The Tipping Backlash Has Begun

US: People are cutting back on tipping, frustrated by ubiquitous requests for gratuities.

As of November, service-sector workers in non restaurant leisure and hospitality jobs made $1.28 an hour in tips, on average, down 7% from the $1.38 an hour they made a year prior. The data is according to an analysis of 300,000 small and medium-size businesses by payroll provider Gusto.

The tipping slowdown is a gloomy development for all types of workers who rely on holiday tips as a chunk of their annual income. It reflects a broad frustration with the proliferation of tip requests at dry cleaners and bridal boutiques and even self-checkout machines that have sprung up since the pandemic.

Mary Medley, a Denver retiree who described herself to The Wall Street Journal in July as a unilaterally prolific tipper, is one of those who has become more discerning in recent months.

“It feels not as good to tip now that it’s popping up everywhere,” says Medley, 70 years old. “What started out to be a way to acknowledge excellent personal service feels like it’s become a way to help supplement worker compensation.”

There is a cost to the tipping slowdown, however, say economists and business owners. When people tip less, workers suffer, says Jonathan Morduch, a professor of public policy and economics at New York University.

“We’re in a situation where workers still want and expect and need tips to some degree,” Morduch says.

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Some businesses are raising worker pay in part as a response to lower gratuities.

Dan Moreno, founder of Miami-based Flamingo Appliance Service, says he has noticed a slowdown in customers leaving tips for their repair people since the Journal spoke with him in July. The average base wages for his techs have gone up about 10% since then, though he hasn’t eliminated the prompt from point-of-sale machines.

“I don’t know if that’s because customers are just over it. I’ll tell you, personally, I’m a little bit over it,” Moreno says of how his own tipping habits have changed over the past year.

Meanwhile, governments have started to get involved.

In October, Chicago became the second-largest U.S. city to vote to require tipped workers to make the full minimum wage. The full federal minimum wage is $7.25 an hour, while the federal tipped minimum wage many bar and restaurant workers earn is $2.13 an hour. Legislation to get rid of tipped minimums is moving in eight states and measures are on the ballot in an additional four, according to worker-advocacy organisation One Fair Wage.

“There’s an ongoing rejection of the whole system by both workers and consumers who have been increasingly pissed about it,” says Saru Jayaraman, director of the Food Labor Research Center at the University of California, Berkeley and president of One Fair Wage, an advocate for higher wages for restaurant workers.

Restaurant workers earned an average of $3.83 an hour in tips and overtime in November, according to technology company Square, up 8% from the previous year. Between November 2020 and November 2022, that amount rose 50% from $2.36 to $3.54 an hour.

While governments, workers and owners wrestle with what to do about tipping, consumers have embraced the humor in tipping’s massive expansion into so many parts of life. Jokes mocking tipping’s proliferation have spread on social-media sites. In one image, a police officer holds out a tablet with different tip options after giving someone a speeding ticket. In another, someone pretends to ask for a tip for letting a stranger pet her dog.

Garrett Bemiller, a 26-year-old who works in communications, started to question his standard practice of always leaving 20% after being asked for a tip at a self-serve checkout station at an OTG gift shop in New Jersey’s Newark Liberty International Airport in April.

“We all know how absurd it is that it almost relieves some of that guilt in saying no,” he says.

He now always hits “No Tip” when he’s buying a black coffee—even when friends are watching.

Holiday tips

One area people might not cut back is tipping for the holidays.

Of the 2,413 U.S. adults surveyed by financial services company Bankrate, 15% said they planned to leave more-generous tips for workers including housekeepers, child-care workers, landscapers and mail carriers this year. About 13% said they planned to leave less.

Median amounts are so far up from last year across the six types of service providers Bankrate asked about.

“It seems that people view holiday tipping differently, perhaps because of the holiday spirit and also because of the regular interaction with many of these service providers,” Bankrate analyst Ted Rossman says.

