In this sub stack post, Nate Silver takes on the topic of inflation, framed by a recent viral story about McDonalds. I’ve been skeptical about the “greed-flation” angle going around, but I think...
Inflation — the price of a fixed basket of goods — increased a lot during this period: by 16 percent. But consumption increased by considerably more than that: by 25 percent. That’s right. From December 2020 through June 2023, Americans’ financial outlays increased by 25 percent. It’s not just that the fixed basket of goods was getting more expensive — they’re also putting more in their baskets.
In this sub stack post, Nate Silver takes on the topic of inflation, framed by a recent viral story about McDonalds. I’ve been skeptical about the “greed-flation” angle going around, but I think this post makes a compelling argument about how companies are squeezing more and more out of customers.
Anecdotally, that's why I hear from people around me. Things are more expensive, but it's not mapped to inflation. People should blame the system that allows megacorps to use their unlimited power...
Anecdotally, that's why I hear from people around me. Things are more expensive, but it's not mapped to inflation. People should blame the system that allows megacorps to use their unlimited power to squeeze blood from a stone. I fear people are going to blame government, and elect the people openly campaigning on giving the megacorps more power.
One thing I've made particular note of since the pandemic is tips. Since every place now has some kind of online ordering system, it's trivially easy for someone to flip on the "ask for a tip"...
One thing I've made particular note of since the pandemic is tips. Since every place now has some kind of online ordering system, it's trivially easy for someone to flip on the "ask for a tip" button at every. single. lunch place. Tipping culture is it's own thing, but I take particular umbrage with any place where I order in person and the system asks for a tip before they've done literally anything except take my order.
Or tipping before the service is even rendered! Several weeks ago, I tipped 18% on top of an already expensive lunch at the Tartine Bakery, a pricey, bougie bakery and patisserie in San Francisco...
Or tipping before the service is even rendered!
Several weeks ago, I tipped 18% on top of an already expensive lunch at the Tartine Bakery, a pricey, bougie bakery and patisserie in San Francisco — we're talking $18 for a sandwich, before tax and surcharges. It was busy and I felt for the staff. I think we spent like $60+ on sandwiches, pastries, and coffees for a single lunch. It was a nice day and we felt like treating ourselves.
But the service rendered was terrible. They got my friend's sandwich order wrong, and when he told the staff, they just offloaded him to the manager accused him of lying to get a different sandwich. I really wished I could've retroactively tipped them a fat zero.
I've decided that from hereon out, I will never tip before actually receiving the service.
An 18% tip is already quite a lot, but to do that at a place which is supposed to be fast moving and where you pay before you sit down is unheard of. Good on you for changing your mind.
An 18% tip is already quite a lot, but to do that at a place which is supposed to be fast moving and where you pay before you sit down is unheard of. Good on you for changing your mind.
It was the minimum suggested tip on the swivel terminal. I feel that tip creep had hit California extra hard, because people here are liberal and highly susceptible to being guilt tripped. I’ve...
It was the minimum suggested tip on the swivel terminal. I feel that tip creep had hit California extra hard, because people here are liberal and highly susceptible to being guilt tripped. I’ve been to places where the default tip levels go: 20%, 22%, and 25%.
The most egregious offender: A few months ago, I tried a new barber place. After my haircut, I was shown three suggested tip levels: 30%, 40%, and 50%. I distinctly remember entering in a 10 or 15% tip manually because I was so shocked.
I'm in mainland Europe where tipping is basically left up to the customer when paying. It has the issue that when paying by card people stop doing it because when you pay by cash you "round up" to...
I'm in mainland Europe where tipping is basically left up to the customer when paying. It has the issue that when paying by card people stop doing it because when you pay by cash you "round up" to whatever increase you want based on how much you wanna tip. The biggest ones are when you pay like 94€ for a 4 person table and increase to a 100€ and just hand them the money that way.
I was in Manchester, UK recently to visit some friends and I was shocked that since card payments are so ubitiquous there, restaurants had moved on to add a 10% tip to any check as a "service charge" and you have to ask for a new one with it taken off, basically shaming you into paying it. At the same time, at no point did I actually know if the service charge ever gets transferred to waiters like it should because it was sold to me as a tip when I inquired about it.
In most cases when you're by yourself it's okay, because you you pay 20-25 GPB for food so the service charge is okay, but when we were together as 5 people and paid like 120 at a Sushi place suddenly you're tipping enough to buy like a whole extra meal. That's pretty wild.
Arsicoult Bakery is amazing and they have a location near the main library and the Civic center that is not well known. The government workers know it but no one else goes there to eat They have...
Arsicoult Bakery is amazing and they have a location near the main library and the Civic center that is not well known. The government workers know it but no one else goes there to eat
They have locations with lines out the door, but not this one.
If you are just ordering at a counter and waiting for the food, there is no service being rendered there. Those tip add-ons don't even go to the employees, they go straight into management...
If you are just ordering at a counter and waiting for the food, there is no service being rendered there. Those tip add-ons don't even go to the employees, they go straight into management pockets.
Tipping is only for an actual service, like at a sit-down restaurant when a server actually serves you, brings drinks, etc.
Never ever tip at a kiosk, it only helps the corporation not the employees because it isn't for a service.
Cash tips at like a mom and pop shop is different, but it's so rare for those to exist because everyone pays with card these days.
