The History of Tipping in America — How We Got Here

9 min read · Updated February 14, 2026

Tipping Did Not Start Here

Tipping as a practice originated in European taverns and coffeehouses, likely as far back as the 16th or 17th century. The word "tip" may come from the phrase "To Insure Promptness" — though linguists debate this — or more likely from thieves' slang meaning "to hand over." In either case, the concept was simple: a small extra payment to encourage better or faster service.

Wealthy Americans traveling in Europe in the mid-1800s encountered the custom and brought it back, initially as a way to show off their worldliness and sophistication. Tipping in early America was essentially a status symbol — a way for the upper class to signal they had been abroad and knew how things were done in the "civilized" world.

Not everyone was impressed.

America's Anti-Tipping Movement

In the late 1800s and early 1900s, there was a genuine, organized movement against tipping in the United States. Critics saw tipping as fundamentally un-American — a holdover from European aristocratic culture that created an uncomfortable master-servant dynamic in a country supposedly built on equality.

Prominent opponents included journalists, labor advocates, and even some restaurant owners who argued that tipping was degrading to workers and created an unreliable income system. In 1915 and 1916, six states actually passed laws banning tipping. William Scott, a prominent critic, wrote an entire book in 1916 called "The Itching Palm" arguing that tipping was "a moral malady" and "democracy's deadly foe."

These anti-tipping laws were all repealed within a few years. The restaurant industry resisted them, customers ignored them, and enforcement was essentially impossible. By the 1920s, tipping was firmly entrenched in American dining culture.

The Post-Civil War Connection

There is a darker dimension to the history of tipping in America that is often overlooked. After the Civil War and the end of slavery, formerly enslaved people entered the workforce in large numbers, particularly in service industries like restaurants and railroads. Employers — particularly railroad companies and restaurants — seized on tipping as a way to avoid paying Black workers a real wage.

The logic was brutally simple: if customers were tipping, the employer did not need to pay as much (or in some cases, anything at all). Tipping allowed businesses to shift the cost of labor directly to customers while maintaining the fiction that workers were being compensated.

The Pullman Company, which employed thousands of Black porters on its railroad sleeping cars, was one of the most prominent examples. Porters were paid almost nothing by the company and were expected to earn their living from passenger tips. This arrangement was wildly profitable for Pullman and deeply exploitative for workers.

This history matters because it shaped the legal and economic framework that persists today. The tipped minimum wage — the idea that employers can pay tipped workers less because tips will make up the difference — has its roots in this post-Civil War arrangement.

How the Restaurant Industry Locked It In

The modern tipping system is not an accident of culture. It is the product of decades of deliberate lobbying by the restaurant industry.

In 1966, Congress created the first federal "tip credit" — a provision allowing employers to pay tipped workers a lower minimum wage, with the expectation that tips would bring them up to the regular minimum. At the time, both the regular minimum wage and the tipped minimum wage were adjusted together.

Then, in 1991, the restaurant industry's lobbying arm (led by what is now the National Restaurant Association, sometimes called "the other NRA") successfully pushed to freeze the federal tipped minimum wage at $2.13 per hour. The regular federal minimum wage has been raised several times since then — it sits at $7.25 as of this writing — but the tipped minimum wage has not moved from $2.13 per hour since 1991.

Let that sink in. For over three decades, the federal tipped minimum wage has been $2.13. In states that follow the federal minimum (and many do), a server's paycheck from the restaurant often amounts to almost nothing after taxes. Their income is functionally 100% tips.

This is the core of why tipping is so entrenched in America: the restaurant industry has engineered a system where customers pay their employees' wages directly, while the business keeps menu prices artificially low and pockets the labor cost savings.

Some states have taken action independently. California, Washington, Oregon, Minnesota, Montana, Alaska, and Nevada require employers to pay the full state minimum wage to tipped workers before tips. In these states, tips are genuinely supplemental income rather than the entire income. But in most of the country, the $2.13 federal tipped minimum still applies.

How Other Countries Handle It

The United States is an outlier in its tipping culture. Most other developed nations have a fundamentally different approach.

