The 144 Million Dollar Button
notes.unwieldy.net
notes.unwieldy.net
WHEN TIP WAS 10%: BASE REVENUE = 82,497 TIP REVENUE = 8,250 TOTAL REVENUE = 90,747
TIP UP TO 22%, ASSUMING SAME BASE REVENUE BASE REVENUE = 82,497 TIP REVENUE = 18,149 TOTAL REVENUE = 100,646
TIP REVENUE INCREASE = 9,899
CREDIT CARD FEE AT 1% = 1,006 2% = 2,012 3% = 3,018 4% = 4,024 5% = 5,030
13,267 CABS
LETS ASSUME THAT EVERY FARE WERE PAID WITH CC.
ASSUME 5% CC FEE, BECAUSE THE NEW YORK TIMES ARTICLE SAYS "higher tips are tempered by a 5 percent service fee applied to fares that are paid with plastic," TOTAL REVENUE, LESS CREDIT CARDS = 95,616
TOTAL TIP INCREASE = ~131.3 MILLION TOTAL CC FEES = ~66.7 MILLION
TOTAL INCREASE FOR CABS, LESS CC FEES = ~64.4 MILLION
Now, since the credit card tips are going to have to be fully declared for tax purposes, since they will come back to cab drivers in paychecks and with 5% of the TOTAL FARE taken out, I would actually guess cab drivers are seeing LESS MONEY than they were before the credit card machines were installed. I would bet that the 10% tip average pre-card machine is actually low based on undeclared cash tips, and having tax taken on a full 22% will drop the net significantly. When factoring in credit card fees and taxes, cab drivers are probably making less on this deal. But hey, at least Visa and MasterCard must be psyched.
NYT: Told of the statistics that showed higher tips, some drivers scoffed. “I know that’s not true,” said William Lindauer, a driver and coordinating member of the New York Taxi Workers Alliance. “They get no tips, or less tips.”
The tax and credit card implications are irrelevant to the point of the linked article, which is about the framing / convenience aspect of having suggested tip percentages. Whether taxi drivers are making more money from credit cards (and you seem to have an interest in believing they aren't) is orthogonal to whether tip suggestions help them make more money.
To me, tipping is just a sign that a business isn't charging enough for the service.
Why? Because I always went the extra mile to satisfy customers, entertaining them, telling them a joke, compliment, whatever. Telling jokes wasn't part of my