Don't tip kiosks, ever. Theyre predatory and sucking your money for nothing
I agree that cash tips are better. I think if workers weren't getting the tips there would be more news stories about it? It can't be kept secret from the workers. (I do vaguely remember seeing...
I agree that cash tips are better. I think if workers weren't getting the tips there would be more news stories about it? It can't be kept secret from the workers.
(I do vaguely remember seeing stories like that for delivery.)
There's no stories because there's nothing illegal about it. Tips for service are regulated. Tips at the kiosk are "for the company" and are not regulated or legally entitled to the employees....
There's no stories because there's nothing illegal about it. Tips for service are regulated. Tips at the kiosk are "for the company" and are not regulated or legally entitled to the employees.
You're throwing your money at the corporation because you think it's the same as tipping for service at a restaurant but it isn't, they're totally different things and they just don't tell you.
They're preying on peoples good nature/social consciousness.
Have any of the employees at these places ever asked you to tip or pointed it out? No. Its entirely automated, and tricking people by making them think it's part of the social norm of tipping when it isn't.
I'm skeptical. A brief search didn't find any special treatment for tips taken at the cash register, and this sort of thing isn't actually new (consider credit cards).
I'm skeptical. A brief search didn't find any special treatment for tips taken at the cash register, and this sort of thing isn't actually new (consider credit cards).
That isn't true in California at least. There, tips received from credit card payments go to the employee just like cash tips, though they're paid out on payroll instead of being divvied out on...
That isn't true in California at least. There, tips received from credit card payments go to the employee just like cash tips, though they're paid out on payroll instead of being divvied out on some more frequent schedule. If the boss is taking those tips, that's wage theft.
All thinga considered, I'd rather waitstaff make a living wage and the real cost of that be built into the cost of food. It's a terrible system, but undertipping only hurts the most vulnerable...
All thinga considered, I'd rather waitstaff make a living wage and the real cost of that be built into the cost of food. It's a terrible system, but undertipping only hurts the most vulnerable people in the system. When you choose not to tip, everybody but the person making minimum wage (or less) still gets paid.
I choose to look at tipping as a chance to put money directly into the pocket of those vulnerable and underappreciated people. In most places it's illegal for the restaurant or management to take a cut. So you can give that money to a person and not enrich a corporation or a faceless restaurant group.
While there are occasionally people who just DGAF about doing a good job, a lot the time, when you get bad service, it's because the managers didn't staff the restaurant well so they have too many tables, or the server is undertrained, or, God forbid, they are just having an off day. Things that are mostly out of their control.
So I tip extravagantly when I can. I have as much patience as I can. And I give my little speech whenever tipping comes up.
I hear you, but the places I'm mainly complaining about are places that make a standard (non-tip) wage. For the places where staff are in a tipped wage position I think this is is a valid...
When you choose not to tip, everybody but the person making minimum wage (or less) still gets paid.
I hear you, but the places I'm mainly complaining about are places that make a standard (non-tip) wage. For the places where staff are in a tipped wage position I think this is is a valid argument. For all the other places, the tip is in addition to their minimum wage (or hopefully higher). These are the places that until recently didn't ask or expect a tip.
We can have a separate discussion about how minimum wage isn't high enough, which it isn't. That aside I don't think I have the moral responsibility to subsidize a business whose existence is dependent on underpaying it's staff. I will tip at a restaurant or diner that has actual service because that's our cultural norm in the US. What we're experiencing now is a new cultural shift, and I think it's worth pushing back against since it expands the trend of underpaying staff (tipping wage) and depending on the public to subsidize the employee's wages.
I agree on pushing back on corporations trying to create these cultural shifts. There is even weird spillover to other countries. Here in Denmark there hasn't really been a tipping culture. It was...
I agree on pushing back on corporations trying to create these cultural shifts. There is even weird spillover to other countries. Here in Denmark there hasn't really been a tipping culture. It was usually only something you did if the service was truly extraordinary in some way. And there was never any expectancy for it. In recent years there has been a massive increase in card terminals asking for tips. Sometimes these terminals are made with some sort of dark pattern (or maybe just terrible ux) making it obscure to say no to tipping. No one likes this and everyone seems to agree it is a terrible thing to introduce into our restaurant economy, but they are now the norm rather than the exception, so I assume it is working. I fear there is some industry end goal to use it to argue for reducing wages at some point down the line.
I suspect it’s more that it’s American developers/equipment being used, the default for America being to tip, therefore it is incorporated into this on a worldwide basis.
I suspect it’s more that it’s American developers/equipment being used, the default for America being to tip, therefore it is incorporated into this on a worldwide basis.
Could be part of it, though a bit strange if somehow the entire restaurant business has shifted to American made terminals in the last five years and all other shops haven't. At least they...
Could be part of it, though a bit strange if somehow the entire restaurant business has shifted to American made terminals in the last five years and all other shops haven't. At least they actively choose to enable the option.
If we're talking morality, I'd argue that if we patronize a business like that, we're complicit on some level. It's not just you -- it's me too. It's a system that's hard to exist outside of if...
That aside I don't think I have the moral responsibility to subsidize a business whose existence is dependent on underpaying it's staff.
If we're talking morality, I'd argue that if we patronize a business like that, we're complicit on some level. It's not just you -- it's me too. It's a system that's hard to exist outside of if you want to function "normally" in our society. For me, it's worth doing what I can to mitigate the harm that it does.
What we're experiencing now is a new cultural shift, and I think it's worth pushing back against since it expands the trend of underpaying staff (tipping wage) and depending on the public to subsidize the employee's wages.
