[OAW]

When my wife and I travel we love using Uber. It's a great service. Simple and easy to use. No need to carry cash which I rarely do anyway. And as an African-American the ability to never again have to experience the indignity of having an empty, in service taxi pass you by on the street to pick up someone white half a block away is worth the price of admission alone. Additionally, we appreciate the fact that it has up front pricing and there's no need to worry about a tip. The simply price is what it is. It's always been a very seamless experience. Until recently ....

So not too long ago my wife was in London. Requested an Uber around midnight to take her back to her hotel. The vehicle arrived shortly thereafter which is typically the case more often than not. And always faster than catching a cab. She entered the vehicle and the driver headed off. A few minutes later he asks her if she has any British pounds. She said she did not. He then asked if she had any US dollars. She again said she did not and asked why? He said for a tip. She politely told him "I'm sorry but I don't have any cash on me at all". He immediately pulled up over and told her "Get out." She said "Excuse me?". And then he yelled "Get the f*ck out!" and promptly accused her of lying about not having any cash. Mind you he put her out in the middle of a dark street. So she had to walk by herself to a well-lit intersection to try to get another ride ... being approached by strange men along the way. She tried to call another Uber but for some reason the app wouldn't work after that. Fortunately she was able to hail a taxi and get back to her hotel safely. Interestingly enough, the Uber app didn't display the ride at all in her Trip History so when I emailed customer service after this incident I couldn't include the driver's name or vehicle info. I figure he tried to game the system by "cancelling" the ride after it had already started. But hopefully they can identify this asshole who jeopardized my wife's safety in this manner by seeing who responded to the ride request and ban him from being a Uber driver ever again. (Note to self/wife: Always screenshot the driver's info who picks you up going forward. )

In any event, the point of this thread is to talk about Uber (or ride-sharing in general), the social norms/expectations regarding tipping for the service, etc.

Discuss!

OAW

[osiris]

I am blissfully unaware of Uber's tipping policy, but in nyc cabs accept credit cards for everything including tips.

Not a Uber fan, I use private car if needed like Dial 6 for about the same price or a nyc taxi.

edit: I miss Japan, no tipping.

[OAW]

My 2 cents on the topic ....

If it is a "social norm" to the point where it is expected then it's not a "tip" ... it's a "service charge". So just include it in the tab automatically. That way you are able to maintain upfront pricing and a seamless customer experience.

OAW

[Laminar]

On one hand, Uber is using new and innovative technologies and approaches to disrupt an outdated, poorly-functioning, heavily entrenched industry - capitalism at its finest.

On the other hand, Uber is using every possible loophole to pay drivers as little as possible and do the minimum required to barely keep enough drivers around to support demand - capitalism at its worst.

[andi*pandi]

If a benefit of uber is that you pay via the app, not needing cash, then this driver was definitely looking for ways to get $$ under the table. If I were to tip via uber etc, I'd want to use the app same as my main payment.

[subego]

Originally Posted by OAW 

My 2 cents on the topic ....

If it is a "social norm" to the point where it is expected then it's not a "tip" ... it's a "service charge". So just include it in the tab automatically. That way you are able to maintain upfront pricing and a seamless customer experience.

OAW

I get the impression, at least with restaurants, waitstaff generally get more money from the tip model, so they're not going to want to change it.

[OAW]

Originally Posted by andi*pandi 

If a benefit of uber is that you pay via the app, not needing cash, then this driver was definitely looking for ways to get $$ under the table. If I were to tip via uber etc, I'd want to use the app same as my main payment.

Uber has no mechanism to tip within the app. I've never used Lyft (though I have the app on my phone as a backup) but it's my understanding that it has the capability to tip within the app. I agree that if one is going to tip then it should be an option within the app itself to preserve the seamless customer experience.

OAW

[subego]

I thought Uber had multiple levels... some tip included, others not. The ones without have it where you choose a tip in the app though.

I don't use it, so I could very easily be wrong.

[OAW]

Originally Posted by Laminar 

On one hand, Uber is using new and innovative technologies and approaches to disrupt an outdated, poorly-functioning, heavily entrenched industry - capitalism at its finest.

On the other hand, Uber is using every possible loophole to pay drivers as little as possible and do the minimum required to barely keep enough drivers around to support demand - capitalism at its worst.