• Japan: Tipping is considered rude. Service workers are paid well, and the price on the menu is the price you pay. Attempting to tip can cause genuine confusion or offense.
• Australia: No tipping culture. Servers earn a living wage (often $20+ per hour), and while rounding up is appreciated, tipping is not expected.
• Most of Western Europe: Service charges of 10-15% are often included in the bill. Small additional tips (rounding up or leaving a euro or two) are appreciated but not expected. Servers earn a regular wage.
• United Kingdom: Some restaurants add a discretionary service charge. Otherwise, 10% is considered generous. Tipping is appreciated, not assumed.
• Canada: Similar to the US but with generally higher base wages for tipped workers. Tips of 15-20% are standard.

The pattern is clear: countries that pay service workers a living wage have minimal or no tipping culture. Countries where service workers depend on tips for survival have intense tipping pressure. It is not a coincidence.

Modern Tipflation

In recent years, tipping culture in America has expanded well beyond its traditional boundaries, a trend commonly called "tipflation." Tip prompts now appear at coffee shops, bakeries, self-serve frozen yogurt shops, drive-throughs, and even retail checkout counters.

Several forces are driving this expansion:

• Technology: Modern POS systems like Square and Toast make it trivially easy to add tip prompts to any transaction. Businesses turn them on because there is no cost and potential upside.
• The pandemic: COVID-era generosity normalized tipping in contexts that previously did not involve it, and businesses have been reluctant to turn off those prompts.
• Wage stagnation: With wages not keeping pace with the cost of living, businesses have implicitly shifted more compensation responsibility to customers through tip prompts rather than raising prices and paying workers more.
• Social pressure: Nobody wants to hit "No Tip" while a worker watches. The screens are designed to leverage this discomfort.

The result is a widespread feeling of tip fatigue. Surveys consistently show that a majority of Americans feel tipping culture has gotten out of control, yet individual behavior has not changed much — people keep tipping because the social pressure is effective.

Why Change Is So Slow

If most Americans dislike the current tipping system, and most other developed countries manage just fine without it, why does not the US just change?

The answer is money and politics.

• The restaurant industry lobby is powerful and well-funded. The National Restaurant Association has fought every attempt to raise the tipped minimum wage at the federal level and in most states. They argue that higher wages would force restaurants to raise prices and cut staff. Studies from states that have eliminated the tip credit (like California) suggest these fears are largely overblown — restaurants adapt, and customers continue dining out.
• Some tipped workers benefit from the current system. High-earning servers at upscale restaurants can make $50,000-$80,000+ per year in tips, far more than they would earn under a flat wage system. These workers often oppose reform because they would take a pay cut. This creates an unusual dynamic where industry lobbying and some worker interests align against change.
• Consumer behavior is sticky. Even at restaurants that have tried no-tipping models (adding a service charge and paying workers higher wages), customers often feel uncomfortable and some tip anyway, while others feel the prices are too high. Several high-profile restaurants that experimented with no-tipping models have reversed course.
• Cultural inertia is real. Tipping is deeply embedded in American social norms. Most people learned the practice from their parents and have never questioned the underlying system. Changing a cultural norm takes generations, not policy papers.

Where Things Stand Now

The tipping landscape is in a strange place. Public frustration is growing, some states are raising tipped minimum wages, and a handful of restaurants continue experimenting with alternative models. But at the national level, the $2.13 tipped minimum wage remains frozen, tip prompts continue spreading to new industries, and the fundamental bargain — customers pay worker wages so businesses do not have to — remains firmly in place.

Understanding this history does not change what you should do today. In the current system, tipping your server, your driver, and your delivery person is still the right thing to do, because those workers depend on it. But understanding the history does help you see that the pressure you feel at checkout is not a natural social norm — it is a system deliberately built to shift labor costs from businesses to you.

Calculate a Fair Tip

Whatever your feelings on the system, you still need to tip in practice. Use our tip calculator to quickly figure out the right amount for any situation — whether it is a restaurant meal, a hotel stay, a salon visit, or a taxi ride.