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Wednesday, March 12, 2014

Starbucks Digital Tipping is Bullshit

Posted by on Wed, Mar 12, 2014 at 2:25 PM

Yesterday, Starbucks announced that patrons would finally be able to tip their baristas digitally. Which seems like a good thing but is in fact really kind of awful.

From Starbucks:

Beginning March 19, customers using Starbucks App for iPhone in the U.S., U.K. and Canada will experience a streamlined design and easy access to their account and My Starbucks Rewards information. In addition, customers using the app will have the option to leave a tip at more than 7,000 company-operated Starbucks® stores in the U.S.

Customers can show their appreciation to store partners by tipping through the Starbucks App for iPhone. Customers are given the option to provide a tip in the following denominations: $0.50, $1.00, $2.00.

Note: The tips will not be based on percentage. They'll just be a flat rate. If you're, say, picking up the office coffee order and it comes to, like, $40, the highest tip you can leave is $2.00, or about a 5% tip. Starbucks doesn't mention if you can give more than one tip, but I doubt it—so that's the first bullshit thing.

The second bullshit thing is that this is most likely a way for Starbucks to dodge paying their employees more.

As Dominic pointed out yesterday in this piece you should read about the proposed $15/hr minimum wage, one tactic employers are trying to use to cut their own labor cost in the instance of an increase is "total compensation," or rolling tips in with wages. This is a way to offset labor costs, while essentially placing the burden of paying service workers on to customers.

Previously, the only way for customers to show their appreciation/help baristas reach anything close to a living wage was to tip in cash. Cash tips are sort of a double-edged sword; while people carry actual bills a lot less frequently, resulting in fewer tips, cash tips aren't documented. The IRS does require baristas to declare tips as part of their income, but those who work at places without digital or credit card tipping rarely do, because a.) there is no record, and b.) there are rarely enough of them to make them worth declaring.

Additionally—and this is perhaps the most salient part of all this—Starbucks can't point to those tips as part of the baristas' wages.

As a result, tips have been sort of a see-no-evil aspect to Starbucks's (and similar companies') business model. Digital tipping allows them start accounting for those tips and, potentially, get away with including them in barista wages.

To be fair, when I was working as a Tully's barista, I would have loved digital tips because it would have meant more much-needed money in my pocket. And in the immediate future, digital tips will absolutely be beneficial to low-wage workers, because it will just be more money.

But in the long-term, especially when the fight to increase the minimum wage is happening right in Starbucks's front yard, the timing of this decision is definitely suspect.

Oh, and the $2.00 limit thing is pretty shitty, too.


Comments (27) RSS

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Gordon Werner 1
yeah ... but what about people like me who walk around without change (or cash in general) ... currently I can't tip the baristas ... especially when they do a good job. This system, while by no means perfect, at least lets me give them something for their hard work.
Posted by Gordon Werner on March 12, 2014 at 2:40 PM · Report this
keshmeshi 2
I guess the answer to that is to not endorse a tip credit. It's also easier for employers to engage in wage theft with a tip credit, but I doubt you'll see Starbucks pulling that shit either.

For its industry, Starbucks has been at the forefront of offering its employees a higher-than-average wage, health care, and other benefits. But, oh right, it's a big company, so fuck them. Obviously Starbucks is worse than a small coffee shop that pays baristas minimum wage and offers zero benefits.
Posted by keshmeshi on March 12, 2014 at 2:42 PM · Report this
JonnoN 3
Weird they chose the 2nd most popular mobile platform. I guess android users have better taste than Starbucks :p
Posted by JonnoN on March 12, 2014 at 2:46 PM · Report this
Allyn 4
Oh, well, oops.

When I posted this suggestion to the Starbucks feedback page last year, it was without thought to how it affects tips or wages. I was only thinking about how I would like to tip, but never carry cash or change - that if I'm a registered user, I should be able to say that every time I pay with my card, the barista will get a tip - just as I can add a tip to my credit card at a restaurant.

