For new expats: Tipping in the USA is an unnecessary extravagance. Or is it…?

 

Getting-the-restaurant-check

Tipping is very common in the USA. Restaurant tips are usually 15-20% of the meal, paid on top of the meal’s cost. Photo copyright ExpatAussieInNJ.

EXPAT LIFE: Tipping in the USA has to be one of the most confusing things to deal with for the new inexperienced expat. There are no exact guidelines and it’s no exaggeration to say there is a huge amount of variety in local behaviours, traditions and practices.

And here lies the difficulty. As an expat you come to your new home, biassed by your own standards, experiences and expectations. You are not aware of the nuances of your new home country. While most of us, at least from Australia know that tipping in a restaurant is a nice thing to do, when it comes to other things like getting a haircut or ordering a pizza, giving a tip isn’t second nature.

In fact, given the pricing of some things like haircut and colouring in the US, you could be forgiven for thinking a tip would be a bit rich. So perhaps the thought will cross your mind as it has to me some times: is this really a necessity? Sure I will tip in restaurants but where does it stop? I could be tipping people several times a day! It goes against the grain for many of us who feel they have worked hard for their money.

But the fact remains that tipping is widespread in New Jersey and many other places in the US. And it doesn’t just involve restaurants, hairdressers and food delivery workers.

Why is tipping in the USA so prevalent?

Tipping it seems, really depends on tradition, what job people do and what their wage levels are like. What is different in the US, and drives the whole tipping approach, is that many people get paid a very low minimum wage ( $7.25, Federal rate). What’s worse, in a lot of States, many low-end jobs are legally paid below the minimum wage.

In New Jersey, for instance, waitresses get paid $2.13 per hour. Yep, that’s no typo…. They really get paid a few cents more than a $2 coin per hour. Unbelievable?  Certainly. But they aren’t the only ones.

Any small business that makes below a total of $500,000 per annum is also allowed to ignore minimum wage requirements. So that means many workers in small shops etc., are likely to be paid a small amount per hour as well. Labor laws also legally allow for below minimum wages to be paid to students learning on-the-job or working in retail, service, agriculture, or higher education. Others who can earn less than minimum wage include those whose mental or physical disabilities reduce their earning or productive capacity.

Strippers, maids, landscapers, snow removal workers, street vendors, taxi drivers, garbage collectors, barbers and sometimes babysitters, also rate amongst those who are poorly paid.

To put this all into perspective, in Australia, our minimum wage is $15.59 per hour for anyone 20 years or older, although it is less for children under 18 years old ($7.55 for 16 year olds). The US minimum is far below what we expect adults to be paid in Australia, and there are also lots of legal loopholes that seem to allow below-minimum-wage payments.

While the US price of living is lower than Australia, it is not so low, that you could be expected to live on $2.13 per hour. Obviously, tips are needed to survive.

Sometimes, a tip jar is placed at the front counter in a cafe or counter service area, and tips distributed to staff afterwards.

Sometimes, a tip jar is placed at the front counter in a cafe or counter service area, and tips distributed to staff afterwards. Photo copyright ExpatAussieInNJ.

Do you have to tip?

In reality, no, you don’t have to. You won’t be arrested for not tipping in the USA but it is a matter of courtesy. And also of understanding what happens when you don’t tip.

Take the example of a restaurant meal. In most cases you only pay the full cost that you fairly owe when you add the cost of the meal to the service tip. So in fact, if you avoid the tip, you get the meal cheaper but your waitress/waiter is making up the difference for you.

How, you ask?

Well there’s the obvious point that the waiter or waitress gets a lower income because of no tips. With little fixed income (on a low hourly pay rate), reality is that customer tips are the waitresses/waiter’s main source of income. If like many other students, the server is working their way through college using this job to pay exorbitantly high educational fees, you can expect them to be at least a bit disappointed in you for not leaving something behind.

If you don’t tip, then not only are you docking the wages of the server but in many cases they have to pay tips to their non-server  co-workers for their help in delivering the meal e.g. barmen, cooks etc. This may put the waitress out-of-pocket in some cases.

