Which States Tip the Best and Worst?

For tipped employees, the generosity of the public may mean the difference between buying a steak or asking the landlord for an extension on the rent. And some tipped employees rely on tips more than others, because in some states it is legal to pay tipped employees a couple of bucks an hour. When we compare tipping practices from state to state, we find some pretty strange results.

(Photo Credit: mootown/Flickr)

The Details Are in the Data

Square analyzed data from credit card receipts to determine which states tipped the best and worst. The tipped employees in this study include not only restaurant and cafe workers, but taxi drivers and various small vendors.

Square compared credit card tip percentages from state to state. However, some states have outlawed the tipped minimum wage, meaning tipped employees must be paid full minimum wage plus their tips. The federal rules are that employers may pay their tipped employees as little as $2.13 cents per hour, as long as their tips make up the difference and they may at least $7.25 per hour. (Employers must make up the difference if the employee does not make enough in tips.) The point here is that a tipped employee making $3 per hour is hurt more by a cheap tipper than one making full minimum wage.

The federal definition of a “tipped employee” is somebody who earns at least $30 per month in tips. States, however, may add to this.

State Wages and Tips

Per Square‘s data, Alaska tops the list with an average tip of 17 percent of the bill. According to the Department of Labor, the state of Alaska requires employers to pay tipped employees full minimum wage. Therefore, in Alaska it might be a little easier to make ends meet as a tipped employee.

Delaware is at the bottom of Square‘s list, with a measly average credit card tip of only 14 percent. Add to this that tipped employee’s in Delaware make as little as $2.23 per hour before tips, and the picture gets drearier.

It would have been nice to find that the states with lowest tipped-employee wages also enjoyed the most generously, but this does not seem to be the case. Square recognizes there are multiple factors that are difficult to quantify, such as transient versus local tipping populations, and even the political culture in an area. Also, their numbers came solely from credit card receipts, so cash tips didn’t enter into their calculations. Still, always interesting to consider data!

Tell Us What You Think

How much do you usually tip? We want to hear from you! Leave a comment or join the discussion on Twitter.