Inflation could prompt more companies to add tip option to avoid raising workers' wages, expert says
You probably tip the person who cuts your hair. Should you do the same for the person cutting your lawn?
Customers are increasingly seeing a gratuity option on card payment machines in industries where tipping was never previously part of the cost, from auto shops to fast food giants like Subway and Domino's.
The phenomenon, dubbed "tip creep," is leaving a bad taste for some consumers, who have vented online about being asked if they want to pay an extra 15 per cent or more on top of the price of atakeout pizza,oil change orpropane tank refill.
"Tipping is spreading to a lot more places right now, so where we wouldn't have previously been prompted to tip, now it seems to be a lot more common," says Simon Pek, an associate professor at the University of Victoria's Gustavson School of Business whoresearches tipping practices.
As customers shift away from carrying cash, it's easier than ever for any business to ask for a little bit of extra money by adding the automatic prompt — what psychologists call a "tip nudge" — to their card payment machine.
Ten years ago, the tipping function on payment machines was "an afterthought" for most businesses, says Alex Povolotski, co-owner of PBH Canada, a provider of point-of-sale terminals and other merchant services.
Today, the tip function is automatically activated for bars and restaurants, but other companies are increasingly requesting it, too.
"Anybody — a bakery, a taxi driver, a car mechanic, a supermarket — can have it," Povolotski says.
'It's definitely a reward'
Gilbert Mofleh is one of those mechanics. When he and his business partner bought and took over The Car Clinic in Ottawa earlier this year, the card payment machine already had tipping activated — and they decided to keep it that way.
"As a mechanic, you get some people that do appreciate the fact that you worked on their car and they'll give you a little tip, but it's not very common," Mofleh says. "When it does happen, it's definitely a reward, like, you've done a good job."
He says few customers complain about the tip option, but he is careful to skip past it before handing over the machine if it's a particularly pricey job.
"I don't want a tip added to a $2,000 bill."
But why do Canadians tend to tip their hairstylist and not their mechanic?
Mofleh ponders the question for a second.
"If I had to guess, I would say because of the expense," he said. "When you go to the hairdresser, you're going to spend $100, maybe $200, maybe less … But if you were to put 15 per cent at the mechanic, you're spending an extra 300 bucks if [the price] was $2,000."
Option or expectation?
The contradiction creeps into other service industries, too — most people give a bartender a buck or two for serving a can of beer, but what about a liquor store clerk?
In private liquor stores in British Columbia and in some independent beer stores in Winnipeg, it's not unusual to see a tipping option at checkout — especially in places that share their licence with a hotel.
"We've always had the tip option as far as I can remember," says Arlene Guillemette, the long-time general manager of Tudor Liquor Store in Surrey, B.C., where tips are split among shop floor workers.
It sometimes gets a negative reaction from customers who don't normally shop at private liquor stores, but many regulars are happy to chip in, she says.
"There was a period when we had our machines break down, we got new ones and the tip option wasn't on and customers were actually saying, 'Hey, where's the tip option?'
"So we put it back on."
Both Mofleh and Guillemette say customers shouldn't feel pressure to tip at their businesses: it's an option, not an expectation.
"The most important [thing] is to tip your servers and your delivery drivers," Mofleh said. "It's not mandatory or important to tip if the [worker] doesn't rely on it."
The continuing creep of tip creep
There's limited research into what is motivating more businesses and sectors to opt into tipping, but Pek suggests the pandemic is a likely factor.
"There was a moment in time where people wanted to show appreciation for essential workers [through tipping]," he says, pointing out that many businesses stopped accepting cash because of hygiene concerns.
Inflation is another likely driver: faced with rising costs, employers might view tips as a way to address workers' demands for higher pay without actually increasing their wages, he says.
"We'll still see a lower sticker price, we'll still buy the product, and then adding 10 to 20 per cent after — it might be frustrating, but people still end up doing it, and that's often cheaper for a company than having to pay those wages."
Although a small number of businesses are moving in the opposite direction,ditching tips in favour of higher wages, Pek says he expects tip creep to continue into more and more businesses unless there is a wider public discussion about where, when and why we tip.
Povolotski agrees it's time for a rethink. He'd personally rather see workers be paid a living wage than rely on the tips that his point-of-sale terminals process.
"I just hope that the tipping culture tips — no pun intended — towards tipping for really good service, not by default, because then the meaning of tipping is lost."
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