If pushing back means not patronizing such establishments, then sure. Don't go, and send them an email that says, "I won't patronize your business while you ask for tips in lieu of paying your employees better." I think if enough people do that, it has a moderate chance of working.
But if it merely means going there, but not tipping, then for me, that's barely different than going to a "traditional tipping environment" and not tipping. I understand your argument as something like, "by not tipping in these new tipping environments, the business will eventually go out of business or their workers will demand better wages and prices will go up (as they should)." Is that accurate?
Because if that's your argument, whether the people there make $2.13 an hour or $15, I think we've acknowledged it's not enough. Putting the onus for changing that on the frontline workers is asking a lot from people who are most vulnerable in that system -- they have almost no bargaining power, are easily replaced, and are likely desperate to even be working there to begin with. Frontline food service is not a career option, it's something most people turn to when they have no better alternative.
Ultimately, I think your viewpoint is shared by a lot of people. I'm trying to get people to rethink tipping from an obligation to an opportunity to do some good in the world.
This is probably close enough. It's not a flawless argument by any means, as you mentioned at some point we have to accept (to some degree) the system that we exist in alongside our fellow humans....
I understand your argument as something like, "by not tipping in these new tipping environments, the business will eventually go out of business or their workers will demand better wages and prices will go up (as they should)." Is that accurate?
This is probably close enough. It's not a flawless argument by any means, as you mentioned at some point we have to accept (to some degree) the system that we exist in alongside our fellow humans.
For the most part, any place I find that asks for tips that I don't think makes sense, I hit $0.00 on the tip option and then try to avoid going there whenever possible. It's a half-assed protest because there's no followup, nobody at that business has any feedback on why I didn't tip, but the alternatives seem either enormously time consuming or overwhelming as opposed to hitting "no tip". If local legislation comes up that regulates it in some fashion I'll 100% vote and advocate for it. If there was a card I could hand the cashier to say "please tell your boss to pay you more" without seeming like a complete asshole, I'd do that too.
You and me both. Though, I've taken some light flak irl from friends and acquaintances for this view. I've thought about it a bit and it seems to me, broadly speaking, tipping makes some people...
but I take particular umbrage with any place where I order in person and the system asks for a tip before they've done literally anything except take my order.
You and me both. Though, I've taken some light flak irl from friends and acquaintances for this view. I've thought about it a bit and it seems to me, broadly speaking, tipping makes some people feel good and other people feel bad. I'm talking about the tipper, not the receiver.
My personal rule for this is I won't tip people unless they've brought me something to where I am. If I have to go out of my way to pick something up from you, why would I tip you? So waiters,...
My personal rule for this is I won't tip people unless they've brought me something to where I am. If I have to go out of my way to pick something up from you, why would I tip you?
So waiters, bell boys, valets, and bartenders get tips. Cashiers and the like don't. I don't have any logical justification for this except that it's just a cultural convention; but then again, the entire concept of tipping itself is a cultural convention, so I don't really feel too bad about it.
This "unlimited power" theory doesn't seem to have much to do with fast food, though? Customers do have some options there. The article talks about "price discrimination." You can choose the...
This "unlimited power" theory doesn't seem to have much to do with fast food, though? Customers do have some options there.
The article talks about "price discrimination." You can choose the budget option.
Oligopolies are a thing. It's not like it's easy to compete in the fast food space vs the massive number of corporate chains getting huge discounts thanks to economies of scale.
Customers do have some options there.
Oligopolies are a thing. It's not like it's easy to compete in the fast food space vs the massive number of corporate chains getting huge discounts thanks to economies of scale.
I was saying restaurants don’t have unlimited power to raise prices. You seem to be arguing that some restaurant prices are too low from a competitor’s perspective. But those are opposites. (It’s...
I was saying restaurants don’t have unlimited power to raise prices. You seem to be arguing that some restaurant prices are too low from a competitor’s perspective. But those are opposites. (It’s also not what the article is about, which is consumers paying too much for food, not too little.)
A limit on restaurant prices is that people could go to a grocery store instead. Even if you’re not in a position to cook, there’s lots of prepared food.
The more articles I read about this topic, along with associated comment sections, the more I think that people think the economy is bad largely because inflation perceptions are kind of sticky...
The more articles I read about this topic, along with associated comment sections, the more I think that people think the economy is bad largely because inflation perceptions are kind of sticky and take a while to catch up.
I don't go to McDonald's that often, so when I recently went to McDonald's for the first time in 2023 I thought to myself "wow, it got really expensive." I might be tempted to think that the price change happened just now, but based on the data most of the price changes probably happened last year while I wasn't paying attention. As we go through life, we buy things that we haven't looked at in a while, so we're consistently noticing price changes even though they might have happened a year ago. So the perception of price changes is going to last for a while even if inflation has somewhat leveled off.
Then you see comments like "if inflation is down, why are prices still so high?" The "correct" response is usually that lower inflation means prices aren't going up so fast, and that for various economic reasons we don't want prices to go down. That doesn't really take human nature into account though. People don't really think about what deflation could do to the economy, so they actually do want prices to go back down to what they're used to. Since the Fed will definitely try its hardest to avoid deflation, it's going to take a long time for the new prices to feel normal. Reminiscing about what prices used to be seems to be a popular activity, even before this recent bout of inflation, so for a lot of people the increased prices will probably never feel normal.
