Do You Tip Less in a Tough Economy?
Now that the economy is even tighter, gas is obscenely costly, and everything from milk to repair service has shot through the 
roof will you tip people less in an attempt to pinch a penny? Over the past months, Mike did an extended series on Tipping Etiquette which was enlightening and fun. I recently heard on the news that people who depend on tips for their livelihood are really feeling the pinch. I wondered about that and wanted to learn more.
According to the Pensacola News Journal their article “Economy takes bite out of servers’ tips” says:
Even in the best of times, workers who depend on tips for a substantial part of their income – food servers, bartenders, cab drivers and hairdressers often struggle to keep afloat.
AdvertisementBut as gas prices, food prices and retail prices attest, these are far from the best of times. Folks are holding tighter to their wallets as the economy gets rockier.
Just ask your favorite waiter or waitress.
“Average tips used to be 15 (percent) to 20 percent (of the bill),” said Linzy Butcher, 19, a waitress at two area restaurants – Ollie’s Neighborhood Grill in Milton and TGI Friday’s in Pensacola. “Lately, it’s like 12 percent. People tip a little bit less.”
If you think about it, that is like an instant 3-7% decrease in salary at a time where the cost of everything is rising. Of course that’s not the only factor at play. As prices go up, you are typically calculating your tip on the grand total which is most likely higher now than just one year ago.
Of course I have to say I’ve never really understood tipping. Why can’t we just pay people for a service? Michael Russnow at The Huffington Post makes some great points in “Tipping Ought to be Abolished: Let’s Just Pay People More Like the Europeans Do”
The list goes on but rather than perpetuate a group of people who invariably feel stiffed — even when someone gives them a 15% tip — wouldn’t it simply be better to just pay the workers a commensurate salary and do away with tipping entirely? This is the case in many European countries, where the service is “compris.” In other words built into the price. Some Americans still don’t get the hang out of it and insist on leaving a full-fledged tip as if they’d be burned in hell for neglecting to do so, even as the locals dining next to them either leave nothing or just small change as a tiny reward.
I’d say amen to that. It’s near impossible to figure out whom to tip and how much anyway even with Mike’s series.
Another thing that got me thinking was – how does this affect the gay community? More? Less? The same? A question that comes to my mind but for which I could find no statistics or comments is — how does this downturn affect gay travel hotspots like Provincetown, Key West, etc.? Those economies rely on travel and people eating out. The folks working those jobs rely on tips. What might that ripple effect be? My guess is it’ll follow the general downturn, but that is just a wild guess.
Do you work in a job in which tips make up a large portion of your income? If so, how has the recent economic downturn affected you?
Paula Gregorowicz, owner of The Paula G. Company, works with women who are ready to create their lives and businesses the way the want rather than how they were told they “should”. Ready to learn how to achieve success on your own terms? Download the free 12 part eCourse “How to Be Comfortable in Your Own Skin” at her website http://www.thepaulagcompany.com.
Paula: I still tip 20% at restaurants even with the economic crunch. At one time in my life (actually a few times since turning 18), I made my living waiting tables and service workers depend on tips. Great post and I bet you’re right… the economy is probably making people more stingy about what they leave behind for gratuity.
A couple of years ago, Fortune magazine introduced another economic indicator: our national appetite for steak. The writer argued that this is the best gut check on the economy and he reviewed the stocks of publicly traded steakhouses and how they’ve all seen some sort of decline in past few years. Outback has had a 5% decline in same-store sales and Smith & Wolensky can’t even get an analyst to cover their stock. Morton’s and Ruth’s Chris, which both finally went public, has had a hard time getting investors to bite.
Not sure how this all will impact the gay vacation destinations… I’m sure people are thinking twice about how they spend their money. I’m sure more and more are choosing to stay closer to home.
Excellent post! Many people think that because I own my massage business I shouldn’t accept tips; I set my own rates at what I think is both competitive and fair. However, my clients do tip. And it’s great! (Never expected but always appreciated.) Not all of them do, and some of them never have, but a large percentage are very generous and I can end up with an unplanned $200 a month. That’s like doing three extra hours of massage! Not only am I getting less bookings to begin with now, I’m also getting more cancellations as people realize the budget is a little tighter. On top of that, the tips have dwindled. My average tip has gone from $15-$20 to $10. Not a huge deal, since I don’t put tip money in the budget as a “planned” income, but that could be a car payment a month and/or make a significant dent in our outstanding amount owed!
If I can’t afford to tip, I can’t afford to eat out. Sometimes I order a little bit less (water, lower priced entree) so I can tip a little bit more (20% of what I would have ordered).
But we don’t eat out much anyway because we really can’t afford it.
Oh, and I agree with Nina. I definitely still do tip! However, we eat out a lot less, so ultimately we spend less in tips than we used to.
I tip 100% based on service quality whether the economy is bad or good. I’ll tip up to 25% for great service, but only tip 10% if the service is atrocious.
Thanks for all the comments! Wow I love it 🙂
I have to say I am more like Trent. If they are good, I’m happy to tip 20-25%. If you are so-so, you’ll be lucky to get 15% and if you suck..well 0-10%. It also depends on the type of restaurant I am in. If it is an upscale restaurant I expect a lot and am willing to tip based on it. If it is a local diner, I just tip 15-20% because I figure if you’re working in a diner..that is low paying, the tips are small, and unless you are totally rude I will tip.
Of course the economy & my business start up has severely limited my eating out experience lately…so in that respect, I am tipping less.
I end up only eating out at the type of restaurant with tipping maybe once or twice a year.
I always prefer to tip decently (at least 15%) rather than go cheap on the waitstaff. I don’t want to perpetuate the myth that women are bad tippers.
My personal experience is that I am going out to eat less, or when I do go, I go to a place where tipping is not an option (Chipolte, Noodles and Company, Panera). I still tip 20% when I do go to resturaunts with waiters. I have never worked a tip-earning job, but my friends have, and I know they get taxed as though they get 18% tips.
As for the gay community as a whole? I have no idea. I thought I read somewhere that gay “hotspots” are getting less tourism because more people feel they don’t need to travel to find a supportive gay community- which I hope is true, in a sense. I like the idea of gayer communities in America, but since I haven’t been a part of them, I don’t feel a mourning sense of loss if fewer people go to San Francisco.
I eat out less but tip the same (20%).
This isn’t right. The income drop for servers is much larger than that.
If tips go from 18% to 12%, then they’ve dropped by a third.
If they make up half your income, then your income has dropped by a sixth.
(I still eat out a lot, but my financial health is good these days.)
I just googled this topic after a frustrating day at work. I work at an upscale restaurant and May should be our busiest time of year with local events and college graduations, however it isn’t. My managers are still staffing on last years numbers and it’s too many servers. Not only are we seeing less tables, but the tables that we see leave less in tips. Getting 20% to me now, is worth a little happy dance, whereas before I expected at least 20%. My restaurant also makes us claim 100% of our tips (easy to do since nearly no one pays in cash anymore) so I see NONE of my $2.13/hour and it isn’t enough to cover my taxes anyway…Come April next year, I will have to pay about $2000 to Uncle Sam.
I don’t know. I suppose I should get out of the industry if it’s so awful now, but I’m a college student and I just so loved to do this. I love my customers and I love giving people a great experience…but when I’m working over 40 hours a week on my feet and have only about $450 to show for it…something is very wrong and I just can’t afford that.