Is the American custom of paying 15% tips unreasonable? An Indian influencer’s social media post has set off a huge debate after he said tipping in New York City is a scam.

But underlying this debate are also questions of labour, fair wages and exploitation as well as differing cultural perceptions of compensation for services.

In a post on August 20, YouTuber Ishan Sharma claimed that he paid $50 for a meal costing $45 at a restaurant but the waiter did not return $5, saying that he “had to pay the tip”.

“Why do I pay extra just because restaurants pay minimum hourly wages?” Sharma wrote in a post on X, formerly Twitter, that has seen immense traction – and drawn harsh criticism.

Users accused Sharma of being “cheap”, with some pointing out that it was customary to leave a tip in the US. But several others said that tipping should be the customer’s choice.

Soon after, the X handle of The Deshbhakt, the journalism and satire platform headed by Akash Banerjee, posted a video of Sharma claiming to earn Rs 35 lakh a month.

The video featured Sharma in conversation with entrepreneur Ashneer Grover and Naukri.com founder Sanjeev Bikhchandani. “The waiter was just trying to make a decent honest living – what about you?” said The Deshbhakt post, tagging Sharma.

Pew Research in November said that 92% of the Americans they surveyed leave a tip when they dine at restaurants where there are servers. The majority of the respondents – 57% – said they would tip 15% or less at a restaurant where they had average food and service.

Gaurav Sabnis, associate professor at Stevens School of Business, said most Americans tip well and even take pride in tipping. “What people outside [the] US don’t get is, that’s how it’s worked here,” Sabnis wrote on X. “Most people tip. That’s what they’s used to.” According to Sabnis tipping in the US is not necessarily related to labour and low wages.

As per the Fair Labor Standards Act in the US, the federal minimum wage for tipped employees is $2.13 per hour, according to the US Department of Labor. However, Sabnis said the federal minimum wage is irrelevant. “Most states have their own minimum wage, which are mostly well above the federal,” said Sabnis, with hourly pay increasing depending on the seniority of the employee.

But where labour exploitation is common and workers have little protection, tips can help supplement low income. “America has exploitative labour laws and the restaurant and hospitality industry have been continuing that way for a long time,” Antoine Lewis, a Mumbai-based restaurant critic and food writer, told Scroll. Tipping “is not the norm globally”, he said.

For instance, in Europe, where labour rights are stronger, customers pay lower tips, more as a gesture of gratitude.

In India, however, tipping is perceived differently. It is “seen as a baksheesh for exceptional service and is optional”, said Riyaaz Amlani, President of National Restaurant Association of India. Baksheesh is largely understood as a tip but has charitable connotations.

Some Indian restaurants levy a service charge between 5%-15% of the billed amount but customers have often protested this. Tips can often be retained by servers, depriving other employees of their share whereas the service charge is usually distributed among all restaurant staff, including cooks and cleaning staff.

Amlani said that to provide a unified and good experience for all customers, “service charge is the most efficient and transparent way of compensating everyone involved”. Lewis, too, favoured a service charge. “We are in general poor tippers,” he said. “We would rather round things off than pay a reasonable tip.”

But the practice of levying a service charge is unpopular in India. In June 2023, the Consumer Affairs Ministry clarified that service charges are not mandatory and a customer can have it removed from the bill.

“We have stopped adding service charge as customers trouble us a lot to scrap it from the bill,” said the manager of an eatery in Indore. Servers at smaller restaurants where a service charge is not levied are usually paid poorly. “I earn Rs 30-Rs 50 in tips everyday,” said a waiter who works at a drive-in restaurant in Indore.

Another pointed out that going digital had also taken a toll on tips. “My tips have reduced by 50% after the advent of online payments,” said a senior waiter at a cafe in Indore.

“Labour is seen as the most expensive and the most dispensable part of the capital,” said Lewis. But tipping cultural norms aside, neither the US nor India have strong labour laws that put the interests of employees first.