Dispatches from the Potomac#46 | Tipping Culture in the United States

This is a translation of an article originally written in August 2023 for publication in the October 2023 edition of the Marubeni Group Magazine, M-SPIRIT.

General Manager, Washington DC Office, Marubeni America Corporation    Yoichi Mineo

The History and Controversies of Tipping

Comparing daily life in Japan versus the United States, various differences are readily apparent, but one that comes to mind given recent trending topics is tipping. While the concept of giving a gratuity is not unheard of in Japan, actually doing so is limited to very particular circumstances where such a gesture is considered necessary, hardly approaching the frequency of giving and receiving tips in the U.S. Despite tipping having embedded itself in the U.S. cultural fabric, Americans themselves appear to disagree with one another over whom and how much to tip. An internet search of “tipping in the United States” produces a startlingly high number of websites dedicated to discussing such points of controversy.

The first time I myself encountered this tipping culture was shortly after I arrived in the United States for my first assignment in the country 24 years ago. An American friend I had made back in Tokyo treated me to dinner in New York, and I still remember his muttered complaint when it came time to pay the bill: “In the U.S., you always have to add a 15% tip, no matter how bad the service was.” Regardless of the truth, or lack thereof, of this statement, this friend of mine did not seem to have a particularly positive view of the practice of tipping. A tip is, after all, an additional expense, and I believe he wanted to express the dissatisfaction he felt at the perceived obligation to part with a certain additional amount of money which, though framed as reflective of the quality of service, is paid regardless of how poor said service actually was.

There are various theories about the history of tipping in the U.S., but the prevailing one is that the practice was initially imported from Europe in the first half of the 19th century. The theory purports that Americans who had seen the custom of tipping on their travels in Europe, which was flourishing at the time, started tipping to show their social and economic status, or that Europeans who practiced tipping immigrated to the United States, bringing the custom with them. One factor that led to tipping spreading far and wide within the U.S. was the Civil War. In its aftermath, a movement began to employ formerly enslaved, now free persons—many of whom worked in the entertainment and leisure sector in such capacities as waiters, personal caretakers, and railroad baggage handlers—as cheaply as possible. Their employers, as they had originally done with those they enslaved, attempted to pay these freed persons zero fixed wages, with all income instead coming from tips directly given by customers.

Movements against the spread of this kind of tipping began to emerge, backed by the idea that the act of giving and receiving tips was un-American; rather, true patriots should take pride in the lack of (overt) class structures in U.S. society, compared to the hierarchical state of affairs in Europe that originally gave rise to tipping there. In any event, these movements soon gained traction, with seven states passing laws banning the practice as the U.S. entered the 20th century. William Taft, who would become the 27th president, famously declared during his 1908 campaign that he would henceforth not give tips in barbershops. Despite the anti-tipping movements, the custom continued to spread around the country. By 1926, all the anti-tipping laws passed by individual states had been struck down in the courts as a violation of the Constitution, and so tipping continues to this day. At present, the U.S. federal hourly minimum wage is set at two levels: $7.25 for employees who do not receive tips, and $2.13 for those who do. While employers are legally obligated to pay the difference between a tip-receiving employee’s wages and the non-tipped minimum wage if an employee’s received tips do not reach a $7.25 per hour equivalent, there have been cases where this obligation has not been met, with the existence of two separate minimum wage levels now considered by some Americans to be problematic.

Tipping: An Understandable Custom When Coexisting with Special Service

The practice of tipping has not simply remained in the U.S.; rather, it has increased in prominence, with tipped amounts climbing ever upward these past few years. One factor in this rise is the COVID-19 pandemic. One possibility is that, as the pandemic raged, clients voluntarily increased the amount they tipped service-sector employees as an incentive for them to take and remain in jobs that involved a high amount of contact with customers. Indeed, the U.S. government stimulus checks and other pandemic-era benefits may well have enabled such clients to loosen their purse strings, which also contributed to higher tips becoming the norm. Another possibility lies in the accelerated transition to card reader payments, which were encouraged to reduce the risk of close contact between customers and employees. These days, customers making a card reader payment at an American fast-food restaurant or similar establishment will almost always be prompted onscreen to pay a tip of about 15–25% (and sometimes more) between inserting or tapping their card and completing the transaction. Even in stores where, prior to the pandemic, the assumption was that services eligible for tips were not provided in the first place, the introduction of card reader payments has resulted in tips being requested—and often actually paid—without the hassle of the checkout clerk verbally needing to prompt individual customers.

I myself encounter this situation every morning, when I order a coffee from a local chain near my office and pay for it, including a small tip, using a card reader. Even though no table service accompanies my purchase, as I order my drink to go, the baristas always greet me by name and, even when the shop is crowded, make and hand me my regular order of an Americano before other orders. If coffee chain baristas did this in Japan, they would be frowned upon by other customers for singling someone out for special treatment, no matter if the customer was a regular, and the situation could potentially blow up into a major issue. Here in the U.S., however, no one bats an eye. That sort of generosity and consideration for regular customers seems to coexist well with the custom of tipping. But if someone walked into a coffee shop out of the blue, received no special service, and was then prompted for a tip by the card reader at the end of their transaction...well, then I would find it understandable, as my American friend’s reaction to tipping showed, to see their doubts about the practice grow.