[Kyle]

More and more people are eating out these days. It is a much higher percentage than 40 and even 20 years ago. More two working parents and single parent homes means less time for home cooked meals. That translates into more restaurants and more restaurant employees. After having worked in a restaurant a person is much more likely to give better tips. Since tipping is passed onto children from parents this is going to have a compounding effect. Also being a bad tipper has a negative social connotation. Therefore if a majority or strong minority is tipping x then it will spread to others.

I doubt we are going to see tipping decline but there has to be an inflection point where it just stops increasing or the growth rate becomes minuscule.

Also an increase in disposable income will increase tipping. Tipping could be considered conspicuous consumption much like buying name brand items. More money=more money spent on status.

EDIT: Actually the more I think about it I like the conspicuous consumption theory. IMO this resonates throughout American society in many different aspects. Someone mentioned this earlier, but bottle service immediately springs to mind.