A Blog by Jonathan Low


Jul 2, 2021

How the Pandemic Really Did Change the Way People Tip

In March 2020 tips started rising above the pre-pandemic norm and have stayed there, even as vaccinations have led to more dining out. 

The increase was not huge - about .7% on average - but if you're working for tips, every little bit helps. JL 

Saahil Desai reports in The Atlantic:

The numbers show that the Great Pandemic Tipping Boom was real. Before March 2020, the average tip when cards were swiped at sit-down restaurants never strayed outside 19.9 to 20.1%. Then, on March 24, the average tip started drifting upward. Within a few weeks, the average hit a peak of 21.0%. Tips fell off to 20.4% over the summer; they came up again, to 20.8%, during January’s massive spike in cases. As fully vaccinated Americans return to normal lives, tips remain higher than where they were in 2019. The average appears to have settled at 20.6 or 20.7%, well above the pre-pandemic norm.Essential workers who tugged the United States through the pandemic have not gotten much compensation for what they’ve had to endure, but hey, they did get some perks. Fifteen percent off mattresses for teachers! Allbirds at $35 off with the discount code HEALTHCAREHERO. A free Snickers bar (redeemable only at Walmart with an e-gift card)! Yes, some major retail chains issued hazard bonuses and goosed employees’ wages with “hero pay” increases—at least for a few months; L.A., Seattle, and other cities compelled grocery stores to do the same. But lots of people who put their lives at risk for their employment went without any hazard pay at all, no matter how many Americans stuck a thank you frontline workers! sign in their front yard or apartment window.

But for restaurant servers, the amount of extra money they could earn for taking on a fair amount of extra risk wasn’t subject only to their bosses’ whims or to local regulations. It was also up to their customers. With every order of takeout sushi or oversauced pasta Alfredo, Americans could add some hero pay when they got their bill.

And they did. Waiters from all across the country told me about the Great Pandemic Tipping Boom of 2020: “I think I got a $20 tip from someone at least once a week,” said Lori Pearson, a waitress at Bob Evans in Ann Arbor, Michigan. “That basically never happened before the pandemic.” At Zoetropolis, a restaurant and distillery in Lancaster, Pennsylvania, the average tip shot up to about 25 percent last spring, allowing waiters to bring home close to what they were making before the pandemic even with a fraction of the tables filled.

That was then. Now squint at America’s dive-iest dive bars and stodgiest steakhouses and you might just forget that the pandemic ever happened. Even in the bluest of states, spaced-out seating and useless-anyway plexiglass dividers are going away. Forget about customers; even some workers aren’t wearing masks. At the start of June, the number of people eating out was already back to 2019 levels, according to data from OpenTable.

The hazard Americans felt is fading. Will their hazard tipping fade as well? What Americans actually tip, both now and before the pandemic, is an enduring mystery. The Department of Labor fastidiously tracks the smallest movements in wages, but no government agency even tries to monitor all the extra bills that get strewn on restaurant tables. To understand how the size and frequency of tips might have changed since the start of the pandemic, and whether they are changing back, I reached out to Square, the payment company that processes credit-card transactions for millions of small businesses. Square isn’t just how you use your credit card to pay for those heirloom tomatoes at the farmers’ market; a large number of American restaurants are also on the platform. That means all the tips that get tacked on to credit-card transactions using Square are also counted up and stored.

The company provided me with data going back months before the pandemic, on how often restaurant customers were giving tips, and how big those tips were. The numbers show that the Great Pandemic Tipping Boom was real, if perhaps a bit less great than I’d expected. In the innocent times before March 2020, the average tip when cards were swiped at sit-down restaurants never strayed outside a very narrow range of 19.9 to 20.1 percent—corresponding to the tipping norm that, coincidentally or not, is also incredibly easy to calculate. Then, on March 24, as stay-at-home orders began to pile up and Americans clapped and howled and clanged pots in appreciation of essential workers, the average tip did something weird: It started drifting upward. Within a few weeks, the average hit a peak of 21.0 percent. When the first pandemic wave receded, tips fell off a bit, to roughly 20.4 percent over the summer; they came up again, to 20.8 percent, during January’s massive spike in cases. Even now, as fully vaccinated Americans return to their normal lives, tips remain higher than where they were in 2019. In the past few months, the average appears to have settled at 20.6 or 20.7 percent, well above the pre-pandemic norm.

