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Monday, December 11, 2023
Dec. 11, 2023

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How the cashless economy put more money in Seattle workers’ pockets


The coffee shop counter has become a no-cash, high-tech experience. For most workers, particularly in cities as expensive as Seattle, that’s a very good thing.

Jars full of change have been replaced by tablets with three options after someone jams their credit card onto a small cube: 15%, 20% and 25%. The customer can choose one of them, or hunt guiltily for the “no tip” tab. Few do.

Because of the new tech, customers are tipping more than ever, and servers often know before providing service how much a customer tipped, or if they simply abstained. Tipping has changed, and is changing the customer-worker relationship.

Most people haven’t paid much attention to the automated process that now happens on a tablet, said Nathan Warren, associate professor of marketing at BI Norwegian Business School, who has written several papers on tipping. But there are those who are angry about tipping when they haven’t yet received service. Others see tipping more and more often as their social responsibility, Warren said.

Nowadays, the normal restaurant tip is 20%.

Customers began noticing the change in tipping at Van Gogh Coffeehouse in Wedgwood because of COVID-19, said Amanda Parmenter, a supervisor there. Instead of having people touch a screen to select tips, baristas began asking customers how much they would like to tip. Some would say not at all.

“We definitely don’t like it, and we’ll definitely talk to each other about it,” Parmenter said. “It feels like a little slap sometimes when they say ‘No.'”

Besides the shift to cashless (or nearly cashless) point-of-sale systems, delivery and pickup apps have also facilitated tipping.

As more people ordered delivery during the pandemic, the average tip percentage in face-to-face settings decreased, according to new research by Michael Lynn, a Cornell University professor studying tipping practices.

Services like Uber Eats and DoorDash give customers the option to tip before or after delivery, rather than hand the delivery person cash. In many cases, customers don’t interact with the person delivering their orders. But they tip more than before.

“The pandemic increased the average tip per-order given to a pizza delivery driver,” Lynn said in a 2021 paper analyzing how COVID affected tipping.

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Starbucks has a similar tipping structure. Instead of jars when customers go up to the cashier, customers can tip as an add-on on the Starbucks app after they pick up their order. Starbucks’ system, Warren said, is an example of what a good tipping system should be.

But new technologies haven’t fully eliminated cash. Justin Wong is the captain of a fishing boat with Seattle-based Cut Plug Charters. He said he gets at least $100 in tips after most outings. Mostly those come in cash, though some anglers use credit cards. Wong said people will often ask in advance if they should tip.

“Tip based on the price of your charter, not what you did back in the 1980s of tipping $10 or $20. The charters back then were a lot cheaper than they are now,” Wong said.

The company charges people $1,200 for a private boat, or $275 per person on a shared charter.

Inequalities have persisted in tipping, even with new technologies, Warren said. Women might make more tips than men because of their looks. And while servers might get tips, people working in restaurant kitchens don’t have the same opportunity.

In July, workers of Capitol Hill restaurant Barrio walked out in protest of the restaurant’s pool tipping system. They claimed there wasn’t enough transparency in how the pool was distributed. The parent company of the restaurant settled a lawsuit in 2021 claiming the company failed to properly distribute service charges.

Housemaids and movers now struggle to get tips in their work with the cashless economy and little face-to-face contact with customers because of the pandemic. Fast food workers don’t get tips by default.

“People have these different perceptions,” Warren said. “The person working at a small business feels like my peer, so I’m going to help them out.”

In most cases, businesses set tipping options on the monitor. They use the systems from companies such as Toast, a point-of-sale and management system for restaurants.

“Because the restaurant sets these default options, this doesn’t dictate tip percentages,” a Toast spokesperson said in an email, “but can enable larger tips.”

Square, another point-of-sale service, and Toast do not get a share of tips, spokespeople for both companies said.

In the past, Jimi Cunningham, a server at steakhouse El Gaucho, would go home at the end of the night with the cash tips he made that day. Now, at 54, he gets paid twice a month. His paycheck consists of his base wage and service charge. El Gaucho has a 20% service charge — 15% goes to the server and 5% to back-of-house.

Cunningham said that predicting how much he’ll earn in tips is “like going in to gamble.”

Despite having a digital point-of-sale device, Van Gogh Coffeehouse still gives workers cash tips at the end of their shifts. Cafe customers are greeted by a sign that reads, “Cash is preferred, but not required.” Credit card transactions carry high, per-transaction fees paid by businesses. Many customers have cash on hand, Parmenter said. But even if a customer pays with a credit card, the tip gets converted into physical money later.

Parmenter, who lives in Lynnwood with her boyfriend, says about half of her income comes from tips. It is how she can afford to live in a metro area as expensive as Seattle’s, she said.

“If I didn’t get tips,” she said, “I couldn’t live off of doing what I do.”

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