Why Tipping Is Everywhere

Update: 2024-08-29

Digest

The podcast delves into the phenomenon of tipping, which has expanded beyond traditional service industries like restaurants and into everyday transactions. The conversation explores the reasons behind this shift, including technology, the pandemic, and worker shortages. Technology has made it easier to add tip screens to checkout systems, while the pandemic increased gratitude for essential workers and the worker shortage has made tipping a way for businesses to attract employees. The podcast also discusses the potential risks associated with the increasing reliance on tipping, including wage disparities between tipped and non-tipped workers, vulnerability to customer generosity, and the potential for businesses to shift the burden of paying wages onto customers. The conversation highlights the potential consequences of a proposed no-tax-on-tips policy, arguing that it could lead to even more tipping and further ingrain the tipping system, making workers more vulnerable to fluctuations in customer generosity.

Outlines

00:00:00

Tipping: A New Era of Confusion and Angst

This segment explores the phenomenon of tipping, which has expanded beyond traditional service industries like restaurants and into everyday transactions. The conversation delves into the reasons behind this shift, including technology, the pandemic, and worker shortages.

00:16:27

The Risks of Tipping

This segment discusses the potential risks associated with the increasing reliance on tipping, including wage disparities, vulnerability to customer generosity, and the potential for businesses to shift the burden of paying wages onto customers.

00:26:21

Tipping and its Impact on Wages and Worker Rights

This segment examines the ongoing debate surrounding the impact of tipping on wages and worker rights. It explores the potential consequences of a proposed no-tax-on-tips policy, arguing that it could lead to even more tipping and further ingrain the tipping system, making workers more vulnerable to fluctuations in customer generosity.

Keywords

Tipping

The practice of giving a small amount of money to a service worker as a gratuity for good service. Tipping has become increasingly prevalent in recent years, expanding beyond traditional service industries like restaurants.

Tip Screen

A digital interface, often found on tablet-based checkout systems, that prompts customers to add a tip to their purchase. Tip screens have contributed to the expansion of tipping into new areas.

Wage Theft

The illegal act of an employer withholding wages from their employees, including tips. This can occur when businesses pocket tips intended for workers.

Tipless Restaurant

A restaurant that does not allow tipping and instead incorporates a higher base wage for all employees into their pricing structure. This model has been experimented with but has faced challenges due to customer resistance.

Wage Disparity

The difference in wages between tipped and non-tipped workers, which can be significant and contribute to income inequality.

Customer Generosity

The willingness of customers to tip service workers, which can vary greatly and impact the income of tipped workers.

No-Tax-on-Tips Policy

A proposed policy that would eliminate taxes on tips received by workers, potentially leading to increased tipping and further ingraining the tipping system.

Q&A

What are the main reasons behind the explosion of tipping in recent years?
The expansion of tipping can be attributed to technology, the pandemic, and worker shortages. Technology has made it easier to add tip screens to checkout systems, while the pandemic increased gratitude for essential workers and the worker shortage has made tipping a way for businesses to attract employees.
What are some of the risks associated with the increasing reliance on tipping?
The risks include wage disparities between tipped and non-tipped workers, vulnerability to customer generosity, and the potential for businesses to shift the burden of paying wages onto customers.
What are the potential consequences of the proposed no-tax-on-tips policy?
Economists argue that this policy is unfair and could lead to even more tipping, as workers would be incentivized to receive a larger portion of their income through tips. This could further ingrain the tipping system and make workers more vulnerable to fluctuations in customer generosity.

Show Notes

Tipping, once contained to certain corners of the economy, has exploded, creating confusion and angst. Now, it is even becoming an issue in the U.S. presidential campaign.

Ben Casselman, who covers the U.S. economy for The New York Times, cracks open the mystery of this new era of tipping.

Guest: Ben Casselman, a reporter covering the U.S. economy for The New York Times.

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