Women's Money Wisdom

Episode 178: Tipping: Navigating the Gratuity Landscape in a Changing World

• Melissa Fradenburg, AIF®️ • Season 3 • Episode 178

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Ever wonder why it feels like you're constantly asked to shell out bigger tips for everything from your Uber ride to your takeout order? You're not alone! On this episode, Melissa Fradenburg is pulling back the curtain on the convoluted world of tipping in the gig economy. We'll explore the norms, the expectations, and the technology that seems to nudge us into tipping more often and more generously.

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Speaker 1:

Welcome to the 52 Pearls Weekly Money Wisdom Podcast. I'm Melissa Joy, a certified financial planner and founder of Pearl Planning, and I'm Melissa Friedenberg, financial advisor with Pearl Planning. Pearl Planning is a financial planning and investment management company located in Dexter and Gross Point, michigan. We work with clients all around the country. The purpose of our podcast is to explore specific financial topics and provide advice you can use in your everyday life.

Speaker 1:

Hello and welcome to another episode of the 52 Pearls Weekly Money Wisdom Podcast. This is Melissa Friedenberg, and this week I am going to be talking about tipping. This has come up a few times in my personal life in the last few weeks. I traveled to New York City and really just trying to figure out with this new kind of gig economy like Uber's and Lyft's, and then it just seems like at every kiosk and counter we're being asked to tip. And so what is the proper tip amount, who gets a tip, who doesn't and why does it feel like we're being asked to tip more? I hope to cover that and just some other insights, as well as link some resources to help you figure out who to tip and how much. So, as I mentioned on this recent trip to New York, I was taking a ride share from the airport and it was like 45 minutes to an hour, so it was kind of an expensive ride and at the end when I asked for a tip, I wasn't sure what the proper amount is Like. Do we get 20%? Because I consider myself to be a pretty good tipper when it comes to like my hair stylist. I'm always a 20% tipper, a little bit more on the holidays and then at restaurants. I worked for many, many years, starting out like scooping ice cream when I was my daughter's age and then a hostess, server and bartender throughout high school and college. So I definitely feel like tipping is important and I do understand in the service industry what people are paid as far as less than minimum wage and how they depend on tips. But I do feel like there is like a change in our culture that is requiring both tipping of more people and then a higher percentage as far as like that starting point or norm. So I do want to address this.

Speaker 1:

One of the things that also prompted this episode is in a Facebook group of working moms locally. This came up as people were sort of turned off. One particular establishment has where you pick up to go order a food and they turn the iPad around towards you and the automatic tip starts at like 18%. So it's like 18, 20 or 25% are your options and then you can hit this other button that's like custom and hit zero or no tip. But this is for pickup orders and it is really off-putting. So there was a huge comment thread on this and I felt like it sort of warranted an episode you know what are the norms or what is expected Because I feel weird.

Speaker 1:

There's like pressure when they turn that thing around. Even if they walk away, which most do they don't stare at you as you enter your tip. But to hit that like custom tip I also don't feel like, especially with prices of food having gone up, if I'm picking up a few things like to go order for either my husband and I or my husband and I and the kids, if it comes to like 80 bucks, I don't feel like a 20% tip on a to go order is necessarily warranted. It also would get quite expensive and limiting, I imagine, this establishment. If they continue to do this, fewer people are going to order to go orders, right, because at the end of the day, tipping at least how I grew up experiencing it as a server is for the service that is provided at a restaurant. So if you're just putting stuff in a bag and handing it to me and running my credit card, do I feel like that's the same as sitting down at a restaurant? Not really, and in fact in a little research here, usually what would be expected for it to go service would be about 10%, and then on top of it people are not tipping on tax, so you're subtracting the tax amount and then doing 10% of the food total. So I personally probably do leave about 10%. But a few times when that iPad's turned around and it starts at 18%, I've gone to custom and just left like five bucks because it's irritating for it to go order, and this is at a nicer restaurant that does a pretty heavy to go business. Now what about fast casual restaurants? Again, in my research for this podcast, I'm finding that people are going to drive through windows and walk up counters for chicken fingers and fries and having that iPad turned around as well, with a percent. Now I know at Panera they'll ask if you wanna give like a dollar or $2 or $3, which again is not off putting. I'll do the $3. There's something about that percentage. And let's talk about the technology, because I think that's a huge aspect in this, and the iPad and the electronic thing makes it feel a little bit different.

