July 15, 2025 • 10 mins
Ted Rossman of Bankrate looks at the latest survey regarding tipping, and it's not good! It's out of control, and like it or not, it's going to continue
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
There was a time, believe it or not, Virginia, Yes,
there was a time when the market adapted to the marketplace,
whether that was from the consumer side or the provider side.
We've gone, we've gone backward over the years, whereas the
market really adapts more to the people who are involved
(00:24):
within it, within the running of it. I'm talking specifically
about wages, tipping specifically, which you know, ever since COVID
has just gotten out of hand, just gotten stupid, just
gotten crazy. I told you before the break there those
those means and stuff on Facebook, if you can't afford
thirty percent, don't dine out and so forth. I find
those offensive. I really do. They bug me because you know,
(00:46):
if you've got the money and you want to take
your family out for a special occasion or whatever, and
you can manage a twenty percent tip, then you've done
your part. But there are people out there that feel
as if they are offended because it's only twenty percent,
which baffles me.
Speaker 2 (01:01):
Uh.
Speaker 1 (01:01):
But we got to talk about the tipping culture right now.
Ted Rossman is a senior in at the industreet analyst
at bank Rate. Let me get him on here. Ted,
First of all, good morning to you. Let me start
with a good morning, because we'll need that.
Speaker 2 (01:12):
Hi there, thanks for having me ted.
Speaker 1 (01:15):
Well, you used to go get a job knowing what
you were getting and not demanding that the job accommodate you.
You were there to accommodate the consumer. And and we've
we've changed that now where people go in and it's uh,
it's as if you know you will, you'll have to
(01:36):
pay me what I want you to pay me, not
necessarily what I'm worth, but what I want you to
pay me, whether you're the employer or the consumer leaving
a tip. Do you know can you tell was there
a clock somewhere that says where we turned that corner
and change the way we looked at this.
Speaker 2 (01:52):
The pandemic brought a lot of shifts in the tipping world,
and parallel to that was technology making it easier for
businesses to solicit tips. It's not as cash centric anymore.
A lot of this is embedded in apps and payment terminals.
But I would really point to twenty twenty, the pandemic time,
as when a lot of things shifted. More invitations to
(02:16):
tip for takeout and counter service, whether that's at the
sandwich shop or the coffee shop. Or the food truck
or something like that. Also, that pandemic time was followed
quickly by the rise in inflation, And that's relevant to
tipping as well, because a lot of businesses have been
hesitant to raise prices more than they have, and they've
turned to tipping as kind of a hidden surcharge. It's
(02:39):
a way to funnel more money to their workers without
the company having to foot the bill. And because technology
has made it easier, it's kind of a win win
for the business and the employee. It's just not always
so great for the customer, who may feel like there's
a lot of hands in their wallet asking for tips.
Speaker 1 (02:58):
You and my twenty percent, honest week, My twenty percent
was always more than twenty percent, simply because I'm one
of those people that would tip in cash. Before we
got to this no tax on tips thing, I didn't, Hey,
why let the government take anymore? I would tip in cash.
So my twenty percent actually equated to more than twenty percent.
And yet by today's standards, I feel guilty at twenty percent.
(03:22):
I just I don't know, I feel I feel like
I've insulted somebody with that. And as a campaign and
I were talking about We've reached a time when even
vending at the Reds Ballpark you have to do that
through a machine, you have to use a card, and
the machines even want a tip. It's it has to
end somewhere, doesn't it.
Speaker 2 (03:40):
Yeah. I was asked to tip one set a self
checkout machine at Newark Airport and had to pick your
own strawberry farm. I mean those both seemed a bit crazy.
The thing is, though, a lot of people are not
tipping well, even in places where it is customary. For example,
only seventy percent of restaurant diners are always leaving a tip,
(04:01):
and that's really shockingly low among Gen z Ers. Only
forty three percent of Gen z Ers always tip at
a sit down restaurant. Only sixty one percent of Millennials
do so, versus eighty three and eighty four percent of
Gen X and boomers, respectively. Only thirty five percent of
Americans say they typically tip at least twenty percent at
(04:23):
sit down restaurants. This is where a lot of people
are not leaving as much as they should. The federal
tipped minimum wage is two dollars and thirteen cents an hour.
Restaurant wait staff are among the occupations that really rely
on tips. So there's been kind of a tipping backlash
in recent years, and a lot of workers are suffering
as a result.
Speaker 1 (04:43):
And I'm afraid, honestly that people are going to become
like me and get offended with this, this insistence on
twenty five thirty percent or whatever. And this is actually
even if it's untaxed, the tips are going to decline
even more simply because the concent roomer gets to the
point where they get offended. They get upset about being,
(05:04):
you know, seemingly coerced into doing something more, and so
they do nothing in return.