I was under the impression that Uber only kept 20% of the fare and the rest went directly to the driver? But don't quote me on that. My thing is it's fine to charge a reasonable rate. I have no expectation to only have to pay rock-bottom for the service. Just don't go back to the well afterwards. I'm definitely not a fan of being "nickel and dimed".

OAW

[OAW]

Originally Posted by subego 

I get the impression, at least with restaurants, waitstaff generally get more money from the tip model, so they're not going to want to change it.

I would expect that depends on the type of restaurant. Higher end restaurants for sure. Your local Applebee's perhaps not. But even in the restaurant industry I wish we would do away with restaurants being able to pay waitstaff less than minimum wage and then expect diners to make up the difference in "tips". It would be more transparent and consistent if they were paid their base wage and there was an automatic service charge added to the bill if you dine in. And no such service charge for carry out. The problem is a "service charge" is taxable to the restaurant whereas a "tip" is not. From a customer perspective my view is that's not my problem. But it wouldn't be a bad idea from a policy perspective to exempt a restaurant from taxation on a service charge provided that 100% of such revenues are distributed to servers. Now the wait staff might not like that because they can't then easily hide their earnings from Uncle Sam ... but you know what? I damned sure can't do that so I'm less than sympathetic on that front.

OAW

[OAW]

Originally Posted by subego 

I thought Uber had multiple levels... some tip included, others not. The ones without have it where you choose a tip in the app though.

I don't use it, so I could very easily be wrong.

I've used UberX, UberXL, and UberBlack. I've yet to see anyway to tip within the app.

OAW

[Laminar]

Originally Posted by OAW 

I was under the impression that Uber only kept 20% of the fare and the rest went directly to the driver? But don't quote me on that. My thing is it's fine to charge a reasonable rate. I have no expectation to only have to pay rock-bottom for the service. Just don't go back to the well afterwards. I'm definitely not a fan of being "nickel and dimed".

OAW

Uber sets the fare in the first place, so they can drop fares to get more customers and drive out the existing taxi business, and the drivers can do nothing about it, especially if they Uber full time. If there's a shortage of drivers in one area, Uber enacts surge pricing in that area to bring a swath of drivers over to compete for what may be a limited number of rides.

Don't get me wrong, I've given up traditional taxis and Uber 100% of the time, because they'd have to do a lot more shit wrong to be worse than traditional taxis.

[mindwaves]

I will not tip. I earn an honest wage and I wish for others to do the same.

[subego]

Originally Posted by OAW 

I would expect that depends on the type of restaurant. Higher end restaurants for sure. Your local Applebee's perhaps not. But even in the restaurant industry I wish we would do away with restaurants being able to pay waitstaff less than minimum wage and then expect diners to make up the difference in "tips". It would be more transparent and consistent if they were paid their base wage and there was an automatic service charge added to the bill if you dine in. And no such service charge for carry out. The problem is a "service charge" is taxable to the restaurant whereas a "tip" is not. From a customer perspective my view is that's not my problem. But it wouldn't be a bad idea from a policy perspective to exempt a restaurant from taxation on a service charge provided that 100% of such revenues are distributed to servers. Now the wait staff might not like that because they can't then easily hide their earnings from Uncle Sam ... but you know what? I damned sure can't do that so I'm less than sympathetic on that front.

OAW

I agree it would probably be better if we didn't tip and instead had that "baked" into price of the meal, but like many things, it can't work unless every restaurant switched over at once.

The fundamental problem is whatever wage management sets, it's going to be less than what the top servers earn in tips. The result is the top servers, the restaurant's best employees, quit.

This applies across the range of restaurants, only the scale changes. Applebee's enacts the policy, their top employees jump ship to The Olive Garden.

[subego]

Originally Posted by mindwaves 

I will not tip. I earn an honest wage and I wish for others to do the same.

What is the essential difference between a tip and a wage other than it is left to the customer to determine what it is?

[osiris]

I think in some places it's presumed that the worker will get tipped, so the wages are much lower - say in a restaurant or livery. But I kind of hate having to give someone extra money for what should already be a job well done. After all, we are not communists.

[subego]

If there was no tipping, the food would cost more.

As I asked above, what's the practical difference between this and a tip except for the part where it's up to the customer to decide that portion of the server's wage?

[osiris]

Originally Posted by subego 

If there was no tipping, the food would cost more.

