Outrage at Starbucks’ tipping prompt shows people don’t get how the tipping con works

It’s Monday morning. Groggy from a lack of caffeine, you pull into the Starbucks drive-thru to buy a cup of coffee. The same employee you see every morning hands you a cup of the same coffee you order every morning. But then you get a rude awakening: When you use your credit card to pay, a digital prompt on the screen asks if you want to tip $1, $2 or $5. 

Starbucks customers have long been able to tip in cash or on the app. But more recently, a tip prompt on credit card payments has been added as well. Customers have to respond to the prompt — if only to select “no tip” — in order to complete the transaction.

As evidenced by a deluge of social media posts, many people have strong feelings about this change. Most either express pleasure at the opportunity to better compensate Starbucks workers or outrage at the expectation of the surcharge.  

In my opinion, however, both reactions miss the reality of what’s happening — and are evidence that we have been conditioned to perceive tips from a fraudulent perspective. 

Those pleased by the change aren’t helping baristas as much as they think. At the same time, those disgruntled at finding a new tip prompt generally direct their pique at the wrong target. The disgruntled frequently argue that the level of service doesn’t merit a tip.  

But the idea that our tip reflects the effort on a server’s part or represents an expression of gratitude from us is a distortion. In truth, tipping is all but required as a matter of social courtesy, which restaurants trade on in paying their staff an hourly rate lower than the state or federal minimums in 43 states. Instead, the customer makes up the difference by tipping, which in full-service restaurants can comprise the majority of their earnings. In short, tipping is a scam to maintain the illusion of low prices while allowing restaurants to pay their employees less.

As the practice seeps into other hospitality settings and other forms of commerce, let’s not debate who “deserves” tips. Instead, let’s reject the con of tipping — and how it obscures the true cost of goods and services — from invading other areas of our lives.  

However, I do not wish to use this space to relitigate the lost-cause case against tipping. I accept it as the custom of the land, strengthened by the law of the land enabling employers to pay workers a subminimum wage if their job entitles them to tips. 

So, unrelated to job performance, I always tip 20%. You could pour coffee on my head and I’d still leave 20%. It is not a reflection of my assessment of how well servers do their jobs (that’s not my responsibility) or to punish them or their co-workers (with whom they likely share the tips) by withholding payment. My expectation is that any meal, snack or drink includes an unofficial surcharge equal to one fifth of the price.

Having said that, tip creep is a problem. 

There are two types of tip creep inching ever upward like a vine snaking its way along a trellis. The first type is the expansion in the places where we’re expected to tip, the second is the rise in the amount we’re expected to pony up.

Recently, I picked up a cheesecake to bring as a gift from a bakery I go to often. The bakery is doing well enough to grow into a global franchise, so it struck me as odd that they had added a tipping prompt similar to Starbucks. Even odder was that a new prompt popped up in a dance studio around that same time I registered my daughter for classes(!).

When we see tip creep like this, I think it’s reasonable to ask the owners if they pay their staff a living wage. If so, what entitles them to ask the customer for more? And if not, why not? In both cases, I wrote to ask.

Turns out that at the dance studio, it was a glitch. When the pandemic first shut it down, the owner hosted virtual classes for free and set up the option of tipping the instructors. Since resuming in-studio classes, she hasn’t been able to figure out how to turn the website feature off, so instead she offers refunds whenever someone tips. The cheesecake bakery did not respond to my questions.

Most people do not, of course, take the time to inquire about instances of tip creep. But acquiescence has negative consequences. 

Saru Jayaraman, president of One Fair Wage, told me back in 2019 that the organization was tracking tip creep in the retail and tech sectors as well. “You walk into a retail outfit, they turn Apple Pay around, and you’re asked to tip at a flower shop or when you’re getting bottled water at a coffee shop. And suddenly that worker can be classified as a tipped worker and be paid $2” an hour (in those 43 states with different standards for tipped workers).  

Three years later, following  the “great resignation” and with the overall rate of inflation now at 7.7%, competition for workers has forced employers to increase wages. The digital tip prompt is a sneaky way to pay increased labor costs while holding the line on menu sticker shock. That’s at least partly why the tip prompt has gone from occasional to nearly ubiquitous at bakeries and coffee shops, aggressively replacing the passive physical bowl of change at the counter.

Importantly, America’s favorite coffee shop is a quick-service restaurant, comparable and in competition with other fast-food leaders such as McDonald’s, Taco Bell and Subway. Starbucks, despite having more than 250 stores that have voted to unionize since last year, is known for offering better wages and benefits than their competitors. But if Starbucks normalizes tipping, expect other fast-food chains to adopt it — and then use it to pay workers less. 

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Of course, places that already have tipped workers want to get in on the largesse as well. For years, payment machines have suggested three options for tipping, but they typically ranged from 10% to 25%. These days, I see the prompt more frequently spanning 18% to 30%. A Starbucks payment terminal suggesting a monetary amount of $1, $2 or $5 can equal a tip choice of 20%, 40% or even 100% for some of the beverages.

Yes, tip creep is annoying. But customers who can afford a $5 coffee drink (a luxury for most people on Earth) can afford a $6 coffee drink. The larger problem with this form of tip creep is that it standardizes and expands the practice of artificially low menu prices, making it harder for upright employers to charge what is necessary in order to both pay workers fairly and also make a profit.