The Payment of Gratuities by Customers in the United States: An Historical Analysis

Abstract

Contrary to some travel guidebooks which state that the payment of gratuities (tips) in the US is due to low wage levels or the quirks of minimum wage laws, the roots of US tipping are comprised of a number of historical forces present in the hospitality industry between the Civil War and the early 1920s. Up to 1900, hotel proprietors regarded gratuities as a bribe to the server to give away excessive amounts of food to customers. However, a shift in hoteliers’ attitudes occurred with the increased popularity of the “European Plan”, in which hotel rooms were priced separately from hotel meals. This trend caused owners of dining establishments to regard tips as a supplement to wages rather than as a bribe. In addition, the advent of Prohibition after World War I had the indirect effect of making the European Plan more widespread, and with that trend, the payment of gratuities at meals became even more common. Even though international travel sometimes leads to misunderstandings regarding tipping, the custom is now thoroughly entrenched in US practice.