The tipping point of tip-flation: Has it gone too far? 

Many Canadians are tired of the recent rise in tipping. A study by the Angus Reid Institute found that 83 per cent of Canadians believe too many places are asking for tips these days. The same survey found this attitude in at least three-quarters of participants across all Canadian regions and demographics.

While most Canadians understand that workers rely on tips for income, they believe this shouldn’t be the case. The Angus Reid Institute survey also found that 86 per cent of Canadians believed tipping allows employers to underpay their employees, and 59 per cent think employers should pay more so tipping can be eliminated.

This is a complex problem. Among inflation and rising costs, many Canadians feel unable to keep up with a greater demand for tipping. At the same time, some workers rely on tips themselves to earn enough money to survive. Although there isn’t recent available data to know how much of certain workers’ income is based on gratuities, the 15 per cent tip standard can add a noteworthy amount to a worker’s hourly base pay.

Read ahead to learn what created this problem and what can be done now that it’s here.

Where did tipping come from?

Tipping is not a new phenomenon in North America. Although the origin of tipping culture isn’t clear, it has been controversial since its widespread adoption in 19th century America. The controversy began almost immediately. Wealthier people with deep pockets had no objection to tipping, but working-class individuals saw the practice as anti-American.

Tipping was especially unpopular among more forward-thinking Americans, as the practice had roots in slavery. While the origins of tipping in Canada are more uncertain, it has been going on for many decades. What has remained the same, though, is the controversy.

What’s behind tip-flation?

Angela Garcia, a boutique hotel manager in Toronto, described tip-flation, or tip-creep, as the growing expectation to tip higher and tip in environments not traditionally associated with the practice. Although there have always been reluctant tippers, Garcia said she has seen a larger pushback from customers starting after 2021. Garcia explained that she thought this was for two reasons.

Firstly, Canadians’ expenses are rising. In 2022, Canada experienced its biggest jump in inflation since GST was introduced. Secondly, she felt that point-of-sales systems in many places are programmed with a tipping option now. This includes places where tipping is less traditionally expected, such as fast food takeout restaurants and some self-serve retail spaces.

During the peak of the COVID-19 pandemic, Garcia explained that tipping goodwill increased significantly. She said that there was an understanding that restaurant and service workers had a greater risk of getting sick, so customers were more sympathetic. Although she stressed that tip-flation started before the pandemic, she said it accelerated the cultural expectation of tipping. She recalled that people were even tipping grocery store cashiers because they understood the risk they were taking and felt they weren’t being paid enough for it. 

After COVID fears died down and many people returned to normal behaviours, Garcia said the new tipping culture remained, including the expectation of higher tips and tips in nontraditional environments.

Should restaurants pay their workers more?

Paying a higher wage to employees and eliminating tipping is an experiment that some places have undergone. Garcia explained that her hotel tried this in the past, but it didn’t go as expected. In the bar and restaurant portion of the hotel, she found some customers were particularly hesitant about not tipping.

Garcia tried including an automatic gratuity in the base prices at the restaurant and bar. The menu was labelled to explain this, and the employees were instructed to explain that tips were optional because the prices already included them. The tactic was polarizing. Some people enjoyed not having to figure out how much to tip. Others were frustrated with the automatic gratuity. Garcia said some customers even tipped on top of the gratuity because they felt awkward about not tipping.

Garcia’s example, however, still supports the culture of tipping. Although the workers enjoyed a more predictable income, the “solution” still relied on customers to pay for a noteworthy portion of their wages. Fundamentally, they still were not being paid enough by their employer and at the end of the day, they were still relying on tips.

Garcia said many customers felt awkward not tipping because they had received good service. The negative reactions from customers fatigued employees, and eventually, the restaurant and bar resumed traditional tipping. The other hotel employees kept the new model without any pushback from customers.

Garcia added that this experiment was pre-pandemic, and the hotel planned to try that tipping model again. She said she expects customers to be more receptive to it now with the ongoing concerns surrounding tip-flation.

Are tips going anywhere?

Tipping is a part of Canadian culture, and although tip-flation and tip fatigue are present, Garcia said she believed that tipping isn’t going anywhere anytime soon. She explained that workers need to be paid more for tipping to become an obsolete practice. Although more and more places are cluing into this, Garcia said she believes there still needs to be a lot done to shift cultural expectations around tipping. Garcia wanted her workers to be paid a more predictable wage, and she did what she could do in her position by introducing an automatic gratuity.

Unfortunately, this is not a solution to the broader problem because employers still expect customers to partially pay their employees for them via tips. Some large companies are increasing prices not to keep up with inflation but to earn higher profits. Although some smaller establishments may need to raise their prices modestly to pay their workers more, others raise prices despite a lower labour cost and better profit margin.

While tipping may not go anywhere in the short term, the best way to encourage this cultural shift is to deliberately buy from places that pay their workers a better wage to forego tips. The universal language of business is the dollar. Although most individuals don’t have the power to change a cultural custom by themselves, they do have the power to avoid the stress of tipping by purchasing from businesses with more ethical practices.