Tipping in USA in 2024 (How to tip in USA)

According to research, most Americans (about 72%) say that tipping is expected in more places today than it was, for example, five years ago. That said, relatively few are sure when and how to do so. Only about a third say it is easy to know whether (34%) and how much (33%) to tip for different services. There is also no consensus on whether tipping is more of a choice or an obligation for consumers. The majority (49%) say it depends on the situation, suggesting no rules or expectations exist.

In the US, for example, it is now suggested to leave a tip not only where customers traditionally expect it, but also in businesses such as retail, online booking, or automatic car washes. Interestingly, the term ‘inflation’ has even emerged for this phenomenon, where the payment to workers who provide goods and services becomes higher due to tips (similar to inflation, which causes the prices of goods and services to rise). And this is where consumers have doubts. Some customers note that they leave a tip anyway to avoid feeling guilty and embarrassed in front of the employee.

It is known that once tipping for a certain service becomes a social norm, it will not go away even if the conditions that created it cease. Tip percentages tend to increase as well. During the pandemic, average tips for offline and online purchases rose sharply. Since then, they have fallen slightly but remain well above pre-pandemic levels, even as inflation has increased.

Research shows that tipping depends on age, income, and other factors. For example, Americans with higher incomes tend to tip more - on average, it's 18% or 20% for a meal at a sit-down restaurant. For middle- or lower-income people, the figure is 15% or less. Older Americans aged 65 and older are slightly more likely than younger people to tip 15% or less.

Perceptions of tipping are similarly influenced by both a person's age and income. In the U.S., younger people are more likely than older people to perceive tipping as an obligation. This perception also increases with income and education.

Interestingly, when asked how restaurant tips should be distributed, the vast majority of Americans (72%) believe that the fairest way would be for each waiter to keep all of the money received. Far fewer say the fairest way would be to pool tips and then divide them among all staff (14%) or among all waiters (13%).

Restaurants often require waiters to share tips with bartenders, chefs, other waiters, other employees, and the owners themselves. It should be said that in the United States, tip payment mechanisms are regulated in detail by state and federal laws.

If a business uses an electronic tip system, the distribution process itself is automated and does not require manual work and time commitment from the manager, or the business owner. In particular, the Bill&Tip application allows you to set up the process once based on the tip distribution mechanism that is convenient for the business (personal tips, general tips, distribution between teams in a certain proportion, distribution based on hours worked, etc.), and then the system does everything by itself.

It seems that about online shopping, tipping seems to make sense. If earlier we had to go to the supermarket, choose the goods, pay and bring them home ourselves, now all this will be done for us by a shop employee and, naturally, we will readily leave a tip as a gratitude for such a saving of our efforts and time.

Tipping should be a reward for excellent service, with American market research showing that in some situations most people are motivated by social pressure. They are expected to tip, and so they do not want to deviate from the long-established norm, especially if other people are watching and possibly judging them.

Researchers of consumer decision-making and marketing, state that just asking customers to leave a tip may be enough to encourage some of them to do so, especially if they have already, for example, purchased a restaurant or café. This is called wanting to be consistent with their previous decision.

Having said that, it seems to us that the topic of tipping is a sensitive one for all parties (those who are tipped and those who tip).

In addition to traditional ways of asking for tips, businesses today have the option of using digital systems for this purpose - it's one of the newest ways that customers find it hardest to refuse. Unlike tip jars at the till, which are easy to ignore.

Etiquette experts point out that if you are asked to tip for a service for which tips are not traditionally asked, and you don't feel that you had an amazing experience in the process or the service was extremely helpful, there is nothing wrong with refusing. However, it is important not to give in to guilt. For services that are traditionally tipped, on the other hand, people should leave at least the amount that is considered acceptable. They can leave more if they can afford it, but should not feel guilty if they cannot. Also, companies should observe etiquette. This means making customers feel welcome and comfortable, rather than feeling a judgemental stare when they don't leave a tip or leave a smaller-than-expected tip. Only when a customer is satisfied with the service will they feel a sense of gratitude and therefore the tip will be taken for granted.

Tipping can also be a way for some businesses that are struggling with costs, inflation, and difficulty finding staff to reduce such costs and attract more skilled workers. In addition, there is a perception that tipping is largely an underground economy, especially when tips are left in the form of cash that is difficult to trace. Therefore, in this respect, electronic tip systems can provide a new source of data, a tool to comply with legislation and preserve the reputation of both businesses and workers.

Through tipping, workers receive a pay rise, even if their base salary remains the same. For example, hotels in the US are actively using QR codes to make it easier for customers to leave tips. Increasing the availability of the ability to pay tips electronically is a great solution when a company doesn't have the budget to actually increase wages and thus attract the best of the best in the labor market. Companies that are not ready to use modern electronic tip systems already in the short term risk losing out to competitors who implement similar innovations. After all, by doing so, competitors become the very business that pays more through tips from guests.

However, as noted above, when it comes to a tip that a customer leaves just to avoid feeling guilty, the effect on the business can be negative in the long run. Try it on for yourself, where would you return more willingly - to a place where tipping makes you uncomfortable and misunderstood, or to a place where you enjoy the process?

For most people, tipping is all about service. Across demographic groups, a majority of Americans say they oppose automatic tipping for service. That said, younger people are less adamant about this issue than those aged 65 and older.

For most Americans (77%), tipping is a matter of the quality of the service they receive. It is the primary factor in deciding whether and how much to tip. It looks like a universal answer that is relevant not only for the US but also for many other countries around the world.

That's why we believe that businesses should always sense the line that shouldn't be crossed in their customer relationships, to be primarily focused on high levels of service, providing a unique experience, and building long-term relationships with customers. This is the only way you can expect them to willingly and happily tip your team, no matter what industry you do business in.

The trends and innovations in the US market are of great interest. We will continue to see where they will transform and how consumer behavior will change in the future.

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Taking care of you and your business,

Bill&Tip (Bill and Tip) Team.

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