3 in 4 Canadians believe tips are just an excuse for employers to underpay their employees

According to a study by the Angus Reid Institute, 3 in 4 Canadians (73%) believe that tips just allow employers to underpay their employees.

The theory is that employers are as unwilling to pass cost increases onto customers as they are to increase wages, preferring to encourage more tipping to boost their employees’ take-home income.

“As inflation has increased the cost of everything, some experts believe business owners already feeling the pressure from suppliers are wary of passing any more cost increases onto customers. Instead of raising the wages of employees, and then incorporating that into their prices, owners instead use sales machine prompts to encourage higher tips and ‘maintain the illusion of lower menu prices,’ argued food reporter Corey Mintz. However, for restaurateurs, there’s another issue: if they were to raise prices by 20% to increase their employees’ wages, they would be taxed on that additional revenue.”

Large majorities of Canadians are also reporting higher instances of “tip-flation” (62%) and “tip creep” (83%).

“Inflation has touched food, housing and even common customary practices like tipping. Gone are the days of the 15% standard tip, as so-called ‘tip-flation’ has ballooned tip suggestions from point-of-sales machines to as high as 30%. Canadians also report ‘tip creep’ — where locations that previously may not have prompted for a tip have added the request to digital payment machines — as a source of fatigue.”

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