The article mentions that personal savings rates are low, but that kind of makes sense, given that the increase in savings rate in 2020 was not due to increases in frugality. The saving rate went up because people were stuck at home and unable to spend, people didn't suddenly gain the desire or habit to save money. Since that's the case, people started spending again as things opened up, and it makes sense that we'd see a reduced savings rate for a while.
I'm also not a big fan of the PCE and inflation graph. I'm wary of any charts that start in 2020 due to base effects. Just looking at the chart, there was a huge jump in PCE between Feb and March 2021, which seems likely due to pandemic effects. After that the slopes of the lines are pretty similar. In the past 2 years, PCE has only outgained CPI by ~2%, which is a lot less dramatic. Also, this ignores any increases in income. Wage data in the heart of the pandemic is really messy, but real wages are now above 2019 levels, so if people are making more money in real terms, we would expect PCE to be higher than inflation.
Well, either way I suppose the point is that people are indeed spending more money. Although wages have kept up and people generally have more money to spend, people don't like paying higher prices, so it feels bad anyway.
This is where the public not being aware of how the data collection, advertising/marketing and various other consumer behavior research impacting their behaviors is rather a scary concept for me....
It feels like spending more is the customers own fault, but places like McD act as a catalyst via behavioral economics. I'm torn on this one, morally speaking.
This is where the public not being aware of how the data collection, advertising/marketing and various other consumer behavior research impacting their behaviors is rather a scary concept for me. We're being targeted by companies that make billions, by many multiples of people that individually spend 40+ hours a week doing a job that seeks to outmaneuver our brains in ways that we're rather defenseless to. Collectively I can't even imagine the workforce hours that goes into it, and there's no consumer union or anything, we're all on our own managing our own lives and have no time to mount a defense against this.
A real-world substitute for a "consumer's union" is a company that keeps prices low. Shopping at Costco or Walmart, for example. You can be pretty sure that the suppliers aren't overcharging you...
A real-world substitute for a "consumer's union" is a company that keeps prices low. Shopping at Costco or Walmart, for example. You can be pretty sure that the suppliers aren't overcharging you (because company buyers have negotiating power) and you aren't being overcharged for labor. No tipping, either.
(This is called countervailing power, where large organizations with opposing interests are pitted against each other. It doesn't always work.)
For Walmart, you might instead worry that the workers don't earn enough, but that's the opposite problem.
I think people are often conflicted about how much workers are being paid and we'd rather not have it be our problem. After all, how much do you actually know about a stranger's circumstances or how much money they should make?
Sure, but companies have known about these techniques and have been using them for decades. Fast food places change up their menus all the time and have been trying to anchor you for ages. I'm not...
Sure, but companies have known about these techniques and have been using them for decades. Fast food places change up their menus all the time and have been trying to anchor you for ages. I'm not sure that things like this can really explain a recent change in consumer sentiment.
The end result of a world where a company isn't technically charging more if they just manipulated the consumer into it, is a world completely loaded with consumer manipulation. Some tactics...
The end result of a world where a company isn't technically charging more if they just manipulated the consumer into it, is a world completely loaded with consumer manipulation. Some tactics simply aren't ethical.
That's a very dramatic increase. Would you mind sharing the name of the insurance company? My insurance hasn't gone up in price for a while, although there will be an 8% increase starting in...
That's a very dramatic increase. Would you mind sharing the name of the insurance company?
My insurance hasn't gone up in price for a while, although there will be an 8% increase starting in December. Kind of annoying, but nothing terribly dramatic or surprising. I was able to find some articles discussing a recent increase in auto insurance premiums. I wonder where the differences are coming from.
While I realize the article is talking about public perception of inflation using the McDonald's example, it's worth some background history on the last similar round of inflation. There's an...
While I realize the article is talking about public perception of inflation using the McDonald's example, it's worth some background history on the last similar round of inflation.
There's an important distinction to be made in sources of inflation:
In the 1970s, economists and policymakers began to commonly categorize the rise in aggregate prices as different inflation types. “Demand-pull” inflation was the direct influence of macroeconomic policy, and monetary policy in particular. It resulted from policies that produced a level of spending in excess of what the economy could produce without pushing the economy beyond its ordinary productive capacity and pulling more expensive resources into play. But inflation could also be pushed higher from supply disruptions, notably originating in food and energy markets (Gordon 1975).4 This “cost-push” inflation also got passed through the chain of production into higher retail prices.
From 2020 to early 2022, we had stimulus "helicopter money", supply chain issues, and decreased production of goods due to pandemic lockdowns. Then we had energy and food cost spikes due to the Russia-Ukraine War, as well as the bite of Trump's tariffs in the U.S. Aside from the demand-pull inflation as the pandemic lockdowns resolved, the energy and food price spikes added cost-push inflation.
All that being said, monetary policy interest rate action and ending quantitative easing are very blunt and slow instruments that tend to have the worst impact on people who rely on loans - mortgages, credit cards, student loans, payday and revolving credit, e.g. most middle or lower class consumers and small/medium businesses. It's not just the sticker shock of higher goods prices on the shelves, and higher service costs from rising wages, but also the terrifying interest cost increases on major purchases and the passthrough costs to rents. And still people keep spending.
It's a Good Thing™ that the 2020's U.S. Federal Reserve isn't following the 1980's policy of drastically raising interest rates to the point of employment collapse. But the business news I'm seeing suggests that we will see a rise in layoffs and business hiring freezes through summer 2024, with attendant consumption decline.
