Finance

Tipping Culture: Time, Distance, or Appeal?

Dan Nicholson

Tipping in the United States has been a long-standing tradition in service industries. For many workers, tips supplement their income, often making up a significant portion of their total earnings. However, as times change, so do the nuances of the tipping culture. Two primary factors have been brought to the forefront: the effort involved in delivery services, and the influence of appearance on customer generosity.

Delivery Services: Time, Distance, and Costs

In an era where food delivery services like DoorDash, Grubhub, and Uber Eats have surged in popularity, the focus of the tipping debate has shifted towards the drivers. Delivery drivers are increasingly vocal about what they believe constitutes a good tip. While the traditional rule of thumb tends to be a 15% to 20% gratuity based on the total cost of the order, many drivers argue this doesn't always account for the effort involved in some deliveries.

Delivery drivers highlight the importance of considering factors such as time spent and the distance traveled when tipping. For example, a $5 tip on a $20 order might be sufficient for a short, uneventful trip. However, if the journey involves significant distance, traffic, difficulty parking, or restaurant delays, the value of the tip in relation to the effort expended decreases.

In cities like New York, where distances are typically shorter, this may not pose a significant issue. But for drivers working in regions where distance between a customer and a restaurant spans miles, it becomes much more important. Moreover, these drivers also bear the burden of vehicle maintenance costs including insurance, gas, and wear-and-tear.

Different drivers employ different strategies to maximize their earnings. Some, like Navi Vong, select orders based on distance to the customer and the total offer. Others, like Heaven Leigh, have personal goals such as earning at least $1 per mile. In light of these, companies like DoorDash are exploring payment models that go beyond simple percentage tips, considering factors like estimated duration, distance, and desirability of the order.

A Double-Edged Sword

The tipping culture in the United States is complex and deeply ingrained. For many workers, tips are crucial to their livelihood. However, it also means that factors beyond the quality of service can significantly affect their income. Drivers must contend with the inadequacy of percentage-based tips that don't account for distance and time. Servers, on the other hand, may feel pressured to enhance their physical appeal to boost earnings.

While the discussions around tipping culture continue, it is crucial to keep in mind the human aspect at its core. Whether it's the delivery driver bringing your dinner, or the waitress serving your coffee, they are people deserving of fair compensation for their time, effort, and service. The challenge lies in creating a tipping culture that truly reflects these values.

Sources:

Business Insider

Business Insider

Dan Nicholson is the author of “Rigging the Game: How to Achieve Financial Certainty, Navigate Risk and Make Money on Your Own Terms,” deemed a best-seller by USA Today and The Wall Street Journal. In addition to founding the award-winning accounting and financial consulting firm Nth Degree CPAs, Dan has created and run multiple small businesses, including Certainty U and the Certified Certainty Advisor program.

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