Gratuities, often paid in cash, are hard to track. A new report sheds light on an estimated $11 billion of annual unreported income.
If you search "how much to tip," you'll find articles from many corners of the internet on how to do it correctly. With so much guidance out there, this debate over etiquette is far from settled: There are the recommendations of the traditional route (tip if the service was good) and the super-polite rules (always tip 20 percent) as well as experimental approaches (a game theorist might advise tipping only if you plan on going back). Regardless of what the right amount to tip is, researchers have tried to document the tipping behavior of Americans across the country. Turns out, tipping data is hard to track because cash tips often go unreported. (And sometimes, even having the data doesn't make tipping behavior less bizarre.)
Square, a payment service, tracked credit-card tips and found Alaska, Arkansas, and North Carolina to be the states with the most generous tippers. But Square's data isn't necessarily representative, because it only tracked tips from credit-card transactions, which tend to feature bigger tips than when cash changes hands.
The Frequency of Credit-Card Tips in the U.S., by State
Payscale, an online salary-information company, has recently released a report with survey data from 15,000 food-service workers. There are a couple reasons why this data is insightful: Firstly, the Bureau of Labor Statistics doesn't have information specifically regarding tips—it is included in the hourly wage estimation. A 1996 BLS experiment tried to collect data on tips from restaurant workers, and found a high nonresponse rate (40 percent did not respond). Secondly, the IRS estimates that as much as 40 percent of tips go unreported. It's hard to track for an obvious reason: Everyone likes giving and getting tips in cash. Nationally this adds up to as much as $11 billion in unreported (and untaxed) income. So self-reported data, which doesn't come with any tax consequences, might paint a better picture of how much servers are actually getting in tips.
According to Payscale's data, bartenders, waitresses, and waiters were tipped significantly more than chefs and cooks. (Though it's important to note that chefs and cooks usually get higher base pay.) Where tips amounted to 0 to 10 percent of chefs' and cooks' hourly incomes, for bartenders, waiters, and waitresses that number could be as high as 70 percent. For example, Payscale's top median tip earners were bartenders in San Francisco, who reported earning a median of $15.50 in tips per hour. For bartenders, the worst place to be is New York, where the median amount earned from tips per hour is $7.10. According to the BLS, bartenders make on average $18,900, or $9.09 an hour including tips.
Median Hourly Tips for Waiters and Waitresses
Waiters and waitresses in Miami, Boston, and San Francisco reported the highest median tips per hour at around $13. The lowest median tips per hour for waiters and waitresses—around $7—were in Minneapolis, Detroit, and Seattle. This is consistent with the BLS's finding that tips are generally higher in metropolitan areas and regions with resorts.
PayScale also found that there's a gender gap for tipping, with men being tipped less than women. In PayScale's sample, women earned $1 more per hour in tips, but men were paid $1 more in base pay—bringing both to about $13 for median pay per hour. That's still below the national median for hourly wage for all occupations, which is $16.87, but it's $4 more than the BLS median for waiters and waitresses. So either the workers surveyed were in the 90th percentile of waiters and waitresses, or (more likely) we're getting a better picture of what they really earn. In the meantime, the fairness of tipped workers' wages remains as hotly debated as how much to tip.
Bourree Lam is a former staff writer at The Atlantic. She was previously the editor of Freakonomics.com.