Yes, this means they can actually lose money if you don’t tip….

Looking at it from the server’s point of view, you can see why they need tips so much. And why they feel disgruntled when you don’t tip.

In the case of hairdressers, by not tipping you are cutting into their take home pay significantly. My own hairdresser doesn’t even get paid a wage. She gets part of a commission for every customer she handles and relies on tips to supplement this. When there are no customers, she gets no income. It doesn’t matter how long she stands around all day in the salon, no customers equals no pay.

So it is in her best interest to have customers returning, although she would definitely prefer the happy tipping customers to the complainers who want to short-change her.

How will I suffer if I don’t tip?

If you are a penny-pincher or just don’t believe in tipping on principle, you may find your experience in dining places extends beyond just dirty looks received for not tipping.

Some years ago, I had dinner with some well-off Australian pharmacists in a LA restaurant. At the end of the meal, they refused to tip because they believed the meal and service was just average to mediocre. In Australia at this time, a monetary tip was only left when the dinner was exceptional.  So maybe their ignorant behaviour was mitigated a little by their lack of awareness.

Despite some heated exchanges with the owner though, these Australians left the restaurant without leaving a tip, making the night an unpleasant and uncomfortable experience through their own ignorance and stubbornness. And no doubt, the waitress serving us will have borne the out-of-pocket costs herself. Because restaurant owners don’t reimburse them out of their own pockets-that just isn’t the way things are done here.Tips-are-paid-in-cash-for-servers

Learn the ropes on when to tip

So if you want to avoid short-changing your new countrymen, you need to try and tip when it is appropriate. Although it is impossible to know straight off whom or how much to tip, be on the lookout for people handing over little envelopes or folded money to service providers. Try to learn the local traditions by reading up on authoritative tipping guidelines or talking to locals who will definitely share this type of info.

Whatever you do though, don’t just stick your head in the sand and pretend it’s not your problem. Life is hard for many people in the US, with restricted free healthcare and low unemployment benefits. Tip when you can afford it and be OK with yourself if you can’t. And at least if you choose not to on principle, be aware of what impact you are making on other people’s lives.

Have you had any embarrassing moments where you were supposed to tip but didn’t?

 

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6 thoughts on “For new expats: Tipping in the USA is an unnecessary extravagance. Or is it…?

  1. In Dubai we had regular debates about this as frequently you’d have an Australian (who come from a non-tipping culture), a Brit (who tips 10%), a Canadian who tips (15%) and an American (who tips 20%) all sharing a meal and again low wages for service staff. What made it worse was that there is (or was) a Municipality fee of 10% which would usually be described as “service charge” on the bill, which many took to be a tip. Usually expats ended up tipping what they tipped in their home country, which is the wrong way to go. When in Rome and all that. I’d rather over tip than under tip. Unfortunately due to overwhelming number of expats from so many different countries, there didn’t seem to be a local standard. I used to pity the poor wait staff who never knew how much tip they’d receive – anything from 0-20%.

    • Wow, and I thought it was hard just working it out from an Australian point-of-view. That must have made paying the bill an extra long discussion at the table. So different than when you just have everyone on the same page and you just split the bill, heh! At least here, there are some standards, albeit a bit variable. the hardest thing I think is learning where to tip, as well as how much. I imagine that it must be much harder when in Dubai. Is it normal there to tip for other services? When we were in Egypt, we ended up tipping for almost everything imaginable. Because we were tourists though, you are much more vulnerable to misunderstanding what is really required. But as you say, I’d rather overtip than undertip, especially when you know the level of pay that the workers involved get.

      I also find the whole thing of a service fee, gratutity or municipality fee confusing. It’s hard to know who gets this money, when you want to make sure the actual server gets the tip you leave. Thanks for dropping by to comment!