Bemiller plans to give the super in his New York City building $100—not because he feels like he has to, but because he wants to.

“She helps me so much throughout the year and that tip seems genuinely justified,” he says.

As tech leaders race to bring Windows systems back online after Friday’s software update by cybersecurity company CrowdStrike crashed around 8.5 million machines worldwide, experts share with CIO Journal their takeaways for preparing for the next major information technology outage.

Be familiar with how vendors develop, test and release their software

IT leaders should hold vendors deeply integrated within IT systems, such as CrowdStrike , to a “very high standard” of development, release quality and assurance, said Neil MacDonald , a Gartner vice president.

“Any security vendor has a responsibility to do extensive regression testing on all versions of Windows before an update is rolled out,” he said.

That involves asking existing vendors to explain how they write software, what testing they do and whether customers may choose how quickly to roll out an update.

“Incidents like this remind all of us in the CIO community of the importance of ensuring availability, reliability and security by prioritizing guardrails such as deployment and testing procedures and practices,” said Amy Farrow, chief information officer of IT automation and security company Infoblox.

Re-evaluate how your firm accepts software updates from ‘trusted’ vendors

While automatically accepting software updates has become the norm—and a recommended security practice—the CrowdStrike outage is a reminder to take a pause, some CIOs said.

“We still should be doing the full testing of packages and upgrades and new features,” said Paul Davis, a field chief information security officer at software development platform maker JFrog . undefined undefined Though it’s not feasible to test every update, especially for as many as hundreds of software vendors, Davis said he makes it a priority to test software patches according to their potential severity and size.

Automation, and maybe even artificial intelligence-based IT tools, can help.

“Humans are not very good at catching errors in thousands of lines of code,” said Jack Hidary, chief executive of AI and quantum company SandboxAQ. “We need AI trained to look for the interdependence of new software updates with the existing stack of software.”

Develop a disaster recovery plan

An incident rendering Windows computers unusable is similar to a natural disaster with systems knocked offline, said Gartner’s MacDonald. That’s why businesses should consider natural disaster recovery plans for maintaining the resiliency of their operations.

One way to do that is to set up a “clean room,” or an environment isolated from other systems, to use to bring critical systems back online, according to Chirag Mehta, a cybersecurity analyst at Constellation Research.

Businesses should also hold tabletop exercises to simulate risk scenarios, including IT outages and potential cyber threats, Mehta said.

Companies that back up data regularly were likely less impacted by the CrowdStrike outage, according to Victor Zyamzin, chief business officer of security company Qrator Labs. “Another suggestion for companies, and we’ve been saying that again and again for decades, is that you should have some backup procedure applied, running and regularly tested,” he said.

Review vendor and insurance contracts

For any vendor with a significant impact on company operations , MacDonald said companies can review their contracts and look for clauses indicating the vendors must provide reliable and stable software.

“That’s where you may have an advantage to say, if an update causes an outage, is there a clause in the contract that would cover that?” he said.

If it doesn’t, tech leaders can aim to negotiate a discount serving as a form of compensation at renewal time, MacDonald added.

The outage also highlights the importance of insurance in providing companies with bottom-line protection against cyber risks, said Peter Halprin, a partner with law firm Haynes Boone focused on cyber insurance.

This coverage can include protection against business income losses, such as those associated with an outage, whether caused by the insured company or a service provider, Halprin said.

Weigh the advantages and disadvantages of the various platforms

The CrowdStrike update affected only devices running Microsoft Windows-based systems , prompting fresh questions over whether enterprises should rely on Windows computers.

CrowdStrike runs on Windows devices through access to the kernel, the part of an operating system containing a computer’s core functions. That’s not the same for Apple ’s Mac operating system and Linux, which don’t allow the same level of access, said Mehta.

Some businesses have converted to Chromebooks , simple laptops developed by Alphabet -owned Google that run on the Chrome operating system . “Not all of them require deeper access to things,” Mehta said. “What are you doing on your laptop that actually requires Windows?”