Speaker 2 (05:09):
Many have gotten to that point. Yeah. We found that
sixty three percent of Americans have a negative view towards tipping.
That includes forty one percent who say that businesses should
pay their staff better rather than relying so much on tips. Also,
forty one percent say tipping culture is gotten out of control.
Thirty eight percent are annoyed with those pre entered tip screens.
(05:31):
It's just hard to put the genie back in the
bottle because tipping is so commonplace in our society and
it's grown. I mean, it's not like you can say,
oh that one coffee shop is asking for tips. I
don't like that. I'm not going to go there anymore.
It's like they're pretty much all doing it now, and
we've seen it encroach into other areas. A lot more
service providers are asking for tips. I mean, whether it's
(05:54):
quick service counter restaurants, or someone coming into your home.
Maybe it's a repair person who flips that tablet around
and they're asking for a tip. I've even heard of
some doctor's offices asking for tips. I mean, certainly not everybody,
but it's caught on in a variety of places, and
it will be interesting to see where this goes in
(06:15):
the future. I just think with technology enabling it and
with businesses looking to view tipping as kind of a surcharge,
I think we're going to see more of it, not less.
But it's something people are annoyed about.
Speaker 1 (06:27):
And even the businesses themselves. By the way, this is
Ted Rossman on the Legacy Retirement Group dot Com flow
Lines EASi senior industry analysts with bank Rate. Even the
businesses themselves are soliciting tips in the way of surcharges
many times on, especially when it comes to food service stuff.
So they're looking for a tip for the weights person
and a payment of the bill, and then you're also
(06:48):
seeing a surcharge added because of you know, cost or
or whatever. It's just it's getting a little inconvenient for
all los. It really is the good news, I guess.
For you know, if you get older people coming in,
it seems like the older you get, the more likely
you are to still be somebody who wants to leave
a tip when you dine out.
Speaker 2 (07:09):
That's right. Income often predicts tipping, and generally the older
you are, the more income you have. It's interesting though,
because a lot of today's service industry workers are gen
z ers and millennials, so you would say maybe they're
not looking out for their own There's also a bit
of a social justice take that some have where they
(07:30):
say tipping is not fair, we shouldn't do it. I mean,
it's true, sadly tipping can be racist or sexist or
other bad things at times. It's not always the best system,
but it is the way of our country right now.
And if you're not tipping well and you have some
kind of principled stand you're hurting the worker, not the business.
And that's an important point to emphasize. There have been
(07:53):
some efforts to do away with tips, like the famous
restaurant tour. Danny Meyer a few years ago said, well,
tipping's not a fair wouldn't it be great if we
just raised prices and everybody got the same amount and
it was just more fair. And that may have been
well intentioned, but it largely flopped because diners couldn't see
past the higher prices. Even a lot of staff thought, well,
(08:16):
I could make more at the restaurant down the street.
Efforts to do away with tipping have not really worked,
so we're kind of stuck with it, for better or
for worse.
Speaker 1 (08:24):
Yeah, Well, when it comes to dining out, we as Americans,
we're kind of a one trick pony. I honestly, this
is the way we have always done things. This is
the way we always will do things. We've had restaurants where,
you know, somebody says, well, we just want people to
be able to eat, so pay what you think it's
worth and pay and they fold up. And there's always
these innovative, nice ideas that sound great on paper and philosophically,
(08:49):
but don't work because this is how we're used to
doing things. And I just, again, I worry that when
you attempt to change so much and and insist on
people accommodating you as the person who's getting as opposed
to you accommodating them as the person who's patronizing. I
(09:12):
swear to you that I think at backfires. Eventually, it does.
We're just that's not the way Americans operate.
Speaker 2 (09:18):
It's interesting to see also that tipping is starting to
catch on in other parts of the world where they
haven't been as apt to tip, like in Europe, for instance,
We're hearing about more businesses soliciting tips. It's not as
commonplace as it is here in the States, but it's
also not as forbidden as it was a few years ago.
I would track a lot of that back to these
two trends. Higher prices that are squeezing businesses as well
(09:42):
as consumers, so they are viewing tipping as a surcharge
of sorts. And then also the technology aspect that it
really is easy to embed this at the point of sale,
as Starbucks is a case in point. They unveiled credit
and debit card tipping on their payment screens a few
years ago, and they say half of customers are tipping
in those instances. That has to be way more than
(10:05):
the percentage that used to put bills or coins in
the old fashioned tip jar. So even as people grumble
about it, sometimes they're guilt tipping and leaving a tip
even if they didn't really want to.
Speaker 1 (10:17):
The guilt tip. I said, you know, the older you get,
the more you make, the better you seem to tip.
And I know we have to say tata here, but
I wanted to say tip. Women more likely than men
to tip.
