PROVIDENCE, R.I. (WPRI) — Shoppers may have noticed tip requests popping up in all sorts of unusual places, such as pin pads and cashier kiosks.
The phenomenon is called “tipflation,” and it’s becoming commonplace at all sorts of businesses that never used to ask for gratuity.
Liam Malloy, an economics professor at the University of Rhode Island, tells 12 News tip requests are now extending far beyond the service industry.
Malloy explained that it’s easy for a business to add a gratuity option to its credit card payment systems, especially if it’s self-serve.
When deciding whether to tip, Malloy suggests shoppers factor in whether the employee relies on gratuity.
For example, Rhode Island’s minimum wage is currently $12.25 an hour. However, workers who rely on tips make roughly $3.89 per hour.
“A tipped worker is required to make up the difference in tips,” Malloy said. “If they don’t make up that difference in tips, the employer has to make sure that they earn at least the standard minimum wage.”
Malloy said while tipping is a nice gesture, tipflation could hurt hourly employees in the long run.
“If you are distributing more than $30 per worker … you could theoretically claim that, instead of being regular workers who you have to pay the full minimum wage, now you can say these are tipped employees that I only have to pay $3.89 plus tips,” Malloy explained.
Rhode Island is ranked 19th in the country when it comes to tipping, according to a recent restaurant trends report from Toast. The report reveals that Rhode Islanders tip 19.7% on average.