As I asked above, what's the practical difference between this and a tip except for the part where it's up to the customer to decide that portion of the server's wage?

I think the practical difference is that the person expecting a tip may or may not give a crap if they're not getting extra money for their effort. I think this is so engrained in American culture to a fault - perhaps no turning back at this point.

[subego]

I'm confused...

If they give a crap, they'll get more money. If they don't, they'll get less.

That actually sounds like one of the few instances where capitalism provides the result that's wanted without really needing outside interference to make it happen.

[OAW]

Originally Posted by subego 

I'm confused...

If they give a crap, they'll get more money. If they don't, they'll get less.

That actually sounds like one of the few instances where capitalism provides the result that's wanted without really needing outside interference to make it happen.

But it really doesn't work that way as academic studies have shown.

The basic idea behind tipping, of course, is that service workers are getting rewarded for doing a good job, but the science simply doesn’t back this up. There’s decades’ worth of consumer-psychology research demonstrating that tipping hardly improves service at all. Michael Lynn, a Cornell University professor and one of the nation’s leading experts on the psychology of tipping, has studied this at length. In one 2001 review of the literature, for example, Lynn analyzed 14 studies on more than 2,645 bills at 21 restaurants. “I found that the average correlation between tip percentages and service ratings was only .11,” Lynn wrote in a paper published in Cornell HRA Quarterly. “In other words, service ratings explained an average of less than two percent of the variation in a restaurant’s tip percentages.”

Better service did indeed translate to a better tip, in other words, but the correlation was minuscule. Another study, published in 2001 in the journal American Demographics, suggested that many people pretty much just tip what they’re going to tip, no matter what happens during their dining experience. That research found that about a quarter of Americans always tip the same percentage, regardless of service. And although the research once suggested that servers could improve their tips by scrawling a little “thank you” or a smiley face on the bill, the latest studies are now showing the opposite — that when servers do this, their customers tend to leave lower tips.

Servers can race around the restaurant at a break-neck pace in hopes of pleasing their tables, in other words, and yet the research suggests that they ultimately have very little control over the gratuity they earn. But even more pernicious than that, one study published last summer in the journal Sociological Inquiry found a racial component inherent to tipping. Customers at a Midwestern location of a casual chain restaurant tended to leave white servers more money on average than they left black servers, regardless of the quality of service provided. And, in another study of Lynn’s that will surprise absolutely no one, researchers found that female servers with bigger breasts and blonde hair received higher tips; in contrast, the larger a female server’s body size, the smaller her average gratuity.

The Psychological Case Against Tipping | NYMag.com



OAW

[andi*pandi]

That might have a lot to also with most people feeling pressure to give at least 15%. My default is 20%. It takes a VERY crappy waiter/ress to make me drop below 15%.

[osiris]

Originally Posted by subego 

I'm confused...

If they give a crap, they'll get more money. If they don't, they'll get less.

That actually sounds like one of the few instances where capitalism provides the result that's wanted without really needing outside interference to make it happen.

Not sure if it always works out this way if the tip is expected/mandatory and the tipper is a tightwad, for example.

[osiris]

Originally Posted by OAW 

But it really doesn't work that way as academic studies have shown.



The Psychological Case Against Tipping | NYMag.com



OAW

fascinating stuff, thanks

[OAW]

Originally Posted by andi*pandi 

That might have a lot to also with most people feeling pressure to give at least 15%. My default is 20%. It takes a VERY crappy waiter/ress to make me drop below 15%.

I'm the same. It's 20% for table service. 10% for delivery service*. $1/drink at a bar. And $2/luggage item at hotels and airports if I happen to have cash on me ... no thank you if I don't. Service quality has nothing to do with it. And you'd really have to screw up to make me go below that. So again my attitude is that if it's expected then just add it as an automatic "service charge" and call it a day. And let's stop PRETENDING that the practice is to encourage good service.

OAW

* And one thing that really grinds me is to automatically charge me a "delivery charge" and then expect me to "tip" the delivery guy on top of that!

[subego]

@OAW,

I don't think that paper is directly addressing the assertion.

The paper states restaurants with good service average out more or less the same percentage of tips as those with bad service.

This does not preclude the possibility of the better servers at any given restaurant get better tips than the bad ones at the same restaurant.

For example, the effects noted in the paper could be due to patrons judging restaurants relatively rather than absolutely. People expect worse service at Applebee's than they do at Chez Pretentious.

