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‘Tip for what?’

The woman, who goes by the name $yd on Instagram, explains in the viral video that she didn’t leave a tip because the exchange — handing over $2 for an empty ice cream cone — “was a transaction” and not “an active service.”

Many TikTokers who commented on the video shared their own experiences of this trend.

One person replied: “I purchased a gift card from Starbucks and the tip screen came up and I thought really?!! lol. Yes for making someone’s drink but to buy a gift card?!”

Another noted they were asked to tip “at one of the frozen yogurt places where you get everything yourself.”

One comment, which had over 62K likes (or TikTok nods of approval), simply said: “Tipping culture is frankly out of control.”

More and more businesses are turning to tip screens with automated cues that prompt customers to “Tip 15%, 20% or 30%.”

The automated nature of this process means that people are being asked to tip for transactions as simple as buying a bottle of water, checking a bag at the airport, or buying merchandise at a stadium — none of which typically require active or extensive customer service.

Americans are turning to social media to voice their frustrations about this so-called tip creep.

“I am 100% about tipping at restaurants,” one person replied to @poorandhungry_’s TikTok. “But the tipping culture has gotten out of control. They want it everywhere.”

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What’s really going on here?

Much of this debate revolves around fair wages, who is a tipped worker, what warrants a tip, and how much people should tip. Tip automation technology has blurred these lines, causing frustration among consumers.

The U.S. Department of Labor describes a tipped employee as someone who “engages in an occupation in which he or she customarily and regularly receives more than $30 per month in tips.”

Employers are only required to pay tipped employees $2.13 per hour in direct wages if the tips they receive bring their pay up to at least the federal minimum wage of $7.25 per hour or the state minimum wage if there’s a separate law in place. If not, the employer must make up the difference.

It’s very common in certain parts of the service industry — like restaurants or bars — for employees to make a very low hourly wage with the idea that tips will take them to or above minimum wage. Other parts of the industry have historically paid a minimum wage upfront.

One person who replied to @poorandhungry_’s TikTok went so far as to label the trend “tipflation.”

But that commenter may be onto something, say consumer researchers.

“It's absolutely the case that many employers prefer tipping to paying adequate straight wages to employees,” Ben Zipperer, senior economist at the Economic Policy Institute, told Business Insider. “The entire cost is paid for by the customer when workers have to rely on tips for wage increases.”

With inflation still high and labor costs rising, William Michael Lynn, a professor at Cornell University’s Nolan School of Hotel Administration, who has written over 70 research papers on tipping, told the Wall Street Journal it’s no surprise employers want to pass off this cost to someone else.

“Who wouldn’t want to get extra money at very little cost if you could?”

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About the Author

Bethan Moorcraft

Bethan Moorcraft

Reporter

Bethan Moorcraft is a reporter for Moneywise with experience in news editing and business reporting across international markets.

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