Speaker 2 (10:30):
That's right. Yeah, in general women are better tippers. Older
people are better tippers. So if you're a wait staff
and you see a table of young men, and chances
are that may not be the best tip,
There was a time, believe it or not, Virginia, Yes,
there was a time when the market adapted to the marketplace,
whether that was from the consumer side or the provider side.
We've gone, we've gone backward over the years, whereas the
market really adapts more to the people who are involved
(00:24):
within it, within the running of it. I'm talking specifically
about wages, tipping specifically, which you know, ever since COVID
has just gotten out of hand, just gotten stupid, just
gotten crazy. I told you before the break there those
those means and stuff on Facebook, if you can't afford
thirty percent, don't dine out and so forth. I find
those offensive. I really do. They bug me because you know,
(00:46):
if you've got the money and you want to take
your family out for a special occasion or whatever, and
you can manage a twenty percent tip, then you've done
your part. But there are people out there that feel
as if they are offended because it's only twenty percent,
which baffles me.
Speaker 2 (01:01):
Uh.
Speaker 1 (01:01):
But we got to talk about the tipping culture right now.
Ted Rossman is a senior in at the industreet analyst
at bank Rate. Let me get him on here. Ted,
First of all, good morning to you. Let me start
with a good morning, because we'll need that.
Speaker 2 (01:12):
Hi there, thanks for having me ted.
Speaker 1 (01:15):
Well, you used to go get a job knowing what
you were getting and not demanding that the job accommodate you.
You were there to accommodate the consumer. And and we've
we've changed that now where people go in and it's uh,
it's as if you know you will, you'll have to
(01:36):
pay me what I want you to pay me, not
necessarily what I'm worth, but what I want you to
pay me, whether you're the employer or the consumer leaving
a tip. Do you know can you tell was there
a clock somewhere that says where we turned that corner
and change the way we looked at this.
Speaker 2 (01:52):
The pandemic brought a lot of shifts in the tipping world,
and parallel to that was technology making it easier for
businesses to solicit tips. It's not as cash centric anymore.
A lot of this is embedded in apps and payment terminals.
But I would really point to twenty twenty, the pandemic time,
as when a lot of things shifted. More invitations to
(02:16):
tip for takeout and counter service, whether that's at the
sandwich shop or the coffee shop. Or the food truck
or something like that. Also, that pandemic time was followed
quickly by the rise in inflation, And that's relevant to
tipping as well, because a lot of businesses have been
hesitant to raise prices more than they have, and they've
turned to tipping as kind of a hidden surcharge. It's
(02:39):
a way to funnel more money to their workers without
the company having to foot the bill. And because technology
has made it easier, it's kind of a win win
for the business and the employee. It's just not always
so great for the customer, who may feel like there's
a lot of hands in their wallet asking for tips.
Speaker 1 (02:58):
You and my twenty percent, honest week, My twenty percent
was always more than twenty percent, simply because I'm one
of those people that would tip in cash. Before we
got to this no tax on tips thing, I didn't, Hey,
why let the government take anymore? I would tip in cash.
So my twenty percent actually equated to more than twenty percent.
And yet by today's standards, I feel guilty at twenty percent.
(03:22):
I just I don't know, I feel I feel like
I've insulted somebody with that. And as a campaign and
I were talking about We've reached a time when even
vending at the Reds Ballpark you have to do that
through a machine, you have to use a card, and
the machines even want a tip. It's it has to
end somewhere, doesn't it.
Speaker 2 (03:40):
Yeah. I was asked to tip one set a self
checkout machine at Newark Airport and had to pick your
own strawberry farm. I mean those both seemed a bit crazy.
The thing is, though, a lot of people are not
tipping well, even in places where it is customary. For example,
only seventy percent of restaurant diners are always leaving a tip,
(04:01):
and that's really shockingly low among Gen z Ers. Only
forty three percent of Gen z Ers always tip at
a sit down restaurant. Only sixty one percent of Millennials
do so, versus eighty three and eighty four percent of
Gen X and boomers, respectively. Only thirty five percent of
Americans say they typically tip at least twenty percent at
(04:23):
sit down restaurants. This is where a lot of people
are not leaving as much as they should. The federal
tipped minimum wage is two dollars and thirteen cents an hour.
Restaurant wait staff are among the occupations that really rely
on tips. So there's been kind of a tipping backlash
in recent years, and a lot of workers are suffering
as a result.
Speaker 1 (04:43):
And I'm afraid, honestly that people are going to become
like me and get offended with this, this insistence on
twenty five thirty percent or whatever. And this is actually
even if it's untaxed, the tips are going to decline
even more simply because the concent roomer gets to the
point where they get offended. They get upset about being,
(05:04):
you know, seemingly coerced into doing something more, and so
they do nothing in return.
Speaker 2 (05:09):
Many have gotten to that point. Yeah. We found that
sixty three percent of Americans have a negative view towards tipping.