I'm not claiming this development as my doing - obviously other people must have brought this up or Starbucks wouldn't have bothered. But for my one suggestion, if it had any sway on Starbucks, I apologize. It truly wasn't an intention to screw over the baristas - it was just so I could feel a little less shitty about not having change and cash with me.

...and now I feel shitty for denying baristas tax-free tips...
Posted by Allyn on March 12, 2014 at 2:46 PM · Report this
keshmeshi 5

There was a claim on Slog several months ago that Starbucks baristas are tipped very little, on average. If anything, this app will increase their tips.
Posted by keshmeshi on March 12, 2014 at 2:54 PM · Report this
wisepunk 6
The other problem with digital tips is that Starbucks will be able to control how those tips are paid out. Maybe they split them all between all employees based on hours worked, so while the morning people get thier butts kicked the afternoon people will get the same tip out with a (possibly) lighter load. Maybe Starbucks won't pay out the tips for 90 days so they can be processed (put into a bank and interest earned on that money while the employees wait for it).

Lots of shit can go on when the company controls the tips.
Posted by wisepunk on March 12, 2014 at 2:54 PM · Report this
No one buys the entire office coffees on their app.

People buy 1 or 2 at the most, in which case the flat rate will definitely cover it.
Posted by c on March 12, 2014 at 2:55 PM · Report this
Who the fuck tips at Starbucks? Take my order at a table, bring it to me and get my check, you get a tip.Stand their like a monkey pulling a shot? Nope, not gonna do it.
Posted by Sugartit on March 12, 2014 at 3:02 PM · Report this
Clara T 9
Hanna I'm stoked to see someone else noticing the wage policy implications here. My take on that's not exactly the same as yours (as in hidden income shouldn't be), but good on ya for reading through to the real issue.
Posted by Clara T on March 12, 2014 at 3:04 PM · Report this
Allyn 10
"Oh, and the $2.00 limit thing is pretty shitty, too."

Not really, though - if one wants to tip more, one can still tip more; there will still be a tip box by the till. The [rare] customer who buys forty coffees for the office on her phone can still leave a cash tip - if she was even inclined to leave one at all - for more than $2.
Posted by Allyn on March 12, 2014 at 3:24 PM · Report this
It's an iPhone app.... too many buttons will confuse the iOS people and apple won't approve it.
Posted by ChefJoe on March 12, 2014 at 3:25 PM · Report this
Will in Seattle 12
Maybe they should pay them a decent wage like they're legally required to in New Zealand?
Posted by Will in Seattle on March 12, 2014 at 3:26 PM · Report this
Guess I missed the part where it said you were FORBIDDEN from leaving a larger cash tip.

Right now baristas are getting zero from most people who just swipe their cards and go. This is going to be huge for baristas.

But somehow if Starbucks does it, it's a bad thing.
Posted by bigyaz on March 12, 2014 at 4:07 PM · Report this
Only two things prevent Starbucks customers from currently leaving tips: 1) they are too fucking lazy to carry cash - which is entirely on the customer, or 2) they are rejoicing at the ability to buy an already overpriced cup of coffee without having to feel pressured to also leave a tip.
Posted by Mike in Iowa on March 12, 2014 at 4:09 PM · Report this
You had me until you started taking tax evasion. Woohoo tips are tax free income and only suckers pay taxes!

Anyway, many people like myself buy, say a $2 americano and tip an extra buck. So perhaps the $40 office coffee purchase will all even out, seeing that that is such a minor portion of their business. And hopefully if they were making a $40 (what is that like 20 gallons of coffee) they wouldn't be an asshat and would pay with a credit card and tip properly.
Posted by Senor Guy on March 12, 2014 at 4:11 PM · Report this
fletc3her 16
Starbucks already has complete control over tips. They collect all the cash and dole it out based on the number of hours worked each payday. Digital tips will go into the pool just the same as tips put on credit cards.

The problem is that Starbucks pushes people to use their Starbucks cards heavily. That's the way you get loyalty drinks and various special discounts. For Starbucks it greatly reduces the fess they pay credit cards for small transactions. But, it makes tipping difficult.