Footnote: I lived through the impact of the Volker Fed in the '80's, and it was comprehensively shitty. Where I lived, 20% unemployment was common, 18% was considered a good deal on a home mortgage, and the relative price of gasoline was about twice what it is now. Minimum wage was a better deal, but otherwise, no one should have to live through that again. The Biden administration is doing a decent job with lessons learned, but that's not going to fix consumer sentiment, and I'm hoping that Trump will remain repugnant to enough of the electorate to overcome the economic perceptions.
My moment when I got shocked by inflation was the time I was at McD’s and saw the medium Big Mac meal was now over $10 and my intuitive reaction was “I can’t afford that.”
My moment when I got shocked by inflation was the time I was at McD’s and saw the medium Big Mac meal was now over $10 and my intuitive reaction was “I can’t afford that.”
If this is really about perception, I’d say it’s because “Biden is bad for the economy” has become a major right-wing talking point. I’ve been to some finance news comment sections over the past...
If this is really about perception, I’d say it’s because “Biden is bad for the economy” has become a major right-wing talking point. I’ve been to some finance news comment sections over the past year or two that seem almost manic about the economy collapsing. There is a lot of cheering for high inflation and doomsday scenarios which makes no sense, emotionally, except that it is framed as liberals’ fault.
I think Nate is spot-on: Marketing and strategic choices by companies drastically impact spending by consumers even without impacting the specific good chosen in the "basket of goods" approach....
I think Nate is spot-on: Marketing and strategic choices by companies drastically impact spending by consumers even without impacting the specific good chosen in the "basket of goods" approach.
The other side effect of this is that it makes the economy look healthier than it is, because even though spending is up, the actual exchange of goods isn't necessarily.
Extrapolating Anecdote Time: I'm buying fast-food less than half as much as I used to. But in terms of total spending on it...it's still roughly the same as before. Used to be able to feed family Taco Bell for < $20. Now spending $40. This is an objectively worse situation for me, but to the metrics...consumer spending isn't down, so therefore the economy is well.
Suposedly we're putting more in our baskets....but money spent is a really poor metric of determining that, given everything discussed in the article.
Frankly, part of the problem as a consumer is that it's too hard to get like-for like comparisons between fast food places.
Me: "I want a 20-piece nugget."
Them: "Oh we only have 8 or 12 piece"
Now I have to do math as quickly as possible to see which one will give me enough (3 eight or 2 twelve) and which costs me more (Alright, quick, you're having a conversation and people are waiting, which costs more 3*$6.49 or 2*10.69). I only needed 20, so now I have 4 extra nuggets. So do I choose to waste 4 by throwing them in the trash or eat them and contribute further to the obesity problem?
How does it show up in metrics now that I spent either $19.47 or $21.38 on nuggets? Does the basket only count the 8-piece price, and the 12-piece price is showing as a more-luxurious good? Does it matter to inflation if I paid $0.89 a nugget and ended up throwing out 4 of them because market segmentation figured out they could squeeze out $3.56 more from me by dividing things weird?
In this sub stack post, Nate Silver takes on the topic of inflation, framed by a recent viral story about McDonalds. I’ve been skeptical about the “greed-flation” angle going around, but I think this post makes a compelling argument about how companies are squeezing more and more out of customers.
Anecdotally, that's why I hear from people around me. Things are more expensive, but it's not mapped to inflation. People should blame the system that allows megacorps to use their unlimited power to squeeze blood from a stone. I fear people are going to blame government, and elect the people openly campaigning on giving the megacorps more power.
One thing I've made particular note of since the pandemic is tips. Since every place now has some kind of online ordering system, it's trivially easy for someone to flip on the "ask for a tip" button at every. single. lunch place. Tipping culture is it's own thing, but I take particular umbrage with any place where I order in person and the system asks for a tip before they've done literally anything except take my order.
Better yet- when the cashier is actually an unstaffed ipad on a counter so they haven’t even taken your order!
Or tipping before the service is even rendered!
Several weeks ago, I tipped 18% on top of an already expensive lunch at the Tartine Bakery, a pricey, bougie bakery and patisserie in San Francisco — we're talking $18 for a sandwich, before tax and surcharges. It was busy and I felt for the staff. I think we spent like $60+ on sandwiches, pastries, and coffees for a single lunch. It was a nice day and we felt like treating ourselves.
But the service rendered was terrible. They got my friend's sandwich order wrong, and when he told the staff, they just offloaded him to the manager accused him of lying to get a different sandwich. I really wished I could've retroactively tipped them a fat zero.
I've decided that from hereon out, I will never tip before actually receiving the service.
An 18% tip is already quite a lot, but to do that at a place which is supposed to be fast moving and where you pay before you sit down is unheard of. Good on you for changing your mind.
It was the minimum suggested tip on the swivel terminal. I feel that tip creep had hit California extra hard, because people here are liberal and highly susceptible to being guilt tripped. I’ve been to places where the default tip levels go: 20%, 22%, and 25%.
The most egregious offender: A few months ago, I tried a new barber place. After my haircut, I was shown three suggested tip levels: 30%, 40%, and 50%. I distinctly remember entering in a 10 or 15% tip manually because I was so shocked.
I'm in mainland Europe where tipping is basically left up to the customer when paying. It has the issue that when paying by card people stop doing it because when you pay by cash you "round up" to whatever increase you want based on how much you wanna tip. The biggest ones are when you pay like 94€ for a 4 person table and increase to a 100€ and just hand them the money that way.