  2. I learnt a lot from your insights above, but I still struggle to understand how, in a supposedly rich first world country that the wages mentioned above can be paid legally.
    My time here in the states has made me realize that we really do some things well in Australia (safety net for unskilled workers, as well as school and higher education, and healthcare to name a few, we’re maybe not perfect, but a hell of a lot better that the USA).
    Essentially the tip is to supplement the wages for the staff, so we are actually helping out the business owner. I do begrudge tipping restaurant staff that are rude, untrained and uncaring, but “when in Rome”.
    My solution is to increase the prices, decrease the portion sizes and pay the staff a decent wage, seems to work in Australia.
    I wonder how most of the Washington DC and state pollies sleep at night sometimes.
    Anyways, our 18 months in Montclair has come to an end and we move to Singapore at the end of the week, no more tipping to worry about there, and closer to Aust.
    Thanks for the website.

    • Hi Chris. Sorry to hear we are losing you to Singapore but that’s the expat life I guess. I think much the same as you in wondering how workers are supposed to get by with such a low level of pay and very limited or worse, no safety nets. Makes the working man’s lot seem a very hard one in the USA. While Australia is no idyll place by any means, there’s definitely a smaller gap between rich and poor in my mind, and there are many more nets to catch those who are slipping before they hit rock bottom. There doesn’t seem enough here done for worker rights but I think that’s the way it has been since way back when. I used to feel frustrated at tipping so much but once I learned the facts, I feel obliged to help out the workers. As you say, it is helping the business owner but it seems hard to make an example by punishing those least deserving of it.

  3. Great article about a very controversial topic. I remember being very annoyed at first for the constant reminders and pressure to tip everywhere for almost everything. In Germany we usually round up to the next Euro, so I was a little irritated at first having to add 15-20% to a restaurant bill, that would have been less for the same meal and service in Germany.
    Unfortunately the food and service industry is taking full advantage of the American tipping mentality while still charging full price and not having to pay their staff properly. And still people are eating out all the time.

  4. Hi folks,
    just happened to stumble by today randomly to this blog.I saw it was about tipping and could not help writing about my amazing experience with an Australian guy.I don’t even know if anyone will see this,but what the heck….
    In 2004,I was a pre-med student,working my way through school.
    Anyhow,I had just started working as a server at this restaurant in los angeles.
    It was lunch time,the place was packed to the gills.So this guy walks in,he’s seated and I hand him the menu.I took down his order.
    The food was ready and I bought it to him.I’m a friendly person by nature so even though I was slammed,I spent a couple to minutes chatting with him.
    He said he was from Australia and had just arrived in the US.His plan was to travel through the US on a month’s vacation.
    Anyhow,after he was done I presented him with the check,thanked him for his business and started to remove the dishes from an adjoining table.Then I checked his receipt folder to make sure the check had been settled.
    He had left a 79 cent tip on a 23.21 dollar bill.79 cents!
    I felt so disrespected and slighted(did not know at the time that there is isn’t a tipping culture in Australia).The look on my face must have given me away,as the manager immediately came and took a look at the check.When he saw what the guy had tipped,he did something neither the Australian gentleman or I will forget for the rest of my life.
    He picked up the loose change and jangling the coins loudly he ran after the patron,who was just making his way out.Then still moving towards the patron he said” sir you forgot your tip” loudly a few times!OMG,there was total silence for a second and then the other patrons started snickering and smiling furtively.
    The Australian gentleman turned a shade of red I have no words to describe.Redder than the ripest of tomatoes would be doing it no favor.He spluttered for a few seconds and then tried to tip me 20 dollars for the meal!It would have been funny if I did not feel so sorry for the guy.I refused the tip and reminded him in a soft and gentle voice that this is America and you HAVE to tip at least 15% specially as I had taken such good care of him.
    He was profusely sorry and I told him it was no biggie. We shook hands and he was off on his way.
    Wow!Wow!It was only when I checked later that I saw that tipping is not a tradition in Australia.
    My advice to people coming to the US or any other country for that matter is to do a little research before heading out of home.It will certainly save one from cultural and social faux pas.I will certainly do some research before I head down to Australia later in the year.Certainly don’t want to be faced with a situation that the guy found himself in.
    I hope I did not offend anyone,just wanted to share my experience.
    Cheers

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