A focus on average tips may hide the full extent of the tipping boom. When shutdowns first went into effect, would-be diners turned to the only options available to them: takeout and delivery. Most people, before the pandemic, tipped 20 percent only for the traditional dine-in experience. They gave less—or nothing at all—when their entrées came plastic-bagged and not plated. Given that pattern, you would expect the huge rise in takeout meals to pull down the average tip. But that doesn’t appear to have happened. “The simple explanation is that there is a greater willingness among some people to tip now as opposed to before the pandemic,” says Michael Lynn, a marketing professor at Cornell University and an expert on tipping.

The restaurant workers I talked with all had an unbelievably hard year. Nearly every one of them received unemployment benefits before having to contend with pandemic restrictions and empty tables and the constant threat of infection from maskless munchers. For a base pay of $3.60 an hour, Pearson, the Bob Evans waitress, has had to sanitize every single ketchup bottle and salt and pepper shaker after each diner walks out. All the extra trips between the kitchen and her tables have taken a toll on her body. A boost in tips hasn’t made up for any of that, but the displays of sheer altruism have been nice. Alex Bonelli, a waitress at Texas Roadhouse in Bensalem, Pennsylvania, told me that her tips averaged 15 percent before the pandemic, but, early in the pandemic, they were often more than 25 percent. “People were tipping more because they were excited to be out,” she said. “They were so happy to be somewhere, and they felt terrible for us.

Okay, but now what? For America’s overworked, underpaid, and perpetually harassed servers, booked-up restaurants could augur the return of impatient customers who aren’t prone to spurts of generosity. Although the Square data suggest that tips are still above the norm, on average, some waiters told me that stinginess and other pre-pandemic behaviors have returned. Another server told me the exact opposite, that tips started increasing when Americans got their tax refunds and were relishing how good it felt to be back in restaurants.

I asked Sara Hanson, a University of Richmond marketing professor, whether she thought anything about the past 15 months might have led to a metamorphosis in how the country treats waitstaff. “I don’t think the pandemic is going to lead to any long-term changes in tipping,” she told me. So much for that! At some point, maybe this summer, maybe a little later—eating out won’t feel so novel or even downright fun, and we’ll all just revert to our old behaviors without really thinking about it.

The still-darker scenario is that Americans may soon become even less likely to tip than before the pandemic. If you’ve walked past a restaurant lately, you may have seen a help wanted sign in the window, or even one with promises of signing bonuses. These businesses cannot find enough workers, as some combination of low pay, increased government benefits, and dangerous conditions spur waiters to leave the industry. Restaurants are, at long last, doling out raises to entice people back, but if customers notice what’s going on, they could conceivably start tipping less, Hansen told me. Even if they don’t, the shortage is making everything about eating in a restaurant a little slower and less fun. A server in Lancaster, who didn’t want to be named for fear of retaliation by her employer, told me that she’s been so busy lately, she has to bus even bigger stacks of plates than normal, and the endeavor sometimes saps all feeling out of her hands. It’s not her fault that she doesn’t have time to stop by to see if her customers want another cosmo, but they might not be so understanding when the time comes to tip.

The other possibility is that someway, somehow, Americans actually have relearned how to treat restaurant workers. The biggest change in tipping doesn’t seem to be happening inside restaurants, but rather at people’s front doors. The Square data include restaurant transactions in which a customer orders food but doesn’t swipe their card in person, which Lynn, the Cornell professor, told me generally corresponds to online delivery orders. Going by these numbers, people bothered to give a tip for only about half of all such orders before the pandemic started. By May 2020, though, that proportion had risen to more than 75 percent—and it hasn’t stopped going up. Last month, at least 84 percent of these transactions included a tip.

The fact that so many more people seem to be tipping on delivery and takeout orders, so late into the pandemic, suggests that something really has changed. It’s not as crazy as it sounds. Tipping breaks the rules of Newtonian physics, Lynn told me: What goes up stays up (usually). “Some people tip to show off and get good service,” he said. “If enough people are doing that, then everyone else has to at least tip average to avoid losing the server’s esteem. It’s this continuous upward pressure.” If a critical mass of Americans really did develop higher tipping habits, the rest of us stragglers may not have much choice but to follow along.

Even if they go away completely, hazard tips will have been a success story. Larger gratuities “weren’t an economic calculation,” Les Boden, a public-health economist at Boston University, told me. “People understood that a restaurant worker was taking more risk than they had before, and were thinking, Your job is important to me, and I want to show that to you.” But the need for hazard tips also reflects a fundamental failure of the restaurant industry, and of its oversight: How much a server is compensated for the risks of working through a pandemic should not be up to split-second decisions from the rowdy diners at Table 3.


Post a Comment