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NEAL CONAN, host:

Around this time of the year, a large part of the population expects a tip, something extra, a thank-you for hard job's well done. But this year, in this economic climate, chances are tips might not be as big as usual. And that's bad news for barbers and hairstylists and bartenders and doormen, the men and women who deliver newspapers. Even those who regard the Christmas tip as a form of extortion don't want to disappoint people they depend on. But if you're squeezed, what can you do? Is it OK to tip less?

Whether you're a tipper or a tippee(ph), we want to hear your story. And cab drivers, waiters, can you give us some indication as to whether tipping in general is down? 800-989-8255. Email us, talk@npr.org. And you can join the conversation on our website. Go to npr.org and click on Talk of the Nation. Kimberly Palmer, a senior editor at U.S. News & World Report, is the Alpha Consumer on their blog. And she joins us now from the magazine's offices here in Washington. Nice to have you on Talk of the Nation today.

Ms. KIMBERLY PALMER (Senior Editor, U.S. News & World Report): Thank you, Neal.

CONAN: And is history any guide, seasonal tips down in previous downturns?

Ms. PALMER: You know, it's an interesting question, because anecdotally, we're hearing that a lot of people are cutting back on their tips this year, maybe not all together, but instead of giving $100 to their doorman, they might giving $80. So, everyone's cutting back, and unfortunately, it's not a great time to do that, because people are expecting or depending on these tips more than ever.

CONAN: And a lot of people object to the entire system; people should be paid enough in their regular salaries; that this shouldn't be. However, this is the system we've got.

Ms. PALMER: It is. And for someone like a doorman, it can end up being 10 percent or more of your annual salary. So, that's why tipping is so important.

CONAN: Any indication ever, that if you don't tip the doormen or the super in your building, that there could be retaliation? I mean, some of these people have the master key to your apartment.

(Soundbite of laughter)

Ms. PALMER: You know, I actually think that's a myth. Really, tipping, it's not something that's like a gift to someone. It's really just part of their pay, of their salary. And so, the idea that they're sort of this exchange or idea that if you don't tip, you'll be punished, I don't really see that out there. I've asked people if they've experienced that; they haven't. So, I think that that might be a bit of a myth. But that doesn't mean that you shouldn't tip this year.

CONAN: No, you - this is, as I understand it, the - you know, obviously if you're completely out of work, if you're totally wiped out, that's one thing. But if you're going to cut back on luxuries, this is not a luxury for a lot of people.

Ms. PALMER: That's exactly right. So, a lot of people are - everyone is strapped right now, really. Everyone's worried about the prices going up. The prices of food have gone up this year. So, there are ways to cut back without cutting back on your tipping, and that's why I encourage people to think about a tip as not so much a holiday gift that you're giving sort of optionally, but you're really paying someone for all of the services they've given you throughout the entire year.

CONAN: And is there any rule of thumb, you know, how much you should be tipping? Obviously, this changes in different parts of the country.

Ms. PALMER: It does. Typically, you're going to tip a lot more in urban areas. But the general rule of thumb is that if you - if someone provides you a service throughout the year, you want to pay them the equivalent of one week's work. If it's someone like a childcare worker, a nanny, you want to give them one week's worth, one week's pay. If it's someone who comes to your house to clean your house on occasion, say, once a month, you want to pay them the equivalent of one visit. So, you can sort of calculate it that way, and otherwise you can use the general 20-percent rule that we usually use when we go out to dinner.

CONAN: And that's still 20 percent, that doesn't change in a recession.

Ms. PALMER: Unfortunately not. Of course, people are tempted to cut back, but if you're buying those services, if you can afford those services, then you really should be able to afford the tip.

CONAN: Let's see if we can get Doug on the line, Doug with us from Rocky River in Ohio.

DOUG (Caller): Good afternoon.

CONAN: Hi, Doug.

DOUG: How are you today?

CONAN: Very well, thank you.

DOUG: The tips aren't near as good as they been, that's for sure.

CONAN: What do you do, Doug?

DOUG: I drive cabs.

CONAN: And they're not as good as...

