HomeBusinessPandemic-era tip hike is over, inflation could be to blame

Pandemic-era tip hike is over, inflation could be to blame

If you’re still tipping servers and other service workers bigger than before the Covid-19 pandemic, you’re now in the minority.

In most cases, Americans now say they tip less regularly than at the start of the pandemic, and less often than in 2019 before the pandemic began. That’s according to data released Monday by personal finance website CreditCards.com, which surveyed 2,610 American adults about their tipping habits last month.

The percentage of respondents who said they always tip in a sit-down restaurant is now 73%, up from 77% in 2019. Similarly, 57% of respondents said they always tip their delivery person, up from 63% in 2019. And only 43% say they always tip their taxi or carpool drivers, up from 49% in 2019.

These declines particularly stand out from mid-2020, when most Americans said they were inclined to reward service workers — like waiters, food delivery people, and taxi or Uber drivers — many of whom lost their wages at the height of the pandemic and faced a higher risk of exposure to the coronavirus due to the nature of their work.

But Americans’ plans to become more generous tippers can now be seen as a case of the “best-laid plans” failing to pan out, says Ted Rossman, senior industry analyst at financial services firm Bankrate, owner of CreditCard. .com. “Sometimes what people say and what they do is different.”

Rossman identifies rising inflation as “something that reduces people’s purchasing power and, perhaps, causes them to tip less.” With the skyrocketing cost of living in the United States, people might be more inclined to spend less. And when restaurants raise prices to compensate for supply chain difficulties, consumers might try to reduce those costs by tipping less, Rossman says.

Persistent labor shortages in the country could also play a role – short-staffed businesses often face significant challenges in providing quality service – although Rossman calls this theory “more than guesswork”. “.

A potential economic downturn over the next year could also drain Americans’ tipping practices, but Rossman notes there’s still plenty of pent-up demand for travel and restaurants after years of the pandemic put people’s plans on hold. . And if people are willing to spend on food and entertainment during a recession, service workers will likely be tipped in the process, he says.

Interestingly, according to findings from CreditCard.com, one specific group of service workers actually receive more tips now than in 2019: hairdressers and barbers. Rossman suggests this could be due to people’s familiarity with their hairdressers and barbers — a rapport that’s less often developed with waiters, delivery people and other service workers.

The results also revealed some notable tipping habits of Gen Z, who will soon become the most populous generation in the world. On average, only 52% of Gen Z respondents said they always tip at sit-down restaurants. But those who tip do so a lot, at an average rate of 26% of their bill – significantly higher than the median percentage of 20% in the report.

Rossman says Gen Z respondents are the age group most likely to tip better after receiving a tip suggestion from an establishment, such as a numeric prompt to choose a tip percentage on a payment screen .

That might help explain the generation’s boom-or-bust approach to tipping: “There’s that kind of implicit societal pressure there,” Rossman says.

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