[subego]

Originally Posted by osiris 

Not sure if it always works out this way if the tip is expected/mandatory and the tipper is a tightwad, for example.

It's an aggregate type thing.

Tightwads get averaged out by benefactors.

[subego]

Originally Posted by OAW 

* And one thing that really grinds me is to automatically charge me a "delivery charge" and then expect me to "tip" the delivery guy on top of that!

I could see this if the delivery charge was going to the driver, but it's to cover the logistics of doing something outside the restaurant's wheelhouse.

[subego]

Interestingly, I just got pushed into getting an Amazon Prime Now delivery, where apparently a tip is expected.

[The Final Dakar]

Originally Posted by subego 

It's an aggregate type thing.

Tightwads get averaged out by benefactors.

Citation needed

[The Final Dakar]

Originally Posted by mindwaves 

I will not tip. I earn an honest wage and I wish for others to do the same.

This is absurd.

[The Final Dakar]

Originally Posted by subego 

If there was no tipping, the food would cost more.

As I asked above, what's the practical difference between this and a tip except for the part where it's up to the customer to decide that portion of the server's wage?

If there is was no tipping the price of service rendered would be more transparent.

[subego]

Originally Posted by The Final Dakar 

If there is was no tipping the price of service rendered would be more transparent.

Does this have a practical effect?

[subego]

Originally Posted by The Final Dakar 

Citation needed

It gets mentioned by servers in internet tipping discussions, and bell curve type behavior is what one would imagine.

[The Final Dakar]

Originally Posted by subego 

Does this have a practical effect?

I need to explain what the practical effect of price transparency is?

[The Final Dakar]

Originally Posted by subego 

It gets mentioned by servers in internet tipping discussions, and bell curve type behavior is what one would imagine.

That's anecdotal.

[subego]

Originally Posted by The Final Dakar 

I need to explain what the practical effect of price transparency is?

I need to explain how tacking on 20% isn't exactly opaque?

[subego]

Originally Posted by The Final Dakar 

That's anecdotal.

Yup.

[The Final Dakar]

Originally Posted by subego 

I need to explain how tacking on 20% isn't exactly opaque?

If it weren't discouraging why don't restaurants just charge that way?

[subego]

Originally Posted by The Final Dakar 

If it weren't discouraging why don't restaurants just charge that way?

As I said...

Top servers either make more in tips than they do if service is included, or believe this to be the case.

If service gets included, the top servers quit. Included service chases away the restaurant's best employees.

[OAW]

Originally Posted by subego 

@OAW,

I don't think that paper is directly addressing the assertion.

The paper states restaurants with good service average out more or less the same percentage of tips as those with bad service.

This does not preclude the possibility of the better servers at any given restaurant get better tips than the bad ones at the same restaurant.

For example, the effects noted in the paper could be due to patrons judging restaurants relatively rather than absolutely. People expect worse service at Applebee's than they do at Chez Pretentious.

I'm confused as to why you think this is the case? From the study itself ....

ABSTRACT

In earlier CQ articles, I reviewed research on tipping and concluded that tips are only weakly related to service quality and that servers can substantially increase their tips by performing one or more of seven specific behaviors. New research indicates that: (1) servers’ and restaurants’ average tip percentages are only weakly related to their average service quality, (2) restaurant turnover rates and servers’ thoughts about quitting are negatively correlated with restaurants’ and servers’ average tip percentages respectively, and (3) servers can increase their tips by performing one or more of fourteen specific behaviors. These findings suggest that restaurant executives/managers should stop relying on tips to motivate good service and stop using tips to measure customer satisfaction, server performance, or restaurant performance. On the other hand, managers should train servers to perform one or more of fourteen tip enhancing behaviors in order to enhance server morale and reduce server turnover.

OAW

[OAW]

Originally Posted by subego 

As I said...

Top servers either make more in tips than they do if service is included, or believe this to be the case.

If service gets included, the top servers quit. Included service chases away the restaurant's best employees.

With any change of this nature there is a transitional period. But when an automatic included service charge becomes the norm rather than the exception ... quitting to go somewhere else over this issue won't be much of an option.

OAW

[subego]

But it won't happen unless someone rides in and forces everyone to do it at once.

It's a Prisoner's Dilemma problem.