DOUG: I've been driving cabs 31 years.

CONAN: And they're not as good as before.

DOUG: No, but that's understandable.

CONAN: And are people offering any explanation? Are you just seeing 10 percent instead of 20 or what?

DOUG: Well, when I got a businessman, the tips are pretty the same. But you get a lot of older people, people going to the doctor, see them going to the stores, there's no - yeah, there's no apology; I don't expect one. You know everyone is hurting.

CONAN: Sure.

DOUG: So, you begin to understand. You just try and get more fares.

CONAN: And work a little harder and work a little longer, I guess.

DOUG: Well, yeah. I've got that option. I can work that sixth and seventh day or that 11th and 12th hour.

CONAN: All right. Doug, good luck to you.

DOUG: Thank you very much.

CONAN: Appreciate the phone call. Let's see if we can look now to Michael, Michael with us from Flagstaff, Arizona.

MICHAEL (Caller): Hey, how are you doing?

CONAN: All right.

MICHAEL: Good. Good to be on the show. Yeah, I work at a fine casual restaurant, Josephine's Modern American Bistro here in Flagstaff. And I have noticed that the tips are actually going up a little bit.

CONAN: Really?

MICHAEL: It is - yeah. Well, yeah, it's our slow season right now, and so we see our local population. We don't see the tourists. We don't - we're not seeing too many of the other people. I mean, we're (unintelligible) now in about 15 inches of snow at this present moment. So, you notice that these people are sympathetic. They know how this city works. They know how it slows off, and they tend to tip you just a little bit more. And we've gotten some bonuses from some of special regulars we've had. It's been really nice, actually.

CONAN: Flagstaff - I know Phoenix, well to your south, is having a terrible time with the real-estate business. How are things in Flagstaff?

MICHAEL: It's pretty bad. Flagstaff has some of the highest proportion in terms of cost of living to the actual median income. It's about 300,000 a house to 28,000 medium income. It's really bad in that. So, people haven't really been buying houses anyways up here in Flagstaff, and so the foreclosure rate I don't think is as high as it is in Phoenix because of that.

(Soundbite of laughter)

CONAN: Well, yeah, OK. I don't think it's as high anywhere, maybe Las Vegas, as it is in Phoenix. But anyway, thanks for the call, Michael. Good luck.

MICHAEL: Absolutely. You, too. OK.

CONAN: Bye-bye. And I guess we're seeing different expressions. I think people do understand that the people who rely on tips, Kimberly Palmer, rely on tips.

Ms. PALMER: That's right. And you know, people who are not hurt by this recession that we're experiencing can afford to keep up their tips. Typically, people who work in restaurants are being hurt sort of two ways right now, because restaurant traffic has gone down a lot. And so, that's interesting to hear in that upscale restaurant that he works at, there may be a difference there, what kind of restaurant that you work at. But certainly, people who do still have their jobs, who can still afford to go out, are aware that tips are more important.

CONAN: Here's an email from Ashley in Colorado: I work as a fine-dining server, and although our overall business has not seen a significant decline - that's interesting - I am seeing a stronger patter of 16-to-18 percent tips rather than 20 percent. It may not seem like a lot to those outside the service industry, but I completely rely on tips for my income. If people cannot afford as luxurious a meal, I would encourage them to cut back on a second dessert or third glass of wine rather than the tip.

And this from Robley(ph) in Denver, Colorado: My husband and I tend to tip more during the recession. We figure if we can afford luxuries like eating out, ordering pizza, et cetera, then we can certainly afford a 20 to 25 percent tip. When we can't afford to tip appropriately, we will stop indulging in such luxuries. Let's see if we can get Lauren on the line, Lauren with us from San Antonio.

LAWRENCE (Caller): Oh, it's Lawrence.

CONAN: Lawrence, I'm sorry. Go ahead, please.

LAWRENCE: Yeah, I've been delivering Chinese food now for, like, three years. And I've noticed specifically in the past two or three months my average tips have gone down from about $40 to about $20 a day. And it just gotten really, really bad. Actually, I'm at work right now.

CONAN: I was going to say, you're probably on lunch runs now, yeah.

