Is Tipping a Scam?
Created by dabai laoshi · 28 Aug 2026
Key Vocabulary
a usual way of behaving in a culture, often treated as a rule even when it is not a law
Tipping is a strong custom in American restaurants, but not in every country.
the money a person earns for work, especially when paid by the hour
The tipped wage of $2.13 means customers are expected to complete the paycheck.
a social or emotional force that makes someone act in a certain way
A tipping screen creates pressure when a worker is standing nearby.
money that helps pay for something that another person or group would otherwise have to fund
Customer tips act as a subsidy for restaurant owners' labor costs.
to fight against a change or refuse to accept it
Some top servers resist ending tips because they earn more under the old system.
Article
Leaving a tip at a restaurant seems simple: it is extra money to thank your server for great service. However, in the United States, tipping is actually part of a worker's regular income. But this raises an important question: who should really be paying the staff?
Restaurant owners did not invent tipping. Rich Americans copied a European custom, and many neighbors first hated it as not American. What companies did was turn the custom into a pay trick. After the Civil War, hotels and railroads gave jobs to newly freed Black workers. They paid them too little to live on, and invited guests to make up the difference. Pullman train workers earned too little without tips. [1][2]
Law later froze that trick into a number. When restaurants joined US minimum-wage rules in 1966, owners received a tip credit. They could count customers' tips toward the legal minimum. The cash wage for tipped workers has sat at $2.13 an hour since 1991. Owners must add money if tips do not bring the worker up to $7.25. [3][4]
Screens made the old social pressure faster. A tablet turns around with 18, 22, or 25 percent while the worker is watching. Choosing no tip is now an action rather than something you can quietly leave out. Many people pay to avoid discomfort, not to reward a special coffee. [5]
Tipping also splits the staff inside the same restaurant. Waiters collect the extra money, while cooks who prepare the meal usually do not.
Diners often like the feeling of control, but research is less kind. Cornell scholar Michael Lynn found that work ratings explain only a small share of tip differences. The size of the bill matters far more, because people follow a percent custom. [6]
That is one reason the system is hard to kill. Top servers often resist a flat hourly wage, because a busy night of tips can pay far more. Danny Meyer tried to end tipping in his New York restaurants and raise menu prices. Many experienced waiters left, so the experiment later ended. [7]
So is tipping a scam created by restaurant owners? They did not dream up the custom from nothing. They used it as a wage subsidy, and the law helped them keep it. The next time a screen asks for 25 percent, ask whose pay you have been asked to finish.
Discussion Questions
- In your country, is a tip a thank-you, a required part of the bill, or something people rarely do?
- Have you ever tapped a higher percentage on a screen than you planned, just to avoid feeling rude?
- If a restaurant raised prices by 20 percent and paid staff a full wage, would you prefer that to tipping? Why?
- Is it fair that waiters can earn more than cooks in the same restaurant? Who should close that gap?
- Would you take a serving job with low guaranteed pay but high tips, or a lower but stable hourly wage?
References
- Federal Reserve Bank of Richmond, "Tipping: From Scourge of Democracy to American Ritual," on post-Civil War tipping and Pullman porters. Source
- CNBC, "How tipping came to the U.S.," 30 November 2023, on employers shifting wages onto customers after the Civil War. Source
- U.S. Department of Labor, Fact Sheet #15, on the $2.13 federal wage for tipped employees and the employer's duty to make up shortfalls. Source
- Sylvia Allegretto and David Cooper, "Twenty-Three Years and Still Waiting for Change," Economic Policy Institute, on the tipped wage frozen at $2.13 since 1991. Source
- Nir Eyal, "How Technology Tricks You Into Tipping More," Psychology Today, on preset tip amounts and New York taxi screens. Source
- Michael Lynn, "Restaurant Tipping and Service Quality: A Tenuous Relationship," Cornell Hotel and Restaurant Administration Quarterly, 2001. Source
- Julia Moskin, "Danny Meyer's Restaurants Will End Their No-Tipping Policy," The New York Times, 20 July 2020. Source
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