Customers routinely tip service workers, but many shoppers are perplexed and even angry to find some self-checkout machines prompting them to leave upwards of 20%. WSJ reporter Rachel Wolfe joins host J.R. Whalen to discuss so-called tip creep and where, exactly, those tips are going .
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J.R. Whalen: Here's your money briefing for Tuesday, May 9th. I'm J.R. Whalen for the Wall Street Journal. It's pretty common for a shopper to tip a service worker who gets them their morning coffee or who cuts their hair, but is it fair game for self-checkout machines at places like airports and stadiums to ask you to leave a tip?
Rachel Wolfe: Shoppers are perplexed. Some of them are really angry. They say that tipping is everywhere and they're starting to get fatigued by seeing so many tip screens.
J.R. Whalen: We'll talk to Wall Street Journal reporter Rachel Wolfe about who you're tipping and where that money actually goes. That's after the break. Self-checkout machines have streamlined the process for a lot of shoppers to pay for their items and be on their way. Wall Street Journal reporter, Rachel Wolfe, is with us to discuss how some of those checkout machines are now asking for tips and stopping shoppers in their tracks. So Rachel, is this something new? And how much in tips are self-checkout machines asking for?
Rachel Wolfe: This is very new. Self-checkout is new. So the idea of tips at self-checkout is even newer and self-checkout machines are asking for the standard 15, 20, 25%. It is really shocking to customers who say they don't know what to do.
J.R. Whalen: All right, but we normally see a range of tip options when you're actually tipping on service, but the machine usually just provides one level of service. Is that confusing people?
Rachel Wolfe: People are definitely confused why a machine should get a tip. The companies for their parts say that the tips still go to the employees who are stocking the shelves or doing the other things to make it possible. At restaurants, it's going to the cooks, so it's not just going to the machines for the companies that I spoke to. Though some of the labor experts that I interviewed, worry that because there aren't the same protections for tipped robots as there are for tipped employees, that companies could use this as a way not to give tips to employees.
J.R. Whalen: So there could be a bit of an undercurrent here?
Rachel Wolfe: It's possible. Tips legally have to go to an employee, things that are classified as a tip on your check. There are laws that say that those wages need to go to employees. There have been plenty of lawsuits when companies have not followed those laws and this is just sort of uncharted territory. So the experts are divided on how this all looks. And again, the companies that I spoke to did say that the tips go to employees and what's happening is that tips are a way, again, some labor advocates say for companies to subsidize employee pay. Rather than paying them more, they're putting the onus on consumers to bolster their wages.
J.R. Whalen: Now you spoke with some shoppers who've experienced this. How's this going over with them?
Rachel Wolfe: Shoppers are perplexed. Some of them are really angry. They say that tipping is everywhere and they're starting to get fatigued by seeing so many tip screens. They emphasize that they always tip for service. They recognize how important tips are to employee pay. Many of the people I spoke to have either worked in the service industry previously or still work in the service industry. These are not people who are stingy by any means. They are really skeptical of where these tips are going and they worry that companies are using this as like, "gotcha" tactic. It feels like a bit of a scheme, they say.
J.R. Whalen: How does this fit into the overall trends of tipping by shoppers, whether they're tipping a person directly or tipping a machine?
Rachel Wolfe: So tips have gone way up in recent years. Big part of that is the proliferation of those tip screens we now see everywhere. Square, whose technology powers many of those point of sale machines, says tips transactions were up 17% year over year at full service restaurants and 16% at quick service restaurants in the fourth quarter of 2022. So we're seeing a big increase and so far there isn't good data to suggest that tip fatigue has set in and people are tipping less. It's more that people are wondering how long they can keep doing this and when it's going to end.
J.R. Whalen: Now, a moment ago you mentioned that there are laws governing tipping and they govern tips given to people. Is there any word on these laws having to be revamped and updated because now there are machines involved?
Rachel Wolfe: I don't think that's something that has made it into the legal sphere as of yet. I think it's brand new.
J.R. Whalen: Is there any concern that the machines asking for tips could rub shoppers the wrong way to the point where it might affect their tipping decision in other scenarios?
Rachel Wolfe: The consumers I spoke to said that seeing a tip at self-checkout doesn't necessarily make them less likely to tip humans in the future, but they are wondering when it'll end and what the point of a tip even is anymore when you're being asked for tips for absolutely everything, including for checking yourself out. So yes and no. Again, the consumers I spoke to weren't like, "Screw this, I'm not tipping anymore." These are really generous people who think a lot about tipping. They're very moral and they're really twisted up in knots over this question of do you tip at self-checkout? A lot of the people I spoke to did still tip, which was really interesting.
J.R. Whalen: That's Wall Street Journal reporter, Rachel Wolfe. And that's your money briefing. I'm J.R. Whalen for the Wall Street Journal.
J.R. Whalen is host and producer of The Wall Street Journal’s Your Money Briefing and Minute Briefing podcasts.
He joined WSJ Podcasts in 2017 after nearly a decade of producing news and business programming for the Journal’s video department. Before joining the Journal, J.R. held positions at CBS News, CBS Sports, HBO, the Associated Press and Who Wants to Be a Millionaire, where he was responsible for assigning dollar values to the questions. He began his career at WVIP-AM/FM in Mount Kisco, N.Y., as news and sports director. He is a graduate of Syracuse University, and owns about 100 pairs of cufflinks.