Extra money to the employee. It’s supposed to be optional and a mark of good service, and typically was only wait staff/bartenders (for food service; there are other tipped jobs), but the hourly wage for said staff ended up becoming a fraction of the main wage and tips basically became required (in my day, $2.13/hour (though if, for example, we literally had no one come in, the company would make it up to the actual (non-tipped) minimum wage) versus I think around $7.15 an hour or something (it may have been less at the time). When I was a kid (1980s), we were always taught about 10-15% of the amount of the bill. These days, it’s often cited as 20-25%. In some states, the server wage is still really, really low (a quick search shows Oklahoma (state) is still at $2.13 with non-tipped minimum wage at $7.25/hr).

Add to that that many of the wait/bar staff are also having to pay idiotically-high US health insurance plus the actual cost of healthcare and their employers may or may not have any contributions to the plan. Then more if they want silly things like vision and dental insurance. The whole thing is a trainwreck and one of the reasons I no longer live in the US.