IN SIMPLE words, a tip is defined as a voluntary payment of an amount of money, customarily offered by a customer to a service provider or worker, such as in the hospitality area, for the services they have performed, in addition to the basic price of the service. There are good social norms or standards that encompass the principle of tipping, such as how well one is served, including whether the order (for food) is correctly taken, and whether the server checks on the customer’s satisfaction with the food served. Tipping is normally practised for the wait staff at sit-down restaurants. Therefore, one does not normally see tips practised in fast-food restaurants.

The purpose of this article is to examine the background and causes of the gradual shift in tipping principles and practices, all around the world, which has now given rise to social discord and dissatisfaction and fuelled controversies.

Historically speaking, the origin of the tip can be traced to the 18th-century practice when a tip was given as a gratuity to a domestic servant by his or her master. Mark Twain commented on the tipping culture, saying, ‘We pay that tax knowing it to be unjust and an extortion.’ In 1915, six US States outlawed tipping, only to bring it back eventually.

It may be relevant to look into the tipping industry in order to grasp its economic magnitude in the North American region. In terms of economic magnitude, in the USA, for example, tipping income in 2010 only in restaurant services, calculated most conservatively, was estimated at $46.6 billion a year. Translated into today’s dollar value, it will be a few hundred billion-dollar industry now. However, tipping is common in other industries as well. During the early 1910s, it was estimated that five million workers in the United States, or more than 10 per cent of the labour force, had tip-taking occupations. Over time, tipping for services has assumed a significant place in urban economies, which has impacted social norms and led to evolving patterns in real-life practices in society.

Is tipping a universal culture? It should be pointed out that, in view of the inconsistencies in its practice, its vulnerability to trickery and theft, about half the countries in the world avoid tipping practices. It includes Japan, Singapore, Australia and many countries in Europe. In fact, tipping as a social practice has come under closer scrutiny in the past decade and has made headlines in the print media since 2014.

Let us take a quick look at the issues under debate regarding tipping culture in the contemporary era. In a recent TED Talk, Bruce McAdams, an industry veteran in Canada, explains his theory that tipping is a harmful practice. He says tipping promotes discrimination and causes workplace inequality. He argues that cooks do not usually get a share of the tips income. It is not even an incentive to provide better service since studies show that most people tip based on social habit and practice. Most of the countries that practise tips resort to a wage policy that is well below the standard minimum wage, and thus the rest is compensated by tipping, a purely arbitrary social convention. He has preferred the European model used in the food and beverage industries. In this model, many, if not most, restaurants charge a service fee on the bill. Many Southeast Asian countries have also embraced this system. This system enables a higher income for the concerned staff. Many, however, support the free-market approach to tipping. They think the free-market approach leads to better service. And their argument is based on the belief that any other methods of compensating staff would come at the expense of raising the prices of commodities considerably.

Over the past years, many American restaurants facing an increasing degree of backlash against the prevalent tipping practice have done away with it altogether. One restaurant owner in San Diego has argued that eliminating tips and instead adding a service charge to each bill — similar to what many European restaurants do — resulted in dramatic improvements in service and the food. The restaurant was able to distribute the money more fairly, which reportedly promoted staff unity and happiness. Some recent data based on direct interviews with servers shows that popular restaurants find it difficult to attract experienced servers because they are so used to raking in huge tips. Clearly, different systems in different regions render this tipping culture more difficult to unify into more rational arrangements. Thus, the idea of adopting a universal system takes precedent over the many prevalent ad hoc systems.

The tipping culture and practice that take root in a voluntary gratuity payment system have gradually been replaced by a culture wherein customers are subjected to paying a mandatory and predetermined percentage of the billing amount. Many raise objections to such a practice on legal grounds. There is also an ethical aspect to this unfair practice. People who frequent restaurants believe that tipping as a method of performance incentive is simply an illusion. They have argued that, on average, tipping rates don’t affect service and vice versa. And with the practice of tip pooling, the money does not necessarily go to the server anyway. A major argument advanced by regular restaurant goers is that one should not have a problem tipping well when the service is enjoyable and rendered with care, but s/he should not be expected to tip the server when s/he is nowhere near available. And there are such situations occurring during the busy hours of many restaurants every day.

