Now that we’re expected to tip everywhere, we’re tipping less

Plus: Housing market math, Terry Gou's political gambit and more. [Bloomberg]( This is Bloomberg Opinion Today, an iced-coffee bag full of Bloomberg Opinion’s opinions. [Sign up here](. Today’s Agenda - Replacing the tip jar with [an iPad]( was a bad idea. - [Housing market math]( gives me motion sickness. - Terry Gou is [not the right pick]( for you, Taiwan. - London’s mayor wants the [crispest, cleanest air](. Tip [Creep]( Something sinister is afoot in New York City, and it’s my public duty to inform you about it. Almost overnight, a handful of coffee shops in my neighborhood got rid of their normal iced-coffee cups and [replaced]( them with what can only be described as a colostomy bag. It’s a creation that only Satan could come up with — or Satan’s eco-friendly cousin, at least: TikTok is rightly [enraged]( by the Capri Sun-ification of caffeine, with Nolita Dirtbag [writing](, “I just paid $7.50 for this IV bag of iced coffee. Do they know how stupid you look holding this at 8:30 am?” Another TikToker, Connor R, [said](, “we gotta pump the brakes on progress and really reconsider what we’re doing to society right now.” And he’s right: If we don’t stop this trend in its tracks, there’s a solid chance we’ll be seeing Starbucks sell Franzia-style Frappuccinos next year. Good trends and bad trends are often born in New York City, but rarely do they get the opportunity to die here. The $[140 Amazon coat]( that took the Upper East Side by storm in 2018? It’s now normcore school drop-off attire in Minneapolis. The [Golden Goose Superstar sneakers]( that had Barneys customers in a chokehold in 2007? They’re now owned by thousands of [sorority hopefuls]( in Alabama. The [tip screens]( that helped the Big Apple’s food-service industry weather the pandemic? The moment these machines infiltrated this city, it was game over for the rest of the country: Shopify and Square created a monster. Almost overnight, every [car wash](, [movie theater]( and [football stadium]( in this great nation installed some sort of flippy-dippy iPad device on their checkout counters. Last year, there was no expectation to leave a tip. Now, the [self-checkout kiosk]( at the airport cafeteria is asking you to fork over 20% for some freezer-burned lasagna. The advent of “point-of-sale technology,” or POS[1](#footnote-1), has many customers feeling [emotionally blackmailed]( into tipping, Bobby Ghosh [writes]( (free read!). Nobody enjoys being at the front of a long line of patrons, all of whom can peep over your shoulder and instantly determine if you are a decent human being or an evil, heartless one who opts to press “No Tip.” But Bobby says the [backlash against tip creep]( — [tipping fatigue]( — is hurting those who most depend on gratuities: restaurant workers. The irony that a machine designed to make tipping easier is leading to fewer tips overall is self-evident. And “it comes at an especially bad time for the restaurant sector, which has been [struggling to find workers]( since the pandemic, even as [food inflation]( is leading to a [spike in prices on menus](,” Bobby explains. If you run a [restaurant]( that is short-staffed, then you’ll be slower to get the food out. Slower service means unhappy customers, who will be less generous with their tips. “This, naturally, makes restaurant jobs even less attractive — especially because tip creep has now created jobs where workers can get a minimum wage and gratuities on top,” he writes. “The most obvious way to break this vicious cycle is to pay all servers regular salaries based on the minimum wage,” Saru Jayaraman, director of the Food Labor Research Center at the University of California, Berkeley, told Bobby. The [tipping scourge]( may be here to stay, but the colostomy coffee bags need not be. I, for one, would begrudgingly leave a tip if my morning brew came in a pouch. Others, I predict, would not be so generous. A Math Problem for Young Quants Word on the street is that Citadel is looking for the next generation of [math geniuses](. The firm has 69,000 applicants for its internship program, which pays a handsome $19k a month — a [bargain]([2](#footnote-2), by Matt Levine’s estimates. “The students are evaluated on skills that go well beyond algebra,” Bloomberg’s Lulu Yilun Chen writes, including their facial expressions, the length of their emails and even the way they cut into a porterhouse steak during networking dinners. The whole thing makes me wonder how they’d handle a certain scenario, one that Aaron Brown [mapped out]( in his column today. If someone is going to solve our housing affordability crisis, maybe it’ll be an intern: Consider a hypothetical John Doe who bought a median-price, $300,000 home in August 2016 with 20% down and a $240,000 30-year-fixed 3% mortgage with a $1,012 monthly payment. Doe feels pretty good. The value of his house has increased to $425,000 — based on the median amount of appreciation — and he’s repaid $38,443 of mortgage principal. The price increase plus the paydown means Doe has almost $225,000 in home equity. Doe “thinks it’s time to use the increase to buy a nicer house,” Aaron writes, noting that he’d want to keep his mortgage payment the same and use the surplus funds from selling his old home to make a large down payment on his new home. The question that I’d ask these whiz kids: Is it financially wise for Doe to buy a nicer house? If they say “yes,” then Citadel should not hire them. But if they say “no, absolutely not,” then they should be hired on the spot, regardless of porterhouse etiquette. The truth is, Doe would be *out of his mind* if he thinks he can afford to sell for $425,000, or get anything in that ballpark. Here’s the math, via Aaron: Doe figures to clear $223,443 from a sale after repaying his remaining mortgage. To keep his current $1,012 payment, he can only borrow $148,622 in a new 30-year-fixed 7.23% mortgage. That means he can buy a house for $372,065, which means he would be trading down and not up — and that’s before paying sales commission, taxes and expenses. In reality, he’s probably looking