I was in Manchester, UK recently to visit some friends and I was shocked that since card payments are so ubitiquous there, restaurants had moved on to add a 10% tip to any check as a "service charge" and you have to ask for a new one with it taken off, basically shaming you into paying it. At the same time, at no point did I actually know if the service charge ever gets transferred to waiters like it should because it was sold to me as a tip when I inquired about it.
In most cases when you're by yourself it's okay, because you you pay 20-25 GPB for food so the service charge is okay, but when we were together as 5 people and paid like 120 at a Sushi place suddenly you're tipping enough to buy like a whole extra meal. That's pretty wild.
I live in Arkansas, which is significantly less liberal, and the minimum suggested tip here is usually like 18.5%.
It is? I do not eat out much, so maybe things have changed and I haven't noticed, but I always thought of a 20% tip as average, and 15% as low.
Arsicoult Bakery is amazing and they have a location near the main library and the Civic center that is not well known. The government workers know it but no one else goes there to eat
They have locations with lines out the door, but not this one.
If you are just ordering at a counter and waiting for the food, there is no service being rendered there. Those tip add-ons don't even go to the employees, they go straight into management pockets.
Tipping is only for an actual service, like at a sit-down restaurant when a server actually serves you, brings drinks, etc.
Never ever tip at a kiosk, it only helps the corporation not the employees because it isn't for a service.
Cash tips at like a mom and pop shop is different, but it's so rare for those to exist because everyone pays with card these days.
Don't tip kiosks, ever. Theyre predatory and sucking your money for nothing
I agree that cash tips are better. I think if workers weren't getting the tips there would be more news stories about it? It can't be kept secret from the workers.
(I do vaguely remember seeing stories like that for delivery.)
There's no stories because there's nothing illegal about it. Tips for service are regulated. Tips at the kiosk are "for the company" and are not regulated or legally entitled to the employees.
You're throwing your money at the corporation because you think it's the same as tipping for service at a restaurant but it isn't, they're totally different things and they just don't tell you.
They're preying on peoples good nature/social consciousness.
Have any of the employees at these places ever asked you to tip or pointed it out? No. Its entirely automated, and tricking people by making them think it's part of the social norm of tipping when it isn't.
I'm skeptical. A brief search didn't find any special treatment for tips taken at the cash register, and this sort of thing isn't actually new (consider credit cards).
That isn't true in California at least. There, tips received from credit card payments go to the employee just like cash tips, though they're paid out on payroll instead of being divvied out on some more frequent schedule. If the boss is taking those tips, that's wage theft.
All thinga considered, I'd rather waitstaff make a living wage and the real cost of that be built into the cost of food. It's a terrible system, but undertipping only hurts the most vulnerable people in the system. When you choose not to tip, everybody but the person making minimum wage (or less) still gets paid.
I choose to look at tipping as a chance to put money directly into the pocket of those vulnerable and underappreciated people. In most places it's illegal for the restaurant or management to take a cut. So you can give that money to a person and not enrich a corporation or a faceless restaurant group.
While there are occasionally people who just DGAF about doing a good job, a lot the time, when you get bad service, it's because the managers didn't staff the restaurant well so they have too many tables, or the server is undertrained, or, God forbid, they are just having an off day. Things that are mostly out of their control.
So I tip extravagantly when I can. I have as much patience as I can. And I give my little speech whenever tipping comes up.
I hear you, but the places I'm mainly complaining about are places that make a standard (non-tip) wage. For the places where staff are in a tipped wage position I think this is is a valid argument. For all the other places, the tip is in addition to their minimum wage (or hopefully higher). These are the places that until recently didn't ask or expect a tip.
We can have a separate discussion about how minimum wage isn't high enough, which it isn't. That aside I don't think I have the moral responsibility to subsidize a business whose existence is dependent on underpaying it's staff. I will tip at a restaurant or diner that has actual service because that's our cultural norm in the US. What we're experiencing now is a new cultural shift, and I think it's worth pushing back against since it expands the trend of underpaying staff (tipping wage) and depending on the public to subsidize the employee's wages.
I agree on pushing back on corporations trying to create these cultural shifts. There is even weird spillover to other countries. Here in Denmark there hasn't really been a tipping culture. It was usually only something you did if the service was truly extraordinary in some way. And there was never any expectancy for it. In recent years there has been a massive increase in card terminals asking for tips. Sometimes these terminals are made with some sort of dark pattern (or maybe just terrible ux) making it obscure to say no to tipping. No one likes this and everyone seems to agree it is a terrible thing to introduce into our restaurant economy, but they are now the norm rather than the exception, so I assume it is working. I fear there is some industry end goal to use it to argue for reducing wages at some point down the line.
I suspect it’s more that it’s American developers/equipment being used, the default for America being to tip, therefore it is incorporated into this on a worldwide basis.
Could be part of it, though a bit strange if somehow the entire restaurant business has shifted to American made terminals in the last five years and all other shops haven't. At least they actively choose to enable the option.
If we're talking morality, I'd argue that if we patronize a business like that, we're complicit on some level. It's not just you -- it's me too. It's a system that's hard to exist outside of if you want to function "normally" in our society. For me, it's worth doing what I can to mitigate the harm that it does.
If pushing back means not patronizing such establishments, then sure. Don't go, and send them an email that says, "I won't patronize your business while you ask for tips in lieu of paying your employees better." I think if enough people do that, it has a moderate chance of working.