Speaker 1:

Again, my first job was scooping ice cream in downtown Princeton at this place called Thomas Suites, and I can't remember what I made hourly. I know it was about the same as I was making babysitting, maybe a little less actually, but when we factored in tips and we just had a jar, this establishment did a ton of business. So like a Friday or Saturday night there was a line out the door and down the street, so we made a good business. On tipping, but I don't think people left more than a dollar or two and there certainly were people that didn't tip at all, and this was in the mid 90s. So the difference between we didn't have people weren't paying with a credit card, much less on a little iPad, when I was working at this ice cream shop. So it was if you bought $10 worth of ice cream and over $20 worth of ice cream, you were leaving a couple of dollars, usually your change, not more than that. It's a little bit different Now people don't think twice about putting $10 on a credit card, swiping it, and so things have changed and there's again, just it's a different and I think that plays a major role in kind of this counter tipping that is off putting to people.

Speaker 1:

Same thing with Starbucks I know there was a big like to do when they started recently, like offering to put a tip in before checking out, right Cause now if you order on the mobile app it will kind of prompt you to add a tip after you check out, and it never did that before and I think it's the way that it's presented. Before, if I went to a local coffee shop and bought a coffee, again I would put for a $5 coffee, I would put a dollar or $1.42, whatever my changes, if I gave them a five. So it really hasn't changed, it's just the delivery method of it. So I did consult because again, I feel like I'm a good tipper, but I have been a little off put by some of these. You know, ipad turnaround, assumed tips, counter service type places or coffee shops. So in preparation for this podcast I did in fact consult the Emily Post Institute and what is considered, you know, a proper tip for a barista or a counter type situation and there's no obligation to tip.

Speaker 1:

So for baristas or, you know, counter service type restaurants, it's really up to you. It does say if you're a regular customer or have a special order something a little more complicated that leaving some money would be appreciated. So, as far as etiquette goes, if they turn the iPad around, there is no like normal standard tipping For to go orders at a restaurant, as I was mentioning, 10% is customary. So again, that 10% on the bill itself, not on the tax, not a hard calculation in your head, but don't feel guilty about, you know, going to that custom tip and not giving 18%.

Speaker 1:

So the other thing that I think has made us feel like we're constantly being asked for a tip is, if you think about the gig economy, right, so these things didn't exist 10 years ago. There was no Uber or Lyft or Uber Eats or Postmates. Food delivery was really just pizzas for the most part, right. So it does feel like everybody is asking for a tip, but these services really didn't exist. I mean I know because my kids are now, you know, early teams and when they were babies I was a stay-at-home mom and they were really close in age. So 18 months apart, you know, I had no family out here and Jay traveled a ton for work, so I would have loved to use any of those food delivery like grocery delivery services or anything like that, and it didn't exist, even click lists, right. So like where you go get your groceries, you order them on your phone and you pick them up.

Speaker 1:

The technology again has enabled these types of services that really Offer you an ease to your everyday life and these people are Providing a service, and I do believe that you know these companies were to pay people outside of their tips enough to be a living wage, that it probably wouldn't be profitable for the grocery store, for instance right, because they can have people come in and fill their own carts and check out like we always have. So I do think there are great improvements to our lifestyle that have Enabled especially working moms to be so much more efficient, right and have more time, which is so valuable. So I do feel like these service providers deserve a tip. But if it feels like you're being asked to tip everyone, keep in mind that some of these services really did not exist. The other area where I feel like I get a little caught up in tipping Both my mom has moved in the last few years and we have moved a few times is Movers right and what is expected there?

