You go to a nice restaurant. You are served by a smiling and enthusiastic waitress who helps you choose from the menu, politely warns you that you are probably ordering too much, and regularly checks in on you if you need anything.

When she brings the bill, you remember to leave a generous tip to show you appreciate the service. Otherwise, you would have left the ‘nominal’ 15 per cent and gone home.

At least, that’s how I understood the tip to mean. And you leave a tip at a restaurant because it is widely known that restaurant workers’ pay structures consider the prospective tips as part of their compensation.

And so does the Internal Revenue Service (i.e., the US tax agency) when they evaluate the annual tax return from a waitress.

When some US states started raising the mandated minimum wage, many restaurant owners protested that it would disrupt the economics of their functioning, they may have to lay-off some service staff due to higher costs, and some even said they would have to shut down.

Really speaking, when service staff members are expected to raise part of their compensation directly from customers, it is an externality in the language of the economists. And it is not fair, but a capitalist society supports it by saying that it keeps the pressure on you to do a good job. (There was hardly any tipping in the former Soviet Union.) This is akin to the debate on whether a bonus is a reward for good work or only deferred compensation.

Tipping tangle

The US is now in a state of flux when it comes to tipping. Covid put many service sector employees at risk and tips started going up, and tip boxes started appearing at many places that didn’t have them. And customers were perhaps more generous and appreciated the service. And now there are a few tip boxes.

Point of sale card readers automatically prompt you to make a tip choice that seems so egregious. 15 per cent, 20 per cent and 25 per cent tip on a $2.50 cup of coffee when the person across the counter just handed you an empty paper cup to fill the coffee yourself at a dispenser?

This is where guidebooks help out. They tell you where to tip and where not to. (No tips for waiters at Paris street cafes because a 15 per cent service charge is included in the bill.)

The etiquette on tipping can be confusing. You know the man who cut your hair is the owner of the salon. Do you tip him? The restaurant’s service may be really bad, but knowing that your tip is part of the individual’s compensation, you feel pressured to leave at least a nominal amount and make a mental note not to return.

Tipping is a gratuity. And it seems gratuitous. What must originally have been a nice way of saying ‘thank you’ has become an obligation, and makes many a customer wilt under the glare of the service clerk and pressured to cough-up, whether deserved or not. Even when nobody is watching you, it can cause a twinge.

After an Uber ride, they want you to rate the driver. These ratings, I understand, are worked into the driver’s compensation. Can you rate the driver high but not leave a tip? You wonder because you already thought the fare was high. Tipping is increasingly complicating the customers’ buying experience.

In places where a large number of workers behind the scenes help to create the good experience for you, is it fair to just tip the one you deal with and ignore the rest?

In some well-run resorts, they discourage individual tipping and instead place a box near the check-out and encourage contributions there which are shared by all the staff. Seems fair, even if does provides a loophole for the mean customers who think this is an excellent way to escape tipping.

The writer is an emeritus professor at Suffolk University, Boston