That includes forty one percent who say that businesses should
pay their staff better rather than relying so much on tips. Also,
forty one percent say tipping culture is gotten out of control.
Thirty eight percent are annoyed with those pre entered tip screens.
(05:31):
It's just hard to put the genie back in the
bottle because tipping is so commonplace in our society and
it's grown. I mean, it's not like you can say,
oh that one coffee shop is asking for tips. I
don't like that. I'm not going to go there anymore.
It's like they're pretty much all doing it now, and
we've seen it encroach into other areas. A lot more
service providers are asking for tips. I mean, whether it's
(05:54):
quick service counter restaurants, or someone coming into your home.
Maybe it's a repair person who flips that tablet around
and they're asking for a tip. I've even heard of
some doctor's offices asking for tips. I mean, certainly not everybody,
but it's caught on in a variety of places, and
it will be interesting to see where this goes in
(06:15):
the future. I just think with technology enabling it and
with businesses looking to view tipping as kind of a surcharge,
I think we're going to see more of it, not less.
But it's something people are annoyed about.
Speaker 1 (06:27):
And even the businesses themselves. By the way, this is
Ted Rossman on the Legacy Retirement Group dot Com flow
Lines EASi senior industry analysts with bank Rate. Even the
businesses themselves are soliciting tips in the way of surcharges
many times on, especially when it comes to food service stuff.
So they're looking for a tip for the weights person
and a payment of the bill, and then you're also
(06:48):
seeing a surcharge added because of you know, cost or
or whatever. It's just it's getting a little inconvenient for
all los. It really is the good news, I guess.
For you know, if you get older people coming in,
it seems like the older you get, the more likely
you are to still be somebody who wants to leave
a tip when you dine out.
Speaker 2 (07:09):
That's right. Income often predicts tipping, and generally the older
you are, the more income you have. It's interesting though,
because a lot of today's service industry workers are gen
z ers and millennials, so you would say maybe they're
not looking out for their own There's also a bit
of a social justice take that some have where they
(07:30):
say tipping is not fair, we shouldn't do it. I mean,
it's true, sadly tipping can be racist or sexist or
other bad things at times. It's not always the best system,
but it is the way of our country right now.
And if you're not tipping well and you have some
kind of principled stand you're hurting the worker, not the business.
And that's an important point to emphasize. There have been
(07:53):
some efforts to do away with tips, like the famous
restaurant tour. Danny Meyer a few years ago said, well,
tipping's not a fair wouldn't it be great if we
just raised prices and everybody got the same amount and
it was just more fair. And that may have been
well intentioned, but it largely flopped because diners couldn't see
past the higher prices. Even a lot of staff thought, well,
(08:16):
I could make more at the restaurant down the street.
Efforts to do away with tipping have not really worked,
so we're kind of stuck with it, for better or
for worse.
Speaker 1 (08:24):
Yeah, Well, when it comes to dining out, we as Americans,
we're kind of a one trick pony. I honestly, this
is the way we have always done things. This is
the way we always will do things. We've had restaurants where,
you know, somebody says, well, we just want people to
be able to eat, so pay what you think it's
worth and pay and they fold up. And there's always
these innovative, nice ideas that sound great on paper and philosophically,
(08:49):
but don't work because this is how we're used to
doing things. And I just, again, I worry that when
you attempt to change so much and and insist on
people accommodating you as the person who's getting as opposed
to you accommodating them as the person who's patronizing. I
(09:12):
swear to you that I think at backfires. Eventually, it does.
We're just that's not the way Americans operate.
Speaker 2 (09:18):
It's interesting to see also that tipping is starting to
catch on in other parts of the world where they
haven't been as apt to tip, like in Europe, for instance,
We're hearing about more businesses soliciting tips. It's not as
commonplace as it is here in the States, but it's
also not as forbidden as it was a few years ago.
I would track a lot of that back to these
two trends. Higher prices that are squeezing businesses as well
(09:42):
as consumers, so they are viewing tipping as a surcharge
of sorts. And then also the technology aspect that it
really is easy to embed this at the point of sale,
as Starbucks is a case in point. They unveiled credit
and debit card tipping on their payment screens a few
years ago, and they say half of customers are tipping
in those instances. That has to be way more than
(10:05):
the percentage that used to put bills or coins in
the old fashioned tip jar. So even as people grumble
about it, sometimes they're guilt tipping and leaving a tip
even if they didn't really want to.
Speaker 1 (10:17):
The guilt tip. I said, you know, the older you get,
the more you make, the better you seem to tip.
And I know we have to say tata here, but
I wanted to say tip. Women more likely than men
to tip.
Speaker 2 (10:30):
That's right. Yeah, in general women are better tippers. Older
people are better tippers. So if you're a wait staff
and you see a table of young men, and chances
are that may not be the best tip,
Popular Podcasts
Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.