[subego]

Originally Posted by OAW 

I'm confused as to why you think this is the case? From the study itself ....



OAW

I'll reread when I get a chance.

Unless I misread or recall incorrectly, the studies discussed at the beginning of the article refer to comparisons between restaurants.

[OAW]

An article I read quite some time ago from a restaurant that banned tipping and instituted an automatic service charge ...

For more than six years, I ran a restaurant without tips.

A couple of years after opening the Linkery restaurant in San Diego, the team and I adopted a policy of adding to each dining-in check a service charge of 18 percent—a little less than our tip average had been. We also refused to accept any payment beyond that service charge. (If someone surreptitiously slipped a twenty or two under a water glass, we donated it to a rotating “charity of the month,” usually selected by a staff member or patron.)

We made this change because we wanted to distribute the “tip” revenue to our cooks as well as our servers, making our pay more equitable. Servers and cooks typically made similar base wages—and minimum wage was the same for both jobs—but servers kept all the tips, which could often mean they were taking home three times what the cooks made, or more. In California at that time, it was illegal to distribute any tip money to cooks. (Recent court rulings in the Western U.S. have loosened that restriction somewhat). By replacing tipping with a service charge, we were legally able to redirect about a quarter of that revenue to the kitchen, which reduced the income disparity and helped foster unity on our team.

We had considered just incorporating that charge into the cost of each menu item, but we decided that it was easier for consumers to understand our pricing if we kept it analogous to that of a tipped restaurant. In a similar vein, we applied the service charge only to dining-in checks, since tipping is not yet a firmly established social norm for takeout. We used this service charge as a substitute for tipping from 2006 until we closed the restaurant this year to move to San Francisco.

When we switched from tipping to a service charge, our food improved, probably because our cooks were being paid more and didn't feel taken for granted. In turn, business improved, and within a couple of months, our server team was making more money than it had under the tipped system. The quality of our service also improved. In my observation, however, that wasn't mainly because the servers were making more money (although that helped, too). Instead, our service improved principally because eliminating tips makes it easier to provide good service.

Tipless restaurants: The Linkery’s owner explains why abolishing tipping made service better.

OAW

[subego]

Having it be illegal to tip out cooks and bussers is insane.

[OAW]

Originally Posted by subego 

Having it be illegal to tip out cooks and bussers is insane.

Agreed.

OAW

[The Final Dakar]

Originally Posted by Laminar 

On one hand, Uber is using new and innovative technologies and approaches to disrupt an outdated, poorly-functioning, heavily entrenched industry - capitalism at its finest.

On the other hand, Uber is using every possible loophole to pay drivers as little as possible and do the minimum required to barely keep enough drivers around to support demand - capitalism at its worst.

My understanding is they're also losing a lot of money because they're operating at a loss - if they were charging what was actually needed to cover costs they might not be as attractive. Basically they're trying to undercut taxis enough to drive them out of business at which point they'll have a monopoly.

[The Final Dakar]

Originally Posted by subego 

As I said...

Top servers either make more in tips than they do if service is included, or believe this to be the case.

If service gets included, the top servers quit. Included service chases away the restaurant's best employees.

That only makes sense if Top restaurants don't also pay their servers better, like other positions.

[subego]

Originally Posted by The Final Dakar 

That only makes sense if Top restaurants don't also pay their servers better, like other positions.

The problem is (in theory) management has to simulate a range of wages with a single wage.

I understand and accept the following is in dispute, but I ask it be momentarily considered true for purposes of explaining my argument.

In terms of percentages of the table the waitstaff earns, at any given restaurant it's going to be a bell curve. Most servers will cluster at the center of the curve. We'll call that 20%. A much smaller group of poor servers will be pulling in closer to 15%. The small group of good servers will be closer to 25%.

A not unreasonable management might set the service fee to 20%. This is giving the best servers a pay cut.

Alternatively, they could set the service fee to 25%, take a hit on profit, and give the worst employees a fat raise.

Neither of these options are superior to what exists now. I'll repeat though, the accuracy of this claim relies on the accuracy of bell curve premise.

[Laminar]

Originally Posted by OAW 

our server team was making more money than it had under the tipped system

OAW

How? Did they work more hours or did their manager increase their hourly wage? All else being equal, it doesn't matter how well the restaurant is doing, if you make $10/hr and work 40 hours you're making $400.

Disclaimer: I didn't read the article.