Tip creep continues

June 19, 2024
A jar with tip money.
Since the pandemic, the demand by the service sector for tips has been growing in North America. Experts tell us why.

Tipping in North America has spread upwards and outwards, and has a lot of people feeling awkward. Others are just fed up. 

Online rant sites such as Reddit are bursting with complaints about unexpectedly being asked for tips in retail situations, from getting an oil change to buying a bottle at a unionized liquor store. One airport user even wrote about being prompted to tip at an automated express food shop where there were no visible staff and literally “no service was provided.” 

Here’s a scenario that most Sage readers, like Federal Retirees’ member Sheila Ducarme, probably have experienced recently when prompted to tip in a counter-service restaurant: “I stand in line, order my food, stand some more and pick up my food, which I carry to my table — but there is a tip jar,” Ducarme says. “I believe the person I need to tip is myself.” 

You don’t even have to leave home to be asked for tips, as people have complained about being asked to tip while shopping online — while ordering shoes, or even booking a hotel online. 

It’s not just the rapid expansion of places and services where tipping has become the norm. Another pressure point is being asked to tip before any service or product is provided, such as at self-serve food shops and food delivery services. One fed-up Reddit user vowed to start “walking around with a tip jar” and “rattle it in people’s faces and give them dirty looks if they don’t tip.” 

Most Canadians seem happy to tip in service situations, even as they’re bewildered by the increasing cost of doing so, especially in places where tipping used to be rare or non-existent. Ducarme, for example, says she is “delighted to tip” for good service. 

So is association member Deitra Klimpton. What bothers Klimpton is being handed a terminal to pay a bill and prompted to tip 30 per cent or more. 

“You are left, usually in front of the service person, having to click the button to set your own rate,” Klimpton says. There’s that awkward feeling again. 

The other tipping pressure point is that food and wage inflation means even a 15 or 20 per cent tip is more than it used to be.  What is driving this upward push on tipping on multiple fronts? And why now? Most factors are rooted in the pandemic and its effects. 

“We definitely had a sense of compassion for people who were working in restaurants, when restaurants sometimes had to be closed,” says David Soberman, the Canadian National Chair in Strategic Marketing at the University of Toronto’s Rotman School of Management. “Prices seem to go up, but they don’t seem to come down very often. It’s the same for tipping.” 

The automation of the tipping process also pushes tipping pressure up, both by automating prompts for higher amounts, and increasing the likelihood of your server standing close by as you decide what to tip. 

“There’s almost this sense of tip-shaming that occurs when people want to put in a lower tip and the waiter or waitress is standing over you,” Soberman says. 

The marketing expert suggests that restaurants that prompt for a higher percentage on tips even as the base prices are higher are “biting the hand that feeds them.” It’s “especially hard” on retired people and seniors who are on a fixed income, he notes, and it may discourage people from eating out as often as they used to. 

“If the number of times you go to a restaurant within a year is 30 and you reduce it to 20, that’s devastating for the industry,” he says. “Even a one-third reduction is going to have a devastating effect.” 

There’s no question that tipping is important to the income of many Canadians in service jobs, but it’s a culture largely distinct to North America. 

“One of the problems that we have in North America is we tend to regard many of these service jobs as being sort of the lowest type jobs you can get, whether it’s serving in a restaurant or driving a taxi,” Soberman says. In other countries, such as France, “people that are waiting in restaurants earn more than the minimum wage. It’s actually sort of a respected and important job in France, versus the way those jobs are regarded here.” 

Federal retiree Olga Massicotte agrees. 

“We should adopt the model used in many [other developed] countries, where people working in service industries are paid a living wage rather than having to rely on tips to make ends meet,” Massicotte says. “That would give them more certainty, and would also allow consumers to better budget the full cost of the services they purchase.” 

Tip of the hat only 

Some establishments have decided to eliminate tips, something they say is pleasing customers and their staff. 

Even during the great expansion of tipping in the past few years, some locations have chosen to go tip-free. 

Exact numbers of newly no-tip establishments are scant, but they do exist in Canada, from Folke in Vancouver, to Belong in Sharbot Lake, Ont., to Richmond Station and others in Toronto. 

“The biggest reason we went to a no-tipping model is to say to our entire staff, and to the entire industry, that we believe this is a career,” says Richmond Station owner Carl Heinrich. “We believe that at the end of your career, you should be able to retire. You should be able to at some point in your life buy a house or have kids like [people working in] any other business. . . This standard restaurant model doesn’t make those things very possible.” 

The other key reason was to undo “pay inequities and the unfairness between staff” in the industry, where servers can earn more than other staff, including managers. 

Paying a higher wage and eliminating tipping allows a business to control compensation rates and “implement a system where there is growth for everybody,” Heinrich says. Servers can move into management or other positions without taking a cut in overall pay, and the cost to customers is the same. 

As a result, he says, “Our dining room is being led by the people who should be leading the dining room, and because our management team is full of our best leaders, our service is actually better.” 

Tipping can also create more subtle distortions, as it’s not necessarily as fair and keyed to quality of service as it's assumed to be. 

“Most of us tip habitually, not in response to service quality,” wrote assistant professor of sociology Amy Hanser in The University of British Columbia Magazine. Hanser wrote of customers’ social “biases,” including “race, gender, age or body size, for example.” Studies show such prejudices can lead to lower tips. 

A 2023 Angus Reid poll found that 59 per cent of Canadian adults surveyed would prefer a no-tipping policy with higher base wages for servers — a huge increase from the 40 per cent preference seen in a 2016 poll. 

That kind of thinking recently led to the end of tipping at Jet Black Hair and Studio, in downtown Ottawa. Co-owner Ilona Garson echoes Heinrich in hailing the shift as a step toward regarding “our industry as professionals and being taken more seriously.” For example, “it shows creditors that we have higher earning power and it elevates our industry as professionals. Having that higher earning power for my staff, it’s very empowering.” 

Some of Jet Black’s 16 employees were anxious about ending tips. Now, Garson says, none is earning less, some are earning more, and all have a more predictable income. If customers want to show their appreciation for good service, Garson suggests they write “a really great Google review, or send us your friends… There are ways to show your appreciation that goes way further than $20.” 

No-tipping hair salons are spreading across Europe, Asia and the United States, she says, though “it hasn’t been so readily adopted [in Canada].” 

In restaurants too, alternatives to tipping culture are widespread around the world. Most countries have little or no tipping, and in some tipping is considered rude. 

“They view their industry as professional,” Heinrich says, “and it’s insulting to them to think they need to hold out their hat to make ends meet. They work in a business that respects them. They work in a business that pays them properly.”


This article appeared in the spring 2024 issue of our in-house magazine, Sage. While you’re here, why not download this issue and peruse our back issues too?