at more like a $325,000 house. His profit has evaporated and he’s actually down $100,000 in house quality. He’s also added seven more years of mortgage payments, since his old loan had only 23 remaining years. Adding insult to injury, the Internal Revenue Service thinks he has a $125,000 profit, although he probably can [avoid]( paying capital gains tax on the first $500,000 of gains if he’s married. All of this goes to show that upper-middle-class Americans are currently priced out of the housing landscape. Under normal circumstances, you’d expect the market to correct itself: If something becomes wildly unaffordable to buyers, sellers have no choice but to discount the price tag, right? But the housing market is an anomaly, thanks to rising mortgage rates. Nobody wants to sell right now, and nobody wants to buy, either — unless you’re pocketing $19k a month. Maybe the Citadel interns can cash in on a Doe’s pad, regardless of the math. Terry Gou Déjà Vu Meanwhile in Taiwan — yeah, the place that may or may not become epicenter of World War III between the US and China — a billionaire businessman with zero political experience wants to become president! Oh how fun and [familiar]( this all feels! Is that déjà vu I feel, or is it [existential dread](? Terry Gou’s grand plan to become president of Taiwan smells awfully familiar to that of former US President Donald Trump. The founder of Foxconn is running as an independent, and his arrival to the already-crowded electoral contest is frankly “an unwelcome distraction” that will end up splitting the vote even further, Karishma Vaswani [writes](. Gou’s plan to stop war from unfolding is nonconfrontational, amounting to “ohh, we’re just gonna talk Beijing out of the whole thing.” I’m hardly the only one who sees this as extremely naive, considering China has zero problems running its military drills in the Taiwan Strait, for all to see and hear. “Voters are choosing between a ruling party that says Taiwan is essentially already a [sovereign nation](, and opposition parties that have advocated for closer ties with Beijing,” Karishma says. But are they really looking for someone who has built his fortune on doing business with China? Crash Course “One thing that beyond irks me is the talk of violence ... We're talking about elections. We know what happens when we talk about violence.” On the [latest episode]( of Crash Course, Timothy L. O'Brien spoke with Susan Del Percio, a Republican political strategist, about how [Trump’s challengers]( are all trapped by Trump, and none of them is showing signs that they can escape. Telltale Charts Okayyy, we get it, you’re an overachiever: “Since 2020 alone, China has made more steel than the US produced in the past 30 years,” David Fickling writes. But US Steel — the world’s first billion-dollar company — has long been on the bench: In 2020, it was worth less than when Andrew Carnegie and JP Morgan put it together in 1901. Now, it’s entrenched in [a takeover battle]( and has a market cap of $5 billion. Although it appears as though China’s biggest steelmakers are chugging away, they have committed to peaking their carbon emissions in the coming years — “a sign the forces that drove US Steel’s decline are setting in across the world,” David argues. Eventually, Beijing’s desire to bang out new steel should wane — along with the plumes of pollution that come from producing it. Today, London made an attempt to kick its most-polluting vehicles off the roads, but “they aren’t going quietly,” Matthew Brooker [writes](. London’s “ultra-low emission zone” has been expanded to cover the whole city, sparking a surge in crimes against the [roadside cameras]( used to track the cars. Although people may be [damaging]( and [destroying]( the cameras and even [covering]( them in stickers — crimes against arts and crafts! — nothing is going to stop London Mayor Sadiq Khan from tackling the climate emergency. Although it’s an honorable fight, Matthew says “he is widening cultural fault lines and unleashing passions that can do serious political damage.” “It looks like a risky gamble,” he warns, even if London’s efforts to reduce air pollution appear to be working. Further Reading FREE READ: Guess who's back, back again? Covid's back, [warn a friend](. — Lisa Jarvis A [bigger BRICS]( is going to lead to a bigger headache for the US. — Bloomberg’s editorial board VinFast [speculators]( are playing with fire: The under-the-hood finances are poor. — Chris Bryant Europe’s [manufacturing crisis]( is the best antidote against its gas-supply squeeze. — Javier Blas The [50th anniversary]( of one of Latin America’s worst moments in the Cold War is a dark reminder. — Eduardo Porter Big [regional banks]( ought to be regulated just like the megabanks. — Michael J. Hsu Succession IRL? [Mukesh Ambani’s children]( are joining the board of Reliance Industries. — Andy Mukherjee ICYMI Medicare [drug prices]( are under review. The labor market is [not overheating](. Tampa’s hurricane might be [once-in-a-lifetime](. A TV crew reporting on robberies [got robbed](. [AI sweatshops]( are in the Philippines. Kickers [$4 movie day](didn’t go as planned. Minnesota’s many [butter sculptures](. Martha Stewart ate [an iceberg](. Late-night hosts do [a daytime pod](. Miguel pulled very [eww stunt]( at a concert. Notes: Please send butter sculptures and feedback to Jessica Karl at jkarl9@bloomberg.net. [Sign up here]( and follow us on [Threads](, [TikTok](, [Twitter](, [Instagram]( and [Facebook](. [1] An aside: Who thought [POS]( was a good acronym??? You're essentially calling your product a piece of ... you know where I’m going with this. [2] "If you are in a math business, and the 20-year-olds making $50,000 are half as good at math as your 30-year-old employees making $1 million, then they are a bargain right now," Matt [writes](. Follow Us You received this message because you are subscribed to Bloomberg's Opinion Today newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. [Unsubscribe]( [Bloomberg.com]( [Contact Us]( Bloomberg L.P. 731 Lexington Avenue, New York, NY 10022 [Ads Powered By Liveintent]( [Ad Choices](