Speaker 1:

So interestingly, I'll link the article below by architectural digest. But the standard Tip for movers is five to ten dollars per mover per hour and they say typically to you know they prefer to get tipped in cash and you obviously don't know, going into the movie, give you a range or an estimate of how many hours. So they say to set aside 20% of the total moving cost estimate Available to pay and again depending on how many people are working and how many hours it takes. But I think that's fair. The other thing that comes up with moving are like Appliance delivery people and like carpet installers and for somebody that's coming in and in carrying a heavy appliance and hooking it up for you, I Usually give like $20 a person. So if there's two guys and the carry in like some to the basement they're carrying in a washer and dryer and installing it and they're friendly and efficient and they don't sting up your walls, I Usually leave like give them each $20.

Speaker 1:

Now, I am somebody who doesn't have cash on them all the time, so I do have to be like pretty aware of like if I'm having this kind of a delivery, whereas, like if people are delivering furniture from like pottery barn and you've already paid this like Outrageous white glove delivery fee, I'm a little less likely to tip on top of that. And I do realize that people are not necessarily getting like pottery barn is probably pocketing a lot of this delivery fee. It's not necessarily going to their drivers and delivery people but again, it has to do with the overall like sting of it right and Keeping in mind when you're getting crowbar Grocery delivery there's a delivery fee but that's probably not going to the person delivering it and I tend to tip more depending on like the difficulty. So if I have of groceries being delivered in a snowstorm or a rainstorm and I don't want to go out because the weather is bad, like, I'll give a little extra because it required a little extra work and I think that's pretty customary. But again, keeping in mind that you know who to tip and who not to tip, it's just sometimes stressful. I Don't tip people that come to like do or like contractors or painters or plumbers.

Speaker 1:

The other place where I know tipping is customary but I'm never quite sure how much to tip is Like at a hotel for concierge. So my last trip to New York Uber pulled up and I know the Uber driver. Again I'm gonna tip him. He was like walking around to the back to go open and get my luggage out, which was super heavy. I don't know where I am, I'm not even sure. Like you know, we're pulled up in front of a busy hotel on a busy street in New York and like where to go in and where the desk is. So it's like these guys were fighting over who's going to get my bag out of the car and they both head around.

Speaker 1:

The concierge grabs it before the Uber driver can and I'm still checking out and he's standing there in the 95 degree heat with my bag and holding the door for me and ready to show me where to go to check in, and then stands there awkwardly as I check in with my bag, asks me if I need help to my room, and that's just awkward. At this point I'm like, okay, so he's taken my bag out of the car, which the Uber driver would have, and he's held a door for me which is pretty much like the bellhop's job at a hotel, and then just standing there, how much do I give him? Now I know my husband, if we're traveling with the kids, and especially when they were babies and we had like a playpen and like seven bags and a stroller, it's like okay, he'll slip them like a fair amount to have him take the stuff up to the room so that like it'll be there. But now it's just me. I've got one roller bag that I've carried all through the airport, pretty sure that I, once I find what the elevator is that I can make it up to my room like this right. Plus, I don't know like I don't want to rolling it into my room and that awkwardness of standing there in your room with like a random bellhop, it's just all around awkward. But how much do I give him now?

