New Report: Fewer Americans planning to tip this holiday season

Ted Rossman of Bankrate discusses where tipping is appropriate and what might be a good option instead of cash

Episode Transcript

Speaker 1 (00:00):
Today is my wife's, my lovely wife's birthday, so we're.

Speaker 2 (00:04):
Well the Edge Rusher, Happy birthday.

Speaker 1 (00:07):
Aaron is having a big birthday today. We'll be going
out to dinner tonight, so we'll come home from dinner
and probably watch a Little Grinch and Frosty the Snowman.
Oh great, happy birthday. So yeah, and then you know,
we'll be out tonight at We're going to the Avenue
right here in Grandview, her choice, what are her favorite restaurants?
Going to go get a steak and hopefully we'll have
good service and we'll leave a nice large tip for

(00:30):
our server. And I want to talk about holiday tipping
now on the Legacy Retirement Group dot com phone line
with our expert. It's Ted Rossman from bankrate dot com.
The headline kind of troubling, Ted, fewer Americans planning to
tip this holiday season. What's going on?

Speaker 2 (00:45):
Yeah, it's interesting because we do see a bit of
a disconnect and that fewer people are planning to give
holiday tips, although those who are giving something are generally
giving at least as much as they did last year,
possibly even more. We're talking here about the once a
year tip for the housekeeper. Maybe it's the mail carrier,
the trash collectors, yard crew people like that. Generally speaking,

(01:11):
somewhere between twenty percent and fifty percent or so are tipping,
depending on the service. Housekeepers, childcare providers, those are the
high end, and the amounts are generally twenty to fifty dollars.
I would say the higher end there is housekeepers, childcare providers,
and yard crews.

Speaker 1 (01:30):
It's interesting, and so we're not talking about your everyday,
run of the mill tip as like I mentioned, if
you're going out to dinner and you have good service
and you leave a twenty percent tip. This is for
kind of going above and beyond. Once a year, you know,
my wife will often buy the kids teachers, maybe a
ten dollars Starbucks gift card this time of year or

(01:50):
something like that. But you know, it's kind of funny
because these are all generally, you know, people who are
making you know, full time wages. I don't know to
what degree, but when you look at like a server
at a restaurant, they're not making their minimum wage is
like two or three dollars an hour, four dollars an hour,
and then they rely on the tips. These folks don't
necessarily rely on tips.

Speaker 2 (02:11):
That's right. It is a nice gesture if you can
around the holidays. I realize money's tight for a lot
of people. If you can't tip everybody, maybe think about
who really went above and beyond this year. There's a
few different flavors of this. Sometimes it's to say thank you.
Sometimes it's to get better service next year. One option
would be a really generous holiday tip is to double

(02:33):
that last payment of the year. So whatever you pay
that weekly housekeeper or nanny, you can double that last
payment as a holiday tip if you so wish. There's
also the possibility of giving some other form of appreciation.
Cash is king, I would say, but sometimes people have
success putting out a basket of drinks and snacks for

(02:55):
delivery drivers, or maybe giving some other homemade baked good
or craft. There are different ways to show appreciation.

Speaker 1 (03:04):
It's interesting. This is not necessarily then for better service, right,
This is just as a thank you for the work
you've done for me or us this year.

Speaker 2 (03:14):
Holiday tipping is generally more for that generosity kind of theme.
A lot of the year, people actually resent tipping. We
found that about six and ten Americans have a negative
view towards the practice there's been a lot of tip
creep in recent years, being asked to tip in unconventional
settings like coffee shops and food trucks and elsewhere. The holidays, though,

(03:35):
it is a bit more of the good old fashioned generosity. Now,
sometimes it's maybe a bit self serving that hopefully you
get better service next year, But a lot of the
time it is more just to reward a job well done.
You might even consider this for someone that you do
tip throughout the year, like a hairstylist, maybe you give
an extra generous tip once a year around the holidays,

(03:58):
especially if that person's gone and beyond for you in
some way.

Speaker 1 (04:01):
Speaking with Ted Rossman, senior industry analyst from bankrate dot com,
so does the idea of tipping get better for people
who are in a better financial position, or maybe you
get bigger tips for people as they get older.

Speaker 2 (04:17):
Yes, all of that. Yeah, if you have a higher income,
you're probably a better tipper. If you're older, you're probably
a better tipper. We do see this so called K
shaped economy at work here. Basically the rich get richer
or the poor get poorer. That helps explain some of
that disconnect I was talking about earlier where fewer people
are tipping, but the median amounts are steady or up.

(04:40):
It does show that people with higher incomes are tipping better,
and we see that throughout the economy. Moody says the
top ten percent of earners are accounting for half of
all spending, which is a record high. Upper income households
are propping up a lot of the spending statistics these days,
including holiday tips.

Speaker 1 (05:00):
So is there an obligation? Do people feel obligated to
tip regardless of the service that they get.

Speaker 2 (05:05):
Younger people are more likely to say that they feel
they just ought to tip. In general, I would say
that holiday tipping is on a different footing though that
whereas it is really expected that you're going to give
a tip at a restaurant, it's not necessarily the case
for the mail carrier, the trash collectors, Only about one
in five people are tipping them. Only about one in

(05:28):
three tip the yard crews and plow services. About half
are tipping. Teachers, childcare providers, and housekeepers. Another thought, especially
for teachers, maybe going on a group gift. Teachers maybe
don't even necessarily consider this a tip. It's more of
a holiday gift. But sometimes there's strength in numbers that
if everybody in the class gives a certain amount of

(05:50):
money and then that rolls up into a group gift
card for the teacher, that can be another way to
show holiday appreciation, maybe a little bit less awkward, or
you don't have to do all the belifting yourself.

Speaker 1 (06:01):
How has tipping generally trended in the last four or
five years, ted generally down.

Speaker 2 (06:06):
Tipping actually kind of peaked around twenty twenty twenty one,
that pandemic time when there was actually a groundswell of
appreciation for service industry workers. That has faded. Inflation has
cut into people's purchasing power, and people are annoyed that
we're being asked for tips in so many different places.
A lot of people resent the tipping culture. It seems

(06:30):
that the holidays are a bit separate from that. That
it's not like the time I was at Newark Airport
and the self checkout machine asked me for a tip,
and that's annoying. But giving a little something expert to
your housekeeper or babysitter that feels more personal and appreciated.