The Federal Reserve Bank of Richmond has released a historical analysis examining the evolution of tipping customs in the United States. This announcement was made on the organization's website.
According to the Federal Reserve Bank of Richmond, tipping practices can be traced back to the Middle Ages in England, where they began as "vails"—monetary gifts given by guests to their host's servants. Initially tokens of gratitude for exceptional service, these vails gradually became expected and even demanded, leading to tensions between guests and servants. By the 18th century, the custom had become so entrenched that even British royalty expressed frustration over the escalating costs associated with vails.
Research from the University of Houston highlights that the federal tip-credit wage has remained unchanged at $2.13 since its last update in 1991. This allows employers to count tips toward minimum wage obligations, effectively subsidizing wages and reducing pressure to increase pay. Although originally intended to be half the federal minimum wage, it has stagnated due to lobbying efforts, despite findings showing that states with higher base pay for tipped workers have significantly lower poverty rates.
National Public Radio (NPR) reports that when tipping was introduced to the United States in the late 19th century, it faced significant resistance. Many Americans viewed it as incompatible with democratic ideals and associated it with aristocratic European customs that undermined equal treatment. This sentiment led several states, including Washington, Mississippi, and South Carolina, to enact anti-tipping laws between 1909 and 1915. However, these laws were largely ineffective and were repealed by the 1920s as tipping became more ingrained in American society.
The New York Post notes that digital payment platforms have significantly transformed tipping practices across various service industries. Point-of-sale systems from companies like Square, Toast, and PayPal now routinely prompt customers to add gratuities during transactions, even in settings where tipping was previously uncommon.
According to its official website, the Richmond Fed is committed to public service, integrity, learning, and community engagement as guiding principles for its workforce. Employees are encouraged to grow professionally while also giving back through volunteerism and civic engagement in their communities.