The Tipping Conundrum

A recent survey found that New Yorkers are the biggest tippers, leaving around 20% in tips whereas people from Arkansas gave about 10%. I remember when 15% was the standard for tipping. Has there been tip inflation? I’m a New Yorker and I don’t generally tip 20% unless the service was really good. Am I being cheap?

When the topic of tipping comes up I always think of an episode of Third Rock from the Sun. I don’t know if anyone remembers this sitcom, but it was a comedy where the characters were aliens who come to Earth in human bodies to observe human behavior. One character, Dick, is baffled by the concept of tipping, and attempts to re-invent it by placing a stack of one dollar bills on the table and informing the waitress that when she pleases him, the pile will grow, and when not, it will shrink. This is definitely degrading to the server, but is it really any less logical than the current system?

Dick says that he has reinvented tipping I’m bringing tipping out of its dark little cave and into the light. Yes, I agree with Dick that tipping might need to be reinvented, though I don’t think his way is the answer.

My uncle once was treated poorly at a restaurant because he wasn’t well dressed and they ignored him because they assumed he didn’t have much money. Well, he gave them a big tip to show the waiter that he indeed had money. Yes! A big tip! That’ll show them!

I also have friends who used to be waiters or who are just very generous who tip at least 20% and often more than that. If I’m at a fancier restaurant, I feel obligated to give a more generous tip. Tipping doesn’t really make sense because a waiter bringing out a $12 meal is doing similar work as one bringing a $30 meal.

I generally just tip double the sales tax for the ease of calculation. The sales tax here is 8.875%, so I’m close to 20%. If the service is not particularly good I still give about 15%, and when it is good I give closer to 20%. But if the standard here is 20%, does the waiter just think I’m giving the standard tip, and not an extra tip for good service?

I went to a restaurant and it included a tip guide on the receipt to help with the math. It tells you how much a 15%, 18% and 20% tip works out to. (Although I did the math and the tip guide from the included the tax when it calculated the tip…I always thought you tip on the amount before taxes). Based on this guide, assuming 15% is the standard tip, 18% is for very good service and 20% is for excellent service.

How do you handle this tipping dilemma?

32 thoughts on “The Tipping Conundrum

    1. livingrichcheaply@gmail.com Post author

      That sounds like a good plan. Yea, I don’t know why I feel obligated to tip more at more expenisve restaurants…they are probably getting more anyway since the prices are higher. But, generally I guess the service is supposedly better…supposedly…

      1. theFIREstarter

        Yea that doesn’t make too much sense to me I have to say!

        The prices are higher anyway so the percentage tip already builds in the fact that the service is likely to be better. Plus the waiter is likely to be paid a better wage at the higher priced restaurant (I think!?) so if anything you should tip them a lower percentage, maybe I am just being tight though 😉

        I totally get where you’re Uncle was coming from with the big tip to show them, I think I may have done that before but really the best thing would be to show them somehow you are loaded/capable of leaving a big tip, but still leave a poor one (if you think of something let me know!)
        theFIREstarter recently posted…A Conscious ConscienceMy Profile

        1. livingrichcheaply@gmail.com Post author

          I actually don’t know if waiters are paid a better wage at higher priced restaurants…maybe they just get a bigger tip since the food costs more. Will be interesting to find out. I agree with you about showing them that you are capable of leaving a big tip but leaving a small one…well in my post http://livingrichcheaply.com/2013/12/11/how-do-you-judge-someones-financial-worth/, Grayson from Debt Roundup said that his friend went to a car dealership and was ignored because of his appearance. He showed them that he was loaded by flashing his cash, and walked out. That would work, but I’m not sure that that would be a good idea. Wouldn’t want to have that much cash on me and get that attention!

  1. Matt Becker

    I’ve always been confused by the concept of tipping. Why is it that waiters are simply paid a salary like everyone else? With that said, I typically try to tip about 20%, partially because it’s easy math and partially because it’s usually not much more in absolute dollars than 15%. I figure the waiter will be happy knowing that he or she got 20% instead of 15%, and it usually doesn’t affect me much either way.
    Matt Becker recently posted…Is a Coffee Habit Comparable to a Debt Habit?My Profile

    1. livingrichcheaply@gmail.com Post author

      I agree, that would make things simpler if they were just paid a salary.

      1. livingrichcheaply@gmail.com Post author

        I know they should just include it in the cost of the meal. Servers should be paid a decent wage so they don’t have to rely on tips

  2. Pretired Nick

    I usually tip 20% (take 10% of the total and double it and then round up). So I’m a pretty good tipper. But I have a lot of empathy for people who work in food service. I love when I go to Europe and I don’t have to bother with the whole tipping craziness. Of course, the downside is the service in Europe can be pretty bad so it’s a hard adjustment for an American.
    Pretired Nick recently posted…Online advertising: Another piece of the pretirement puzzle?My Profile

    1. livingrichcheaply@gmail.com Post author

      Interesting, unfortunately I’ve never had the chance to go to Europe yet. So do Europeans know to tip when they visit the US?

