Why are businesses increasingly relying on tips to compensate their workers?

Why are businesses increasingly relying on tips to compensate their workers?
During the pandemic, customers tipped workers to acknowledge the risk they were exposing themselves to. Businesses have become reliant on the practice of tipping for an increasing share of employee compensation as most employers have tight margins.
Despite current news and economic data, many people, including myself, believe there could be an economic recession. Many businesses also expect economic turmoil in the near future which is why they are reluctant to lock in higher employee wages. Tipping pushes the financial risk onto the workers rather than the employer.
There are few sectors where it is so hard to hold onto workers than the service sector.
The quit rate for workers in lodging and food service is ~5% over three months since July 2021 versus ~3.3 in retail, and the overall quit rate of ~2.6 accord to the Bureau of Labor Statistics.
Tipping increases worker compensation which makes it easier to retain workers.
Tips as a share of compensation are rising faster in limited service establishments like bakeries and coffee shops rather than full service places like restaurants. I think this is because we were not tipping at these limited service establishments in the past, whereas it has always been customary to tip at a sit down restaurant.
A business has a duty to charge a fair price in the market. If a customer feels the price is too high, they will not return to the business. It makes me think of a new place I stopped for lunch on the way home that I will not return to because I felt the price was too high.
Tips potentially motivate employees, giving them an incentive to work harder or better.
Being prompted for a tip is probably more awkward for the customer than it is for the worker.
Most businesses fluctuate seasonally which means tipping rises and falls. Many service workers are lower income and struggle to deal with volatility in pay.
Increasing reliance on tips to compensate workers, without increasing base pay, is arguably detrimental to workers in the long term. At any time, there would be a reduction in tips that effectively lowers a worker’s overall pay. In fact, customers are tipping less often than they were at the height of the pandemic. As a society, we are reaching an inflection point where we are starting to acknowledge that tipping culture has gotten out of hand.
Works Cited:
https://www.wsj.com/articles/tipping-businesses-cant-stop-asking-cc1aca6c?mod=hp_lead_pos7
Tags:
tipping culture, tipping, tipping culture in america, tipping culture in usa, tipping culture out of control, the tipping culture in america is broken, tipping culture in america is out of control, tipping culture in america history, tipping culture is bad, tipping culture debate, tipping culture is toxic, america tipping culture, american tipping culture, american tipping, tipping in america, culture, tipping point, tipping in the usa, history of tipping