If you're paying for the office coffee doesn't it seem more likely that would be on a credit card than on a Starbucks card? If it costs enough then you have to sign the receipt and will have the opportunity to tip.

And no, there is no conspiracy here. You're really reading too much into this. Workers are probably long upset that their tip revenue has declined so much so Starbucks has finally done something to improve the situation.

Is Android still a thing?
Posted by fletc3her on March 12, 2014 at 4:15 PM · Report this
If a brastia makes enough in salary/tips to be required to pay taxes, why is it a good thing they avoid paying them? Is tax dodge only bad when the really rich does it?
Posted by j2patter on March 12, 2014 at 4:33 PM · Report this
@16. Yes, android is a very big thing.…

Android continues to dominate the global smartphone market. In the first quarter of 2013, 74.4 percent of all smartphones sold to end users were running Google's open operating system, up from 56.9 percent a year ago. Apple's iOS remains a distant second with a market share of 18.2 percent.
Posted by ChefJoe on March 12, 2014 at 4:34 PM · Report this
keshmeshi 19

Starbucks credit card slips never had a line for tips. Notice how I used the past tense there? A few years ago, Starbucks did away with credit card slips entirely.
Posted by keshmeshi on March 12, 2014 at 4:46 PM · Report this
french_desperation 20

"Weird they chose the 2nd most popular mobile platform. I guess android users have better taste than Starbucks :p"

Android users on average are less willing to spend money. That's no shit. The Play Store is like the trailer park of the mobile app world.
Posted by french_desperation on March 12, 2014 at 4:47 PM · Report this
MacCrocodile 21
That "total compensation" bullshit has always been brought up as the argument for why you should always always always tip generously, you heartless monster. Thank god that doesn't apply in Washington where we have the highest state minimum wage *and* tips can't be taken out of that.

But now the expectation of generous tips is being used as an excuse not to raise the minimum wage? Fuck you, no. I refuse to let tipping and poverty wages justify each other. But if I take the initiative and stop or cut back my tipping, I'm a dick, so how about we instead guarantee a living wage for all workers.
Posted by MacCrocodile on March 12, 2014 at 5:23 PM · Report this
AmyC 22
@21 - well, that's what I came here to say, only you did it better. "Total compensation" as a concept makes me want to punch people in the throat.
Posted by AmyC on March 12, 2014 at 6:28 PM · Report this
JonnoN 23
@20 [citation needed]
Posted by JonnoN on March 12, 2014 at 6:39 PM · Report this
@22 why? If someone is making a living wage why tip 20%? Other countries don't. One of the reason tipping is expected in the states is because its assumed the main way tipped employees make their living. As they make more of their living from their hourly wage, why is it unfair to tip less.
Posted by j2patter on March 12, 2014 at 7:18 PM · Report this
bracted pedicularis 25
I think there are some misconceptions here.

1) This does not enable credit card users to tip. It enables registered Starbucks Card holders who also have an iPhone and who have downloaded and use the Starbucks app to add a tip to their purchase

2) Tips are (traditionally) collected as cash. On Monday usually, a barista (not a manager, not an assistant manager, not a crony - these individuals are not allowed to touch tip money) counts up all the money from the previous Mon-Sun, adds up total hours worked by baristas, and comes up with an hourly tip. You work more hours on the floor, you get more tip money. That hourly rate is also reported as part of your income by the manager. In my experience, tips were always on my earnings statement and therefore taxable.

No credit card tipping
Nonbaristas don't touch Batista tip money
Tips are reported as income
Posted by bracted pedicularis on March 13, 2014 at 7:04 AM · Report this
MacCrocodile 26
@24 - I think we actually agree, unless you meant your comment to be directed elsewhere. The expectation of tipping should not be used as justification for lowering the minimum wage, and a low minimum wage should not be used to prop up the practice of tipping.

If wages are low, raise wages, don't extort customers through guilt.
Posted by MacCrocodile on March 13, 2014 at 2:37 PM · Report this
Who tips at Starbucks? Let them pay proper wages with their overpriced hot water revenue!
Posted by Mad dig Tannen on August 29, 2014 at 3:38 PM · Report this

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