Inflation Could Impact Holiday Tipping for Service Providers This Season

Inflation’s wrath could eat into this year’s holiday cheer, at least in the form of holiday tipping. What does this mean for everyday service providers who work hard at essential jobs like collecting trash and recycling, maintaining lawns, delivering packages, and more?

Here’s where holiday tipping may stand as inflation continues to eat at the income of average American consumers and the economy’s short-term fate remains uncertain.

According to a survey from GOBankingRates, Americans plan to reduce or eliminate their holiday tipping for service providers that frequent their residence.

The survey shows 36 percent of respondents don’t plan to tip their service providers at all for the holiday season over what they owe them if anything. Of the rest who plan to tip their service providers, many plan to keep it minimal — most people said they’d tip just 5 percent over their bill, if applicable.

Garbage collectors and doormen might be getting the shortest stick of all, with just 20 percent of people planning to tip them during the holidays this year. You don’t pay these people directly anyway, so the lack of a transaction could make them the easiest to avoid (in contrast to nannies, dog walkers, pool cleaners, and others you pay).

Inflation is up 8.2 percent in the 12 months ending in September, according to the Bureau of Labor Statistics’ latest Consumer Price Index (CPI).

That’s not news to most people. Inflation has proven its longevity to the point where the Federal Reserve has increased federal interest rates by 75 basis points (or 0.75 percent) not once, not twice, but thrice in 2022 alone.

All things considered, it makes sense that Americans would resort to trimming seemingly unnecessary holiday tipping for service providers.

The problem? Service providers need the cash, too. Holiday tipping has been around for decades, even though the terms of how much and when you should tip often get lost in the confusion of social norms. In most areas and for most skilled service jobs, wage increases haven't kept pace with inflation, meaning service providers are losing purchasing power by the month.

If you want to extend welfare to your service providers, there are ways to budget for it. With the hopes that inflation has peaked, find space in your spending to double your normal tip of service providers you pay. Meanwhile, assess your relationship with and the value of service providers you don’t pay to determine a suitable tip.

Michael Lynn, professor of consumer behavior at Cornell University, told reporters, “There is no authority that sets the norms.” However, Lynn says it’s a good idea to remember to tip “people you don’t normally tip, but with whom you interact a lot.”