Tips shrink as inflation rises and COVID ends

FOX Business Flash top headlines for March 23

Here are your FOX Business Flash top headlines for March 23.

It's hard to work for tips.

During the pandemic, many Americans began tipping service industry workers more. This was likely due to people wanting to help others out during a difficult time, especially those who had to work as food delivery drivers.

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While Americans became more generous during COVID, inflation and other factors may be reducing the amount that they tip. (iStock)

Based on a recent report, however, the amount that workers are receiving from tips appears to be declining.

A variety of factors are causing this trend, the Wall Street Journal reports. During the pandemic, Americans began tipping as much as 30% for deliveries and other services. Recent data collected by Block Inc.'s payments unit shows a decrease in the amount of transactions that receive a tip for online or phone purchases.

These sorts of purchases would include restaurant delivery services.

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Dine-in restaurant workers are still receiving higher than average tips. (iStock)

One reason tips may be decreasing is due to more businesses using online apps to make appointments and accept payments. When customers pay with cash, they tend to tip more. Many online payment services calculate tips based on percentages, which might be lower than the amount most people would generally think to tip for a service.

One barber who spoke with The Wall Street Journal explained that a customer who usually tipped heavily for haircuts recently made their first payment through the business' new app. The tip was only a third of what they would normally give.

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The rise of electronic payments may also be decreasing tip amounts. (iStock)

Another cause for lowered tips could be the rise in prices. Even an increase of 50 cents can cause customers to leave smaller tips.

Full service dining, however, is still seeing strong tipping habits. Customers paying for in-person dining services have started tipping more than 20% on average. Meanwhile, remote transactions at restaurants receive 16%.

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