  3. Jacob @ Cash Cow Couple

    Tipping is one reason we don’t eat out much. The other being tax. Groceries actually aren’t taxed here in Texas so you automatically save around 25% juts by cooking! If we go out I tip 10-20% depending on quality. I don’t appreciate never being checked on or eating without a glass of water. I mean, that’s their job…
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    1. livingrichcheaply@gmail.com Post author

      Yea, I tried to cook at home too and sometimes if there is no time to cook, I might pick up the food to avoid the tip. Good point about the sales tax…it is high here in NYC, but no tax on food from grocery stores.

  4. John S @ Frugal Rules

    We usually tip 15% if it’s lunch and 20% if it’s dinner and will vary it based off the service in either direction. It’s also part of the reason why we don’t go out much as it adds up to do so. We recently got hit with an entertainment tax to boot so we have over 10% in tax before we even get to the tip.
    John S @ Frugal Rules recently posted…The Gift of Financial LiteracyMy Profile

    1. livingrichcheaply@gmail.com Post author

      Wow entertainment tax too? Was there a performance during your meal?

  5. Greg@Thriftgenuity

    No joke, I have referenced this episode of 3rd rock before! Pretty interesting concept.

    I am a 20% tipper in most cases. I guess I was told that is the new norm. I don’t think I will switch. There have been a couple times that I have tipped and not noticed that the tip was already added on. I was not happy in those cases.
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    1. livingrichcheaply@gmail.com Post author

      Yeah I loved that show…it was hilarious. They often include the tip here when there is a group of 6 people or bigger.

    1. livingrichcheaply@gmail.com Post author

      Same with me, I could never not leave a tip, even with bad service. I’m sure servers have to deal with a lot of crap, but I’m a pretty laid back diner. No special requests and always nice to my server.

  6. Jennifer @ Money Aches

    I think tipping is way out of control. It’s one thing if they are bringing the food to you but does anyone else think it’s ridiculous that Subway has a tip line? Really, it’s not different than any other fast food place except I’m seeing them make it in front of me. When was the last time you went into McDonalds and tipped the person making your food. How about a buffet where the worker walks over to the pop machine and simply refills your glass? Ok, now that I got that out I will say that I tend to tip in the 15% range for servers. At the same time I have no issue tipping less, or in very rare instances none, for poor service. Many servers work really hard and deserve to be tipped for the work they do and the people they have to deal with every day.
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    1. livingrichcheaply@gmail.com Post author

      Good point Jennifer. I’m starting to see a lot of tip jars everywhere. Where does it end? And I do agree that at some places like buffets where they don’t have as much to do, you can tip a little less.

  7. The Phroogal Jason

    I agree tipping is both an ethical and financial decision. I recently wrote about the very same topic. I worked in a restaurant and delivered food so tipping is part of me. I do not believe in excessive tipping but do believe its a matter of realizing that you either have to pay for that server’s salary factored into the food price or you get a chance to choose what price you pay for the total amount of the restaurant experience.
    The Phroogal Jason recently posted…Manage Money: How much should you tip?My Profile

  8. Anthony @ Thrifty Dad

    Ha! Some good observations! I usually tip about 15-17%, but I have tipped higher and I have tipped lower for poor service. One bartender I tipped, thought I tipped him low and pointed at the change I put down as if to say that’s not enough, so I took back all my change :). I don’t really understand tipping for pouring a drink, but anyhow. Another thing is if the meal was bad, does that affect the tip? It’s not really the waiter’s fault, but from what I’ve heard they do share tips with the cook staff??
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    1. livingrichcheaply@gmail.com Post author

      Yea I’m with you on tipping for pouring a drink. I can understand it, but it seems like too much. People generally tipped a dollar or two for each drink. Being in NYC where drinks often cost $5 to $10, I guess it worked out to about 15% to 20%. The bartenders must make a killing on tips because they poured plenty of drinks in a short timeframe.

  9. Tie the Money Knot

    I tend to tip around 15%, maybe a bit more. If the service is especially good, I might bump it up to 20%. I’m fine with tipping a decent amount, as it’s custom and how many people really make their money. That being said, I’m not in favor of the growing trend of tip jars showing up everywhere! That’s a different ballgame altogether.
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    1. livingrichcheaply@gmail.com Post author

      Yea I agree, I have no problem tipping a decent amount when the servers are nice and it is a tough job. Also agree about those tip jars…though I don’t really feel obligated to drop a tip unless the service was extraordinary.

  10. Laurie @thefrugalfarmer

    I worked for a few years as a waitress, so I always feel obligated to tip well for a job well done, simply because serving is such grunt work. Then again, so are a lot of other jobs. Like Tie the Money Knot said though, the tip jars bug me. Those employees generally are not making the menial wage of most servers, so, buck up and deal. 🙂
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    1. livingrichcheaply@gmail.com Post author

      I know people who have worked as waiters or waitresses and they feel the same way as you. It is crazy that servers make menial wages which require tips to make up for it.

    1. livingrichcheaply@gmail.com Post author

      A lot of people have said something similar. I guess 20% is the new standard for tipping.

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