New York’s Council Wants to Mandate Tips—and Ban Them.

The Council’s new proposal is a classic of big-city nanny state absurdity.

Courtesy MainlyTwelve/Wikimedia Commons

Amid a historic affordability crisis, and with many types of crime still elevated above pre-pandemic levels, the New York City council is focusing on the important things: making sure New Yorkers tip.

A recent bill would mandate that restaurants and other food-service establishments in the city build tipping options—known as “tipping prompts”—into their digital systems for orders. The proposal would also require that customers be provided with preset suggested tipping amounts as options, including at least one option that is 20 percent of the total amount paid by the customer.

The proposal may seem like small change. But if passed, it not only is likely to increase tipping fatigue among diners. It will also run counter to other efforts by progressive politicians in New York that actively undermine tips for food-industry workers. In this regard, it’s just the latest in the Council’s micromanagement of food—and a microcosm of how big-city leaders misunderstand markets.

The legislation is downstream of the Council’s decision to expand minimum wage laws to app-based restaurant delivery drivers in 2023. In reaction to that decision, companies like DoorDash moved tipping prompts in their apps, shifting them from before the delivery was complete to after. This led to allegations of trying to undermine driver tips.

The Council mandated tipping prompts in delivery apps in recently-passed legislation; this latest move would ensure tipping prompts remain prominent in all online food orders, app or otherwise. But it’s far from clear that the mandate will even help workers—let alone consumers, who stand to lose the most from such a change.

The NYC proposal draws upon evidence suggesting that tipping prompts—especially with pre-suggested amounts—can increase the amount a customer tips. Specifically, including a high default option as a suggestion, even if it’s one option among several, can have a so-called “anchoring effect.” That accustoms consumers to tipping a set amount of, say, 20 percent, rather than a lower number or a default of zero.

These sophisticated tactics may push consumers to cough up higher tips, but they’re also helping to drive what experts have labeled “tipping fatigue.” Surveys show that increasing numbers of Americans are reporting their annoyance and frustration with tip creep in our modern economy, including with setups like pre-entered tip amounts on touch screens.

One of the key issues with the fatigue is that it deters customers. Restaurants that aggressively push tipping can increase per-order tips but also may dissuade would-be customers from ordering in the first place. As one researcher recently explained:

Our research shows suggesting tip amounts is indeed effective at increasing tip amounts. But this comes at a cost when consumers feel manipulated into forking over more money before their pizza or coffee has even arrived. Our survey showed that this may lead people to avoid ordering from a given restaurant in the future.

There’s also evidence that consumers, in reaction to higher costs, are spending less overall when they dine out or order food. Aggressive tip prompts can make already high food prices feel even higher, which means such prompts could further deflate overall take-home tip amounts if they push diners to spend less.

But the biggest absurdity of the Council’s plan is that it directly contradicts the other, anti-tipping policies being pushed by progressive politicians across New York and the nation.

The new plan is in tension with the City Council’s minimum wage mandate for food delivery drivers. That policy sent tip levels for deliverers plummeting. In some cases, some workers could earn less as a result of tax-free tips being eroded while the taxable minimum wages increase.

But it’s also in tension with the push by progressive state legislators, along with dedicated advocacy groups, to eliminate the tipped minimum wage, known as the tip credit system in New York. The tipped minimum wage is what allows restaurants to pay workers below minimum wage so long as their tips make up the difference.

Prominent liberal cities like D.C. have already eliminated their own tip credit systems. That’s led to such disastrous results that D.C.’s city council recently voted to partially overturn its tip credit elimination. The evidence from D.C. and elsewhere makes one thing clear: Eliminating the tipped minimum wage reduces the tipping levels of tipped employees.

In other words: at the same time that progressive New York government officials are positioning themselves as champions of worker tips by advocating for tip prompts, they’re simultaneously pushing policies that erode tipping culture and reduce worker tips. If they get their way, Gotham consumers may end up with a giant helping of tip fatigue—and workers with little more in the way of take-home pay.