LAWRENCE: Yeah. I've done four deliveries today, and one person tipped me. The other three were credit cards, and it was, you know, zero, not a penny.

CONAN: Not a penny.

LAWRENCE: Yeah. It's gotten just so bad. In fact, it was either last week or the week before, I did an open-to-close shift, and I delivered $450 in sales, and I didn't even break $20 in tips.

CONAN: Wow, that's - math was never my strong suit, but that ain't 20 percent.

LAWRENCE: Yeah. It's really bad. In fact, I'm trying to find another job, but...

CONAN: Do people look you in the eye when they sign that credit card?

LAWRENCE: Oh, yeah. Yeah, they do. It's - I don't know what to say. I - yeah, your - that last email that you got where the lady who's talking about how if they can't afford, they don't order - you know, if they can't afford to tip, they cut down their luxuries, you know - I really feel that if you can't afford to tip, please don't go to a bar, don't go to a restaurant or don't order food to be delivered to your house. I mean, it's extremely rude. It's - I - it's just gotten so bad, I can't really take it anymore. God.

CONAN: Well, Lawrence, good luck. Maybe your next delivery will be someone more generous.

LAWRENCE: Yeah. I've got my fingers crossed.

CONAN: OK, so long. Drive carefully. Here's an email from Angela in San Francisco: I'm a bartender and rely on that money to pay my bills. It is a mentally, physically and emotionally demanding job, which is why I earn tips. If you do not have the money to tip, you should not eat or drink out. So, Kimberly, what we're hearing from a lot of people, you should consider that 20 percent part of the price.

Ms. PALMER: Yes, that's right. And you know, another option that people come up with is thinking that they'll just tip in terms of a nice thank-you note or baking cookies, so, ways of sort of getting around that budget issue. But as we just heard from Lawrence, the money is really a key part of it, and so while that's a really nice gesture and, of course, that's a great thing to do in addition to a monetary tip, I don't think you can ignore the fact that giving money is important.

CONAN: Kimberly Palmer, senior editor at U.S. News & World Report and the Alpha Consumer. She's with us from her magazine's offices in Washington. We're talking about tips, not just the seasonal tips for people like doormen, hairstylists, massage therapists, that sort of thing, but well, the waiters and the cab drivers and the bartenders rely on tips year 'round. What's your experience if you're a tippee and tipper? 800-989-8255 is the phone number. Email is talk@npr.org. You're listening to Talk of the Nation from NPR News. And let's see if we can go to Lindsay, Lindsay with us from Wenatchee in Washington.

LINDSAY (Caller): Yes, hi.

CONAN: Hi.

LINDSAY: I'm a barista here in Wenatchee at a little drive-through coffee shop, and I have a lot of the same great problems that the guy in Flagstaff is having. Most of our customers tend to be regulars. Every single day, sometimes twice a day, they're all, you know, either employed - self-employed or public servants or other bartenders or baristas, and our tips have been really fabulous lately.

CONAN: Really?

LINDSAY: They've been very generous, and I think people tend to be sympathetic, and we're unusual in that we have regulars that have been coming to us for years. So, we tend to have their drinks ready sometimes when they drive up the window. Sometimes we'll sit there and do the math and figure what some of these people are spending on their lattes every month, and it's amazing, and they still find enough to tip. And we know what they do for a living, and you know...

CONAN: You also know where they live. Would you slip them only a half a shot of espresso if they didn't give you a tip?

(Soundbite of laughter)

LINDSAY: No, no. The more caffeinated, the better, you know?

CONAN: I suspect you're right about that, Lindsay.

(Soundbite of laughter)

CONAN: Thanks very much for the phone call.

LINDSAY: Thank you.

CONAN: Bye-bye. Let's see if we can go now to - this is Cathy, Cathy with us in Troy, Michigan.

CATHY (Caller): Hi, Neal. It's very nice to be on your show.

CONAN: Nice of you to call.

