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A tipping culture is bad for workers and bad for the economy

Why Aussies don’t tip — and neither should you.

If there’s a pitfall of our bold new cashless era it’s that you can’t pay for a coffee at your local cafe without having the dreaded “if you’d like to leave a tip” screen loom up at you, as a staff member hovers. Such interactions are incredibly awkward. Especially for Australians.

In Australia we don’t tip. And if we do, it’s for excellent service only. And the reason we don’t tip is because we respect hospitality workers and believe they should be paid accordingly.

Explaining this concept recently to an American friend, I was met with incredulity. But I’m adamant: a culture of expected tips means you’re hurting the very people you’re intending to help.

Australia has a high-wage, high-price system.

Thanks to our robust industrial relations system and strong unions, the cost of good wages and conditions are included in the sticker price. And that’s the way we like it.

This ethos is one of the reasons we demanded the GST be included in the on-the-shelf price. It’s why we happily pay a significant Medicare levy for universal health care. Simple, direct, fair — that’s the Australian way. Tipping undermines all of this.

A tipping culture means customers are picking up the wages tab for the owner. And because you can only pay a tip if you’re in the venue, it leaves workers with less security at work. Tips are unpredictable and unevenly spread, contributing to inequality. If the business is quiet, workers don’t get paid. This is not an agreement between workers and business we should ever feel comfortable with in Australia. Business owners take risks in exchange for potentially healthy profits; workers give up their time in exchange for reliable wages. That’s the Australian deal.

Until recently Australians considered tipping something Americans do in movies. And like that other American practice of long-term stagnant wage growth, it’s best left on the other side of the Pacific. Ask any Aussie what they fear most about a trip to the US and they will point to the complex social norms of American tipping. How much? When? You tip your waitress, but not the McDonald’s counter?

Sure, the confusion is a factor. But I think a huge part of Australian discomfort with the US tipping system is how inherently elitist and demeaning it is Australians like to believe that they are not inherently superior to the bloke who carries their bags. There’s something that feels wrong about pressing some insignificant chump change into their hand. It has a master-servant feel.

The Australian deal is that we assume all workers are looked after with decency by our industrial system. They shouldn’t have to hustle for tips. While we may not yet be at US levels, a tipping culture tends to creep. Some in the Australian hospitality industry used the concept of tips as a reason that penalty rates could be cut last year. In the US, the minimum wage of $7.25 has not risen since 2009. And if you’re in an industry that is subject to tips, you can be excluded from this extremely low minium.

During this time of flat wages, customary tipping has increased from the historic 10 per cent rule of thumb, to 20-plus. Call me a conspiracy theorist, but do you think that might have something to do with bosses working out how to cost shift to their customers?

Meanwhile, US workers are some of the most insecure on the planet. Tipping is even bad for the economy as insecure workers are famously bad consumers. Unable to access credit and loans, they don’t spend as much and growth suffers.

And we are already seeing something of the US-disease spreading to Australia. Wages growth is now at the slowest levels in recorded history. Hospitality workers have suffered real cuts to their take-home pay. And suddenly out comes the pressure from bosses to be “nice” and leave a tip for the friendly person serving you. Low wages growth; penalty rate cuts; owners asking for tips. Call me a cynical unionist, but that doesn’t feel like a coincidence to me.

We shouldn’t take issue with workers who are simply trying to make ends meet. But we have every right to be furious at bosses and owners who lobbied ferociously for penalty rates cuts, only to then thrust those costs onto the public via this foreign and socially awkward custom.

As a customer, you pay the wages cost one way or another. There’s the Australian way where wages are secure, or the American path where lower prices are merely a mirage, workers suffer with their dignity and society is so much the poorer.

As an Aussie, I’d rather pay a little extra up front knowing that the person looking after me is looked after and doesn’t have extra pressure to sing for their supper.


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