the average waitress/waiter makes in the low to mid 20K per year. Of course, it varies based on state, style of restaurant, etc. but nationwide the average for a server is in that low 20K per year range. That salary is “pre-tips”. As you can imagine, a waitress/waiter relies on that extra cash from a customer to make ends meet as 20K is not enough to live on (if it is a primary source of income for a household).

Another example. There are many studies that show gig economy driver (Uber, Lyft, Doordash, etc.) makes $10 per hour or less after factoring in all of their expenses for driving, such as mileage, gasoline, tools, wear and tire on their car (think more frequent tires and oil changes, etc.). That too is obviously not enough to live on, and drivers also rely on tips to pay the bills or make ends meet.

What if you can’t afford to tip?

That is fine. Nothing wrong with that at all. However, if you can’t afford to tip, then just reduce the number of “tipping” events that you are exposed too. Free up that money saved by reducing activities so that next time you are placed into a position where it is expected, you can tip. What do we mean by that? Well, here are some examples.

Let’s say you go out to dinner or lunch at a “tipping” establishment 5 times per month and you (1) either do not tip or (2) usually give a minimal amount or cheap tip. Well the solution is simple here. Just go out less. Maybe go out to a “tipping” establishment 3 times per month (instead of 5) and the amount of money you free up from two fewer times out, use that to tip appropriately. Or better yet, if you can’t afford to tip then you probably should not be going out at all but rather saving, investing, or paying down debt with your money.

The point being, if you can’t afford to tip, then you should not put yourself in a position in which a tip is supposed to be paid. Do not go to those places or participate. As servers, car drivers, many hairdressers, and others rely on tips to pay the bills. As their income and wages are based on that. If you can’t afford the tipping culture in the US, then go out fewer times or not at all.

Who tips and who doesn’t?

As we noted, there are various surveys and data points on this. The latest snapshot from CreditCards.com shows some usage of credit cards and who does tip vs. who doesn’t. And always remember, another way to give back to society is to tip vs making charitable donations.

Restaurant waiter and waitress servers – Women are more likely to tip, and the data shows about 80% do vs. men of which about 74% tip servers.

Food delivery workers are also more likely to get a tip from a woman. That is about 66% vs. men at 59%.

Millennials tip all workers much less often than baby boomers. And part of that could of course be explained by stages of life and income at those stages, but that goes back to our point if you can’t tip, then don’t go out or do it less. And that fact is true regardless of age. Millennials tip servers 66% of time vs. baby boomers at 89%. Or millennials tip ride share drivers 40% of time vs. boomers at 63%. Other data points indicate the same things…fewer tipping comes from the younger generation.

Once again, it is understandable that not everyone can afford to tip, but the fact is many workers reply on extra cash to pay the bills and provide for their family. So, if you can’t tip, then either go out less or not at all. Or go to places in which tipping is not critical to a person’s salary, such as maybe Starbucks where most locations do not even accept tipping.

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