But if it merely means going there, but not tipping, then for me, that's barely different than going to a "traditional tipping environment" and not tipping. I understand your argument as something like, "by not tipping in these new tipping environments, the business will eventually go out of business or their workers will demand better wages and prices will go up (as they should)." Is that accurate?
Because if that's your argument, whether the people there make $2.13 an hour or $15, I think we've acknowledged it's not enough. Putting the onus for changing that on the frontline workers is asking a lot from people who are most vulnerable in that system -- they have almost no bargaining power, are easily replaced, and are likely desperate to even be working there to begin with. Frontline food service is not a career option, it's something most people turn to when they have no better alternative.
Ultimately, I think your viewpoint is shared by a lot of people. I'm trying to get people to rethink tipping from an obligation to an opportunity to do some good in the world.
This is probably close enough. It's not a flawless argument by any means, as you mentioned at some point we have to accept (to some degree) the system that we exist in alongside our fellow humans.
For the most part, any place I find that asks for tips that I don't think makes sense, I hit $0.00 on the tip option and then try to avoid going there whenever possible. It's a half-assed protest because there's no followup, nobody at that business has any feedback on why I didn't tip, but the alternatives seem either enormously time consuming or overwhelming as opposed to hitting "no tip". If local legislation comes up that regulates it in some fashion I'll 100% vote and advocate for it. If there was a card I could hand the cashier to say "please tell your boss to pay you more" without seeming like a complete asshole, I'd do that too.
Maybe you could make a QR code out of this URL and hand those out.
https://unitehere.org/organize-a-union/
You and me both. Though, I've taken some light flak irl from friends and acquaintances for this view. I've thought about it a bit and it seems to me, broadly speaking, tipping makes some people feel good and other people feel bad. I'm talking about the tipper, not the receiver.
Edit: sp
My personal rule for this is I won't tip people unless they've brought me something to where I am. If I have to go out of my way to pick something up from you, why would I tip you?
So waiters, bell boys, valets, and bartenders get tips. Cashiers and the like don't. I don't have any logical justification for this except that it's just a cultural convention; but then again, the entire concept of tipping itself is a cultural convention, so I don't really feel too bad about it.
This "unlimited power" theory doesn't seem to have much to do with fast food, though? Customers do have some options there.
The article talks about "price discrimination." You can choose the budget option.
Oligopolies are a thing. It's not like it's easy to compete in the fast food space vs the massive number of corporate chains getting huge discounts thanks to economies of scale.
I was saying restaurants don’t have unlimited power to raise prices. You seem to be arguing that some restaurant prices are too low from a competitor’s perspective. But those are opposites. (It’s also not what the article is about, which is consumers paying too much for food, not too little.)
A limit on restaurant prices is that people could go to a grocery store instead. Even if you’re not in a position to cook, there’s lots of prepared food.
The more articles I read about this topic, along with associated comment sections, the more I think that people think the economy is bad largely because inflation perceptions are kind of sticky and take a while to catch up.
I don't go to McDonald's that often, so when I recently went to McDonald's for the first time in 2023 I thought to myself "wow, it got really expensive." I might be tempted to think that the price change happened just now, but based on the data most of the price changes probably happened last year while I wasn't paying attention. As we go through life, we buy things that we haven't looked at in a while, so we're consistently noticing price changes even though they might have happened a year ago. So the perception of price changes is going to last for a while even if inflation has somewhat leveled off.
Then you see comments like "if inflation is down, why are prices still so high?" The "correct" response is usually that lower inflation means prices aren't going up so fast, and that for various economic reasons we don't want prices to go down. That doesn't really take human nature into account though. People don't really think about what deflation could do to the economy, so they actually do want prices to go back down to what they're used to. Since the Fed will definitely try its hardest to avoid deflation, it's going to take a long time for the new prices to feel normal. Reminiscing about what prices used to be seems to be a popular activity, even before this recent bout of inflation, so for a lot of people the increased prices will probably never feel normal.
The article mentions that personal savings rates are low, but that kind of makes sense, given that the increase in savings rate in 2020 was not due to increases in frugality. The saving rate went up because people were stuck at home and unable to spend, people didn't suddenly gain the desire or habit to save money. Since that's the case, people started spending again as things opened up, and it makes sense that we'd see a reduced savings rate for a while.
I'm also not a big fan of the PCE and inflation graph. I'm wary of any charts that start in 2020 due to base effects. Just looking at the chart, there was a huge jump in PCE between Feb and March 2021, which seems likely due to pandemic effects. After that the slopes of the lines are pretty similar. In the past 2 years, PCE has only outgained CPI by ~2%, which is a lot less dramatic. Also, this ignores any increases in income. Wage data in the heart of the pandemic is really messy, but real wages are now above 2019 levels, so if people are making more money in real terms, we would expect PCE to be higher than inflation.
Well, either way I suppose the point is that people are indeed spending more money. Although wages have kept up and people generally have more money to spend, people don't like paying higher prices, so it feels bad anyway.
This is where the public not being aware of how the data collection, advertising/marketing and various other consumer behavior research impacting their behaviors is rather a scary concept for me. We're being targeted by companies that make billions, by many multiples of people that individually spend 40+ hours a week doing a job that seeks to outmaneuver our brains in ways that we're rather defenseless to. Collectively I can't even imagine the workforce hours that goes into it, and there's no consumer union or anything, we're all on our own managing our own lives and have no time to mount a defense against this.