Speaker 1:

So, interestingly, it says if, like concierge provides an additional service, such as securing theater tickets or restaurant reservation, they should be tipped. The Emily Post Institute suggests $5 or $10 in most services. If the tickets or reservations were particularly hard to get, increase the tip $15 or 10 to 20% of the ticket price. As far as like I'm talking about, where they just grab the bag out and they sort of walk you in, emily Post says you know, holding the door is their job. But if they have really helped you out with your luggage and your bags, between $5 and $15 is customary to tip. Again, opening the doors, their job Valet. If a valet is like hailing a cab or they're going to retrieve your vehicle, between $3 and $5 is customary. So that's just you know. Again, I think what gets people riled up is for, like hotel valets at Marriott's. Like you, you spend like $30 a day to park your car there and they make you like park it in like a city, like New York valet. You're not going to drive in and park your own vehicle, so you're already spending $30 a day if you have a vehicle there. And then on top of that, tipping seems like. But again, keeping in mind that a lot of these employees are not making a large hourly wage and they're depending on tips.

Speaker 1:

The other weird thing in hotels is housekeeping. I feel like it's kind of rubbed me the wrong way recently because hotels are doing less and less of the housekeeping now after COVID. It started during COVID. And then there's the thing like with the environment, like hey, we're not going to like wash your sheets, we're not going to wash your towels unless you tell us or you know, only put the dirty ones here and I can't help but feel this isn't an environmental thing. This is like a corporate thing trying to save money, like hey, we're not going to clean your room unless you ask us to, or we're not going to do it unless you stay for two more days.

Speaker 1:

And when it's just me in a hotel room, it's fine. I like barely even move the sheets around. But when we stay in a hotel room and it's like four of us and then we're kind of like shaking people down in the hallway for towels and not getting our room cleaned, it's kind of annoying. And then on top of it, like leaving a note like hey, my name is so and so and I'm your like house cleaner who's handed you towels three times throughout your stay. But if the service is good and we've stayed there for like a few nights and had regular hotel service, I will leave some money at the end of the stay, but I'm never sure how much. So it was interesting to kind of read about what is customary. So if you're like me and you're wondering how much to leave the hotel housekeeping, it's about three to five dollars for the initial service and then one to three dollars per night after that, which is customary? Is it a room full of like family and they're making a mess and you've trailed sand in and they're vacuuming and changing the sheets and your kids spilled stuff and they're doing a great job? Or did you stay one night and, you know, barely even use any towels or make a mess? So I think that depends on that.

Speaker 1:

I do feel again the frustration comes from like is housekeeping getting paid properly by corporate, by the hotel, or are they depending on you to supplement through tipping? And I don't ever want to take it out. I think housekeeping is such a hard job. I would never want slight them right or not pay them a proper tip. But when you look at all the fees that the hotels are adding on for a stay, I think that's when people get a little frustrated and sometimes take that out on tipping the staff. So hotel stays are a big one. I hope that you find that helpful because I know, like me, I'm just not sure what other people leave as far as a tip and I never want to feel cheap and I never want people to like think, oh my gosh, she's like not being generous at all. And I also don't want to overpay because I'm already feeling like I'm overpaying for a lot of these things compared to what I paid a few years back. And again, that is due to just the service industry being shorthanded. I think service has gone down while tip expectations have gone up, and that's not necessarily the fault of the individual worker, right? So, keeping that all in mind, I'm going to just wrap this up by sharing a little bit about who to tip and who not to tip. We talked about hotels, we talked about restaurants, talked about counter service.

Speaker 1:

Some other ones of customary tipping would be hair salons and spa services. Nowadays, again, I think it's like with the service industry of delivery and food delivery. There are so many more options out there. I know for me I used to just get a haircut or a haircut and highlights. Now I'm getting my eyebrows done, my eyelashes done, sometimes I'm getting a spray tan, so like it feels like everybody's putting their hand out for a tip. But there's so many more services available and I think the average person is getting more of the services done versus like plucking your own eyebrows at home, right? So typically, how much to tip hairdressers and nail technicians? About 15 to 20%, and that is from the Spa Industry Association. So anytime you're getting any of those things done, that is customary.