CATHY: Thank you. In regard to tipping for general restaurant trips and things like that, we have not decreased our tipping at all. But as far as holiday tipping goes, for our regular hairdresser, nail technician, things like that - my niece is a professional massage therapist here and she is independent. So, I have been offering in lieu of their usual tip a free massage. That way they get a tip that is enjoyable, my niece gets some work, and everybody turns out pretty happy.

CONAN: All right. Well, that's a good idea. So, this is a 30-minute, one hour, whatever.

CATHY: One hour, whatever, yeah.

CONAN: All right. So, that's going to be, what, $75 worth, something like that.

CATHY: Yes.

CONAN: All right, all right. Cathy, thanks very much.

CATHY: You're quite welcome.

CONAN: All right, bye. Is that an acceptable alternative, do you think, Kimberly Palmer?

Ms. PALMER: Yeah. You know, that sounds like a pretty creative approach. And I think that when it comes to in-kind tips like that, that can work. And so, that's a way to get around the budget issue. But I do think there is a fine line there, because you don't want to go too far in the direction of just thinking that you can - as I mentioned before - bake people cookies and have that be the equivalent of a gift, a monetary gift.

CONAN: You can get away with that with friends, but not to service people.

(Soundbite of laughter)

Ms. PALMER: That's right.

CONAN: Let's talk with Greg, and Greg is with us in Boise.

GREG (Caller): Yes. I was calling because I've been listening to your show here, and I was raised by - I would say I'm a consumer rather than somebody who leaves off tips. I was raised with conscientious parents that taught me that 15 percent was a normal and reasonable tip. I'm hearing on your show that most people are expecting 20, 25 percent. I'm actually somewhat surprised, because I'd always thought I was doing a pretty good job at giving 15 percent, and I thought that's, you know, that's a moderate portion of your total bill. And I'm kind of wondering how and when it changed.

CONAN: Kimberly Palmer, any advice there?

Ms. PALMER: Yes. Well, you know what? It did change. There's been a shift over the last couple decades, and it moved from actually even lower, about 10 percent, up to 15 percent in the '80s, and now, really, what's typical is 20 percent. So, it has shifted. Part of that is because the wages of service workers, they are low, and so they need to be compensated by these tips.

GREG: OK. So, I should expect that when I'm going into these different service-oriented things like haircuts, restaurants, things like that.

Ms. PALMER: Yes. You know, it's unfortunate for consumers who are trying to manage their own budgets, but 20 percent is the expectation now, and probably, we have lower base prices because the tip expectation is higher.

GREG: OK. And so, the employers just aren't paying these people as much in a relative sense as they were before.

Ms. PALMER: That's exactly right, yes.

GREG: OK. Well, thanks. I appreciate it. I'm glad that you had me on the show.

CONAN: OK, Greg. Thanks for the call. Let's see. One last quick call, Megan, Megan with us from Detroit.

MEGAN (Caller): Hi.

CONAN: Hi.

MEGAN: I was calling. I'm hearing a lot of the take from the workers side of things saying if you can't afford to eat at a restaurant or if you can't afford to tip to bypass those luxuries. But my question is this. I recently hired two women to do some house cleaning for me, which is a real luxury for me. And being in the Detroit area and with the recession, it is difficult to keep them coming and provide a 20-percent tip or a week's tip - a week's worth of tip at the same time. So, do you continue to keep those people provided with the job when you can't tip, or would it be your advice just to let them go altogether and look for something new?

CONAN: That's dilemmic(ph). Kimberly Palmer, we'll give you 10 seconds to answer it.

Ms. PALMER: Definitely, it's best for them. If you keep employing them, the best tip you can give them right now is referrals. Pass their name on to friends, encourage them to hire them. That's the best gift you could give them right now.

CONAN: Megan, good luck.

MEGAN: Thanks.

CONAN: Bye-bye. And we'd like to thank Kimberly Palmer, senior editor at U.S. News & World Report, the Alpha Consumer at that magazine, with us today from their offices in Washington. Thank you for your time today.

Ms. PALMER: Thank you, Neal.

CONAN: Tomorrow, Ken Rudin joins us for a weekly visit with the Political Junkie. This is Talk of the Nation from NPR News. I'm Neal Conan in Washington.

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