Now there's a thought. Can't interfere with the free hand of Capitalism though, heaven forbid.
A real-world substitute for a "consumer's union" is a company that keeps prices low. Shopping at Costco or Walmart, for example. You can be pretty sure that the suppliers aren't overcharging you (because company buyers have negotiating power) and you aren't being overcharged for labor. No tipping, either.
(This is called countervailing power, where large organizations with opposing interests are pitted against each other. It doesn't always work.)
For Walmart, you might instead worry that the workers don't earn enough, but that's the opposite problem.
I think people are often conflicted about how much workers are being paid and we'd rather not have it be our problem. After all, how much do you actually know about a stranger's circumstances or how much money they should make?
Sure, but companies have known about these techniques and have been using them for decades. Fast food places change up their menus all the time and have been trying to anchor you for ages. I'm not sure that things like this can really explain a recent change in consumer sentiment.
The end result of a world where a company isn't technically charging more if they just manipulated the consumer into it, is a world completely loaded with consumer manipulation. Some tactics simply aren't ethical.
What unethical tactics are you talking about in this case?
That's a very dramatic increase. Would you mind sharing the name of the insurance company?
My insurance hasn't gone up in price for a while, although there will be an 8% increase starting in December. Kind of annoying, but nothing terribly dramatic or surprising. I was able to find some articles discussing a recent increase in auto insurance premiums. I wonder where the differences are coming from.
I'm curious as to what the theory is here though. Who would be manipulating the market, and how?
While I realize the article is talking about public perception of inflation using the McDonald's example, it's worth some background history on the last similar round of inflation.
There's an important distinction to be made in sources of inflation:
From 2020 to early 2022, we had stimulus "helicopter money", supply chain issues, and decreased production of goods due to pandemic lockdowns. Then we had energy and food cost spikes due to the Russia-Ukraine War, as well as the bite of Trump's tariffs in the U.S. Aside from the demand-pull inflation as the pandemic lockdowns resolved, the energy and food price spikes added cost-push inflation.
All that being said, monetary policy interest rate action and ending quantitative easing are very blunt and slow instruments that tend to have the worst impact on people who rely on loans - mortgages, credit cards, student loans, payday and revolving credit, e.g. most middle or lower class consumers and small/medium businesses. It's not just the sticker shock of higher goods prices on the shelves, and higher service costs from rising wages, but also the terrifying interest cost increases on major purchases and the passthrough costs to rents. And still people keep spending.
It's a Good Thing™ that the 2020's U.S. Federal Reserve isn't following the 1980's policy of drastically raising interest rates to the point of employment collapse. But the business news I'm seeing suggests that we will see a rise in layoffs and business hiring freezes through summer 2024, with attendant consumption decline.
Footnote: I lived through the impact of the Volker Fed in the '80's, and it was comprehensively shitty. Where I lived, 20% unemployment was common, 18% was considered a good deal on a home mortgage, and the relative price of gasoline was about twice what it is now. Minimum wage was a better deal, but otherwise, no one should have to live through that again. The Biden administration is doing a decent job with lessons learned, but that's not going to fix consumer sentiment, and I'm hoping that Trump will remain repugnant to enough of the electorate to overcome the economic perceptions.
My moment when I got shocked by inflation was the time I was at McD’s and saw the medium Big Mac meal was now over $10 and my intuitive reaction was “I can’t afford that.”
If this is really about perception, I’d say it’s because “Biden is bad for the economy” has become a major right-wing talking point. I’ve been to some finance news comment sections over the past year or two that seem almost manic about the economy collapsing. There is a lot of cheering for high inflation and doomsday scenarios which makes no sense, emotionally, except that it is framed as liberals’ fault.
I recently stopped at McDonald's after about two years away. A hash browns was 3 50. Inflation is not just about feelings.
I think Nate is spot-on: Marketing and strategic choices by companies drastically impact spending by consumers even without impacting the specific good chosen in the "basket of goods" approach.
The other side effect of this is that it makes the economy look healthier than it is, because even though spending is up, the actual exchange of goods isn't necessarily.
Extrapolating Anecdote Time: I'm buying fast-food less than half as much as I used to. But in terms of total spending on it...it's still roughly the same as before. Used to be able to feed family Taco Bell for < $20. Now spending $40. This is an objectively worse situation for me, but to the metrics...consumer spending isn't down, so therefore the economy is well.
Suposedly we're putting more in our baskets....but money spent is a really poor metric of determining that, given everything discussed in the article.
Frankly, part of the problem as a consumer is that it's too hard to get like-for like comparisons between fast food places.
Me: "I want a 20-piece nugget."
Them: "Oh we only have 8 or 12 piece"
Now I have to do math as quickly as possible to see which one will give me enough (3 eight or 2 twelve) and which costs me more (Alright, quick, you're having a conversation and people are waiting, which costs more 3*$6.49 or 2*10.69). I only needed 20, so now I have 4 extra nuggets. So do I choose to waste 4 by throwing them in the trash or eat them and contribute further to the obesity problem?
How does it show up in metrics now that I spent either $19.47 or $21.38 on nuggets? Does the basket only count the 8-piece price, and the 12-piece price is showing as a more-luxurious good? Does it matter to inflation if I paid $0.89 a nugget and ended up throwing out 4 of them because market segmentation figured out they could squeeze out $3.56 more from me by dividing things weird?