Tipping should not be a cause for or a means to ensure great service. In principle, excellent service should be taught and instilled and should be present at all times. If more people thought of service as a priority and tips as the effect of that level of service, we would be better off.

The real issue underlying tipping is that our societies should be working to address that first — a fair wage — and then, if we choose to, with free choice and no public shaming, we can leave a tip for someone when we are impressed or have sharable change. In some major cities, like Vancouver, some restaurants ensure staff salaries are above minimum wages and are provided with minimum benefits. They have factored in all overhead costs and benefit payments into the menu prices, so customers simply pay the price. Such experiences lend support to the wisdom that conversations should be about wages, not tipping.

A few words must be said about tipping rates that have been mysteriously increasing in the past two decades. There are no legal, moral or rational reasons for these rate increases. Restaurants have always increased menu prices to adjust to the rising costs of food, and that is understandable. But arbitrary tips increasing with the menu price increase only add insult to injury. Today’s restaurant goers feel that with the new tipping culture, they are essentially feeding greed and a false sense of entitlement as a cultural norm.

Two factors have been identified as responsible for the push for increased tips. First, the pandemic has generated public sympathy for the restaurant industry, which suffered a major loss from the pandemic; and second, the pre-programmed electronic credit and debit card payments system forces customers to tip more. These preprogrammed devices bind the customers to pay a predetermined percentage as tips that demand as high as 25 per cent of the bill. As a result, we all face a new phenomenon called ‘tipflation’.

While the concept of gratuity is firmly established, what is commonly believed is that customers prefer to have control rather than yield to the pressure tactics of a predetermined percentage payment. Thus, again, it is a choice between a voluntary choice and a mandatory payment.

Another recent phenomenon relates to requests for money from ordinary buyers for causes that are never considered as a tipped service. For example, McDonald’s asks the customer to pay voluntarily for the charity or social work McDonald’s itself is promoting. It is strange that these corporate bodies resort to such a tactic despite their own CSR funding programmes. Once again, it is a case of ‘tipflation’, so to say.

Let it be known, once again, that tipping is supposed to be a reward for excellent service, but studies have shown that the vast majority of people are motivated more by social pressure. Today’s digital POS (point of sale) systems aren’t the only way businesses will request tips, but they are one of the newest way and one of the hardest to refuse. You are forced to declare your level of generosity or cheapness to anyone within eyesight, including your server. The tip prompts are also designed to push the customers into not just leaving a tip but leaving an amount that the business suggests. That’s how you might get a suggestion to leave an extra $3 for a $4 chocolate croissant, which is effectively a 75 per cent tip. Having to make a tip choice in order to complete an order forces the customer to opt out of a process that used to be opt in.

Barring a rebuke of tipping culture or laws forbidding the practice — both of which are unlikely — you can probably expect to be asked to tip at more places for higher amounts. The question we should consider is — should we comply? Well, what should a customer do when the tablet asks them to tip? Experts on etiquette suggest that, if you are asked to tip for a service that does not traditionally ask for tips, there is nothing wrong with saying no. For services that are traditionally tipped, people should leave at least what is considered an appropriate amount. They can leave more if they can afford it, but they should not feel guilty if they cannot. The core lesson is that it is really important not to give into guilt.

The issue of whether tipping has gone too far depends on how we see it. Most see it as social pressure, especially with online payments or the new POS that leave them little option for tipping. With all the pros and cons of tipping, we can only keep debating whether we should need it as a voluntary act of gratuity or as a compulsive system as practised now. For now, the customers are on the losing side.

Humayun Kabir is a former United Nations official.