You know a trend has attained critical momentum when it is assigned an easily recognizable moniker. Chances are this one has recently worked itself into your vocabulary: Tip creep. It describes the phenomenon, especially noticeable since the end of the pandemic, of customers being prompted to add gratuities to tabs where previously there was no such expectation, like coffee shops, fast-food joints and even self-service establishments.

The proliferation of touch-screen payment tablets has accelerated since the end of Covid lockdowns, allowing shops and establishments to solicit tips, usually by offering a choice of predetermined percentages. This trend has its own moniker: Tip trap.

And it is not restricted to the restaurant sector. With the new point-of-sale technology, tipping prompts are turning up everywhere, from movie theaters and carwashes to stadiums and airports. Many of these are small firms trying to pass on to customers the burden of inflation without increasing prices or salaries. In a tight labor market, some employers say allowing staff to collect gratuities is a way to prevent them from seeking other jobs.

The Wall Street Journal reports that 16% of the 517 small businesses surveyed by employee-management software company Homebase now solicit gratuities at checkout, up from 6.2% in 2019. Many places have always had tip jars, where satisfied customers could leave loose change. It would be one thing if the preset tips on the tablets were small, but they have tended to mirror the rates expected at full-service places — 15% to 20%.

This trend, too, has a name: Tipflation.

Of course, the tablets allow the option of not leaving a gratuity at all. But many customers say they feel emotionally blackmailed into tipping. A recent poll by Bankrate shows that 32% of Americans don’t like predetermined tip screens, and more than twice that percentage have a negative view of tipping in general.

Inevitably, there’s a backlash against tip creep, and it seems to be hurting those who most depend on gratuities. Feeling obliged to tip in new places may also be one reason customers are cutting back on tipping where it was traditional. According to the Bankrate survey, 65% of Americans who dine at sit-down restaurants say they always tip their server, down from 73% in 2022, 75% in 2021 and 77% in 2019. There’s a catchy label for that, too: Tipping fatigue.

It comes at an especially bad time for the restaurant sector, which has been struggling to find workers since the pandemic, even as food inflation is leading to a spike in prices on menus. At the start of 2023, nearly 2 million restaurant positions were vacant. Those who might have filled them have other, better options in an economy where unemployment is low, and many sectors are paying well above minimum wage.

Most restaurants, meanwhile, pay their servers what is known as “minimum cash wage,” or MCW, and rely on tips to make up the difference with federal and state minimum wage levels. (Kitchen staff usually receive regular salaries in lieu of a share of the tips.) The federal Fair Labor Standards Act sets the MCW for workers who receive tips at just $2.13 an hour and requires employers to top this up with what is known as a “tip credit” of $5.12. States have their own MCW and tip credit thresholds.

“When people tip their waiter, they sometimes think they are rewarding good service, but what they’re really doing is enabling a person to get a living wage,” says Benjamin Sukle, the chef-owner of the highly rated Oberlin restaurant and Gift Horse raw bar in Providence, R.I. Those of us who eat out often usually know this, and it compels us to be more generous than is merited by the service alone; it’s called “guilt tipping.”

It doesn’t help that some restaurant owners pocket a proportion, or even all, of the gratuities intended for their servers. Yes, there’s a term for that, too: “Tip theft.” A new investigation by ProPublica shows that 25% of all reported instances of gratuity-garnishing in New York state come from the restaurant sector. And that’s just reported cases in only one state. Saru Jayaraman, director of the Food Labor Research Center at the University of California, Berkeley, says the restaurant industry has the “highest levels of tip theft” of any sector.

Staff shortages directly affect the speed and quality of service; combine that with price increases, and you have unhappy customers, who then tend to be less generous with tips. This, naturally, makes restaurant jobs even less attractive — especially because tip creep has now created jobs where workers can get a minimum wage and gratuities on top.

“The most obvious way to break this vicious cycle is to pay all servers regular salaries based on the minimum wage,” says Jayaraman, who also heads One Fair Wage, an advocacy group seeking to end subminimum wages. Some restaurateurs have tried this and instituted no-tipping policies. But the movement never acquired real momentum, not least because of the industry-wide shutdown during the pandemic.

Oberlin, too, experimented with paying all its staff minimum wage plus tips, but Sukle had to revert to the old practice after a year and a half because he couldn’t pass on the extra cost to customers. “When the restaurant next to you and the one behind you is still paying subminimum wages, you can’t compete,” he says.

Eliminating the subminimum wage is the aim of the latest iteration of the Raise the Wage Act, introduced last month by Democrats led by Senator Bernie Sanders and Representative Robert C. Scott. Not everyone agrees this is a good idea. For decades, the National Restaurant Association lobbied against increases in MCW rates, arguing that restaurants can’t absorb the increased costs. But Jayaraman is optimistic that restaurant owners, worried about finding and retaining staff, will see the light.

A wage increase won’t remove the tip trap, much less end the tip creep, but there’s a chance it may reverse tipflation. And at the very least, it will protect restaurant staff from tip fatigue.

Bobby Ghosh is a Bloomberg Opinion columnist covering foreign affairs. Previously, he was editor in chief at Hindustan Times, managing editor at Quartz and international editor at Time.

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