The History of Tipping in AmericaFrom Rebellion to $2.13 Per Hour

The word 'tip' as a gratuity traces to 17th and 18th century England, where London coffeehouses placed wooden boxes on tables labeled 'To Insure Promptitude.' Patrons who wanted faster service would drop coins in the box before ordering. While the T.I.P. acronym origin is a popular myth (it appeared long before acronyms were used this way), the practice of paying extra for better service was firmly established in English tavern culture by 1700.^[1]

Wealthy Americans returning from European tours in the Gilded Age brought tipping with them as a fashionable European custom. It spread rapidly through hotels and Pullman railroad cars. At the same time, restaurant and hotel owners recognized an opportunity: if customers tipped workers directly, employers could justify paying workers less. By 1890, tipping was widespread in American hotels, restaurants, and barber shops.^[2]

Not everyone accepted tipping. In 1904, the Anti-Tipping Society of America was founded in Georgia with over 100,000 members at its peak. Members pledged to never tip. Journalists called tipping 'un-American' and 'feudal' - a practice that reduced free workers to de facto servants. William Scott's 1916 book 'The Itching Palm' argued tipping was anti-democratic, fundamentally at odds with American egalitarianism.^[2]

The anti-tipping movement scored real legislative victories. Six US states - Washington, Mississippi, Arkansas, Iowa, South Carolina, and Tennessee - passed laws banning tipping between 1909 and 1915. The laws were nearly impossible to enforce and quietly repealed by 1926. The tipping industry had simply become too economically intertwined with restaurant and hotel labor to dismantle.^[2]

The expansion of tipping had a deeply racial element that is rarely discussed. After the Civil War, industries like railroads hired recently freed Black workers - particularly as Pullman sleeping car porters - at near-zero wages, betting that white passengers would tip them. The Pullman Company paid Black porters less than $30/month in the 1920s, while pocket change tips made the difference between survival and poverty. It took the Brotherhood of Sleeping Car Porters (1925) - the first major Black-led union in America - 12 years of organizing to secure a living wage alongside tips.^[3]

Prohibition eliminated alcohol sales, which had been the primary revenue source for many restaurants and bars. Faced with catastrophic revenue loss, owners slashed wages and became even more dependent on customer tips to compensate workers. Restaurants that survived Prohibition did so partly by transferring wage costs to customers through gratuities. The tip had evolved from a social gesture to a structural subsidy of the restaurant industry.^[4]

The Fair Labor Standards Act of 1938 established a federal minimum wage - but allowed employers of tipped workers to pay less, with tips intended to make up the difference. In 1966, Congress formally set the tipped minimum wage at $1.00/hour (versus $1.60 for regular workers). The law stated tips must at minimum bring the worker to the regular minimum wage - a rule called the 'tip credit.' This was the birth of America's two-tier wage system.^[5]

In 1991, Congress raised the federal tipped minimum wage to $2.13/hour - and then never raised it again. While the regular federal minimum wage has risen (though still inadequate), the tipped wage has been frozen at $2.13 for over 33 years. Adjusted for inflation, a tipped worker earning $2.13/hr in has significantly less purchasing power than one in 1991. This stagnation is the single biggest driver of why 20% has replaced 15% as the American tipping standard.^[5]

The COVID-19 pandemic created a brief surge in tipping generosity as customers supported struggling restaurants. But it also accelerated 'tip creep' - point-of-sale systems now present tip prompts at coffee shops, fast food chains, self-checkout kiosks, and retail stores where tipping was previously unheard of. Bankrate's survey found 66% of Americans have a negative opinion of these new tip prompts, and 'tip fatigue' has become a genuine cultural phenomenon.^[6]