Why Do Americans Tip? The History and Culture Behind the US Tipping System

Recently, a Bengaluru-based YouTuber stirred up quite a debate after labeling New York’s tipping system as a “scam.” After paying $50 for a $45 meal and not receiving his $5 change, he was surprised that tipping, often expected at around 10% or more, is ingrained in the US dining experience. Naturally, he took to social media to vent his frustration, only to face a wave of backlash.

But why is tipping such a big deal in the US?

Visit Our Official Website adityasinghtharran.com for daily financial news at your tips.

The Origins of Tipping in the US

Tipping has its roots in 15th-century England, where it started as a gesture of appreciation for good service. The word “tip” itself comes from an old English term meaning to give or hand over something. However, it wasn’t until the late 19th century that Tipping crossed the Atlantic, brought back by wealthy Americans who had traveled through Europe.

While US businesses quickly adopted tipping to reduce labor costs by shifting the burden onto customers, the practice wasn’t initially popular. Many Americans felt it was unfair and even undemocratic to expect customers to pay extra on top of their bills.

Despite this early resistance, tipping became widespread, especially in the South following the Civil War. Newly freed African Americans, often working in service jobs, earned meager wages and relied heavily on tips to survive.

Tipping Becomes the Norm

The tipping culture was further solidified when President Franklin Roosevelt passed the Fair Labor Standards Act in 1938, which set a minimum wage for some industries but excluded food services. When restaurants were finally included in 1966, they were still allowed to pay lower wages under a “tip credit” system, as long as tips made up the difference.

This shift made tipping a necessity rather than a mere courtesy, and today, many workers in the US depend on tips for a significant portion of their income. The tipping culture is so ingrained that automated payment systems even prompt customers to tip, making it an almost obligatory part of the dining experience.

Visit Our Official Website adityasinghtharran.com for daily financial news at your tips.

Tipping’s Role in the Modern US Economy

Tipping has even become a topic in political campaigns. Both former President Trump and Vice President Kamala Harris have proposed reducing taxes on tips, recognizing their critical role in workers' incomes. In 2018 alone, US workers earned over $38 billion in tips, underscoring the financial significance of this practice.

So, tipping in the US is far more than a polite gesture; it’s a deeply embedded cultural norm that can be surprising to visitors from countries like India, where tipping is less formalized.

Feel the vibe with this track: ?? “Rajahin Rajjo” by Shunno.

Could Los Angeles Go Car-Free for the 2028 Olympics? A Bold Move Toward Sustainability

The buzz around the Olympics hasn’t died down just yet! With the Paris 2024 Olympics in the rearview and the Paralympics drawing to a close, all eyes are now on the Los Angeles (LA) Games slated for 2028. But there’s a twist—LA is aiming to host a car-free Olympics, marking a bold move toward sustainability.

The Car-Dependent Culture of Los Angeles

Los Angeles is notorious for its reliance on cars, with public transportation being less efficient. Trains and buses often take twice as long as driving, and safety concerns due to the city’s growing homeless population and incidents of violence make public transit less appealing to residents, known as Angelenos.

LA’s Plan for a Car-Free Olympics

Despite these challenges, LA is serious about going green for the 2028 Olympics. The city is making significant investments to enhance its public transportation system. This includes better buses, expanded rail connections, and even a new link between the airport and the rail network. LA is also planning to borrow 3,000 buses from other areas and will create dedicated lanes for these buses during the Games. Additional bike lanes and initiatives to encourage remote work are also on the table to reduce traffic.

Visit Our Official Website adityasinghtharran.com for daily financial news at your tips.

Drawing Inspiration from the 1984 Olympics

This isn’t LA’s first attempt at managing Olympic traffic. The city successfully hosted the 1984 Summer Olympics by convincing a million people to use buses and pushing trucks to operate during off-peak hours. However, with 50% more athletes and far greater numbers expected in 2028, LA will need to update these strategies to meet the challenge.

Can Los Angeles truly achieve a car-free Olympics? It’s an ambitious goal, and only time will tell if the city can pull it off. But if successful, it could set a new standard for sustainable large-scale events worldwide.

This Day in Financial History: The Birth of the Oil Industry in America

On August 27, 1859, America’s economic landscape was forever changed with the discovery of the world’s first commercially successful oil well in Titusville, Pennsylvania. Before this breakthrough, whale oil was the primary source for lighting lamps in American homes, but overhunting had made it scarce.

Enter Edwin Drake, a determined driller who spent over a year and significant resources searching for a cost-effective way to tap into rock oil. His persistence paid off when he struck oil 69 feet underground, marking the beginning of the Pennsylvania Oil Rush and laying the foundation for the American oil industry.

While Drake’s discovery sparked a new era, leading to the decline of the whaling industry and the rise of petroleum, he never patented his drilling method and ultimately spent his later years in financial hardship. Despite his personal struggles, Drake’s legacy as the father of the modern oil industry remains.