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Service charges and tipping are common in many societies, though in few countries are they as prevalent as they are in the United States. Driven in part by wage laws that allow food service workers to earn a different, lower minimum wage, tipping provides a subsidy to these workers’ income. The ethics underlying tipping culture remain debated.

On the one hand, advocates of a higher mandatory minimum wage for restaurant workers argue that this policy would require restaurants to take responsibility for paying their employees a living wage and ensuring their income is sufficient, even if slow seasons, weather, or other factors outside their control lead to a slow shift. Tipping then becomes an expression of gratitude for exceptional service, not an expected cost of ordering food. On the other hand, service employees whose skills enable them to earn substantial tips worry that their income would decline, and the restaurants that employ them argue that increasing servers’ minimum wages is operationally unsupportable. If increased labor costs force restaurants to increase their retail prices, it could drive customers away, with detrimental implications for the business and its employees.

In response to such debates, New York City has sought a solution that can balance the two opposing views: It suggests options for encouraging larger tips for certain segments of workers, without actually mandating changes in the spending habits of either customers or businesses. Specifically, local laws 107 and 108 regulate the suggested minimum tip that appears on the displays proffered at takeout counters and by food delivery workers, to start at 10 percent. Customers still can choose whatever amount they want to tip, but the baseline amount is set at a consistent, and lower, level. Research has long shown that setting such baselines strongly influences consumers’ perceptions of appropriate payment amounts, so the change might diminish the perceived pressure to provide substantial tips for simple service transactions.

Food delivery providers contest the effort though. Uber Eats and DoorDash filed a joint complaint, alleging that the 10 percent requirements violate the services’ constitutional rights to freedom of speech, because they force them to communicate a predetermined, constraining message. The suit also outlines the potentially adverse effects of the legislation, including a threat of greater tipping fatigue among consumers. The U.S. District Court that heard the case dismissed it, with the judge ruling that the plaintiffs failed to demonstrate that a small change in their current tipping screens constituted a clear violation of their civil liberties. He added his opinion that the legislation actually increases transparency for consumers, while also protecting workers who depend on tips.

The battle in New York is relevant to restaurants and food service employees nationwide. The food delivery platforms certainly operate most intensely in densely populated areas (New York City residents spent more than $250 million on takeout in the first six months of 2025), but changes to their operations in select cities are likely to spread more widely too. Other states already have taken up legislative debates about whether tipping should remain customary and unregulated or if more restrictive and protective measures are needed. In their attempts to do so, they might take into account the results of a recent study conducted by Toast, Inc., a restaurant software provider. It indicated that states with larger populations tend to report the lowest tipping averages; Texas, Florida, and New York rank among the lowest. Southern workers also tend to struggle with low tips, whereas the Midwest states represent the middle in terms of tipping averages too. It was two mid-Atlantic states, Delaware and West Virginia, that notched the highest diner contributions, exceeding 21 percent, followed close behind by New Hampshire and Indiana.

Discussion Questions

1. On what side do you fall in the tipping debate? What experiences in your own life have informed that opinion?

Sources: Matthew Haag, “Uber and DoorDash Try to Halt N.Y.C. Law that Encourages Tipping,” The New York Times, December 16, 2025; Erin Alberty and Sami Sparber, “At Utah Restaurants, Tips Still Lag,” Axios Salt Lake City, April 17, 2026; Jonathan Stempel, “Judge Rejects DoorDash, Uber Bid to Block New York City Tipping Laws,” Reuters, January 23, 2026.

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Becoming the chief executive of a global retail firm might seem like a dream. It implies reaching the top of a competitive field, earning millions in compensation, and having the opportunity to reorient and determine the future of hundreds of stores, thousands of employees, and millions of consumers. So why do all these new retail CEOs seem so worried?

Current trends make retail leadership even more challenging and uncertain than ever before. Inconsistent tariff policies mean it’s nearly impossible to establish clear, confident cost predictions. Consumers are exhibiting an ongoing crisis of confidence, unsure about how far their disposable income can go and unwilling to spend more than they must. As these macro-level trends add pressure to the business, employees worry about the threat of layoffs and store closures. Meanwhile, shareholders continue to clamor for sufficient returns on their investments, demanding the retail leaders find novel sources of substantial revenue.

Together, these trends have prompted new approaches to leadership in many firms. It appears that more companies are willing to take a risk and appoint a brand new CEO, someone without prior experience in that role, in the hope that their perspective will be radically different and powerfully effective. Another notable trend involves “listening tours,” such that new leaders make it a priority to solicit direct feedback from employees across the hierarchy, to determine what problems they see and what solutions they might prefer.

These tours had better be short though. To keep boards and investors happy, new retail CEOs need to devise and start implementing their strategy within the first three to six months after their appointment. Once they’ve done so, experts note that they only have about a year to prove it works. If they don’t, they face another notable trend in modern retail: massive turnover among leadership ranks.

Compared with many other industries, retailing sends leaders packing far more quickly and more often. When calculating all turnover among executives, retail firms account for approximately one-quarter of firings. Whereas CEOs in technology sectors can count on an average 10-year tenure, and finance executives average nearly 9 years, chief executives in retail last less than 6 years on average.

Discussion Questions

1. Having read about these challenges, would you still want to lead a retail chain at some point in your careers?
2. Should new retail leaders be evaluated with the same standards, despite the unprecedented conditions they face?

Sources: Jordyn Holman, “A Bad Time to Take the Helm? New Retail Leaders Face Extra Headaches,” The New York Times, September 27, 2025.