Speaker 1:

So the other area where tipping is somewhat customary is with house cleaners. So if you have someone come and clean your house every two weeks, typically you want to leave them a nice tip, and I do. I typically tip 15 to 20%, depending on what I have in my wallet on a regular basis, and then an additional tip over the holidays, and that tip over the holidays is usually the cost of one cleaning. The other people that I tip over the holidays are mail delivery and garbage pickup, and where we live here in Girls Point they actually come like down to your garage and will get the stuff from like wherever you keep trash. They have these little like golf cart dumpster things and they do that because the streets are quite narrow, so it is oftentimes they will like park the actual garbage truck a little bit further away. They do a great job so and it's always the same one or two guys. So we have pretty much been giving them like a holiday card with some cash, not a ton, just like 20 a person again is like a little thank you, and I'm going to link this article below.

Speaker 1:

But it was interesting for holiday tips of like what is generally acceptable for holiday tipping standards. So for regular babysitters or nannies one evening or one week's pay respectively. Hairstylists or beauticians equivalent to one visit. Door attendants so I'm assuming you're like living in a city $20 to $100, depending on the level of service provided. Maintenance workers, such as housekeepers, landscapers one week's pay.

Speaker 1:

Repair people Again, this is for holidays, like I'm assuming it would depend on which holidays you yourself or they celebrate, right? So, repair people $20 to $100. Now, that's a wide range. Newspaper carriers $10 to $30. I don't even know my newspaper. Like we get barons delivered to the house and I'm pretty sure I mean I see on the security cameras that a car rolls up and they like throw it in the driveway, but I'm not sure where. I would even like how I would tip them for the holidays. Cash collectors $10 to $25 per person, if allowed. So, keeping in mind that some of these employees cannot accept tips. Dog walkers one day or one week's pay. And dog groomers equivalent to one visit. So interesting, who have I not been tipping? Well, to think about that.

Speaker 1:

Lastly, to wrap it up, I am going to talk about professionals who provide a service but are not customarily tipped. These include the following accountants, financial advisors, lawyers, medical professionals, mechanics and teachers. Now that's interesting. So teachers, I do owe it. Well, now it's harder because my kids are older, so they have like five or six teachers every you know marking period and they change so it's not like the same teacher throughout the year. But when my kids were in elementary school and they had like a teacher for the year, I would always kind of chip into the class gift at you know, or like birthday or teacher appreciation day. Then on top of that, I always feel pressure to like send in a little something specifically you know from me, like a Starbucks gift card or a Target gift card. So that gets expensive At the end of the day, though I think it's interesting that my profession I mean I couldn't imagine people tipping right Like being like oh, you made me somebody this year here, have a hundo like I.

Speaker 1:

Just it'd be so weird. But again, I've worked in service industries like restaurants and bartending and it's customary. So don't tip your financial advisor or your accountant or your attorney or your doctor, but pretty much everyone else. It's customary to tip Takeaways here. If you really are feeling, with inflation, increased costs and now tipping that this is really cutting into your cash flow. Maybe you've got to go back to picking up your own food at the grocery store and doing your eyebrows or your self tanning or whatever it is that you're doing in service industry on your own and not doing ride shares Because, again, a lot of the people in the service industry are dependent on these tips and if you can't afford to tip, then you should not go out to eat or use these services. It's sort of what the general consensus is when I was doing some research. But best to use your own judgment and not get hung up by the automation of it all.

Speaker 1:

Share your thoughts. I'd love to hear the most ridiculous place that you've been asked to give a tip, or something like. If there was an altercation where somebody expected a 20% tip to go order, I'd love to hear about it. So do share and we can use that information on a future episode. But I hope you found it helpful. I'm gonna link some additional resources in the show notes and, as always, if you did enjoy this episode, let us know and share with others. We greatly appreciate that. Thanks for listening and have a great day. You can access our first two seasons of this podcast on our website at wwwpearlplancom, or on Spotify. If you're interested in learning more about pearl planning, feel free to sign up for our newsletter, also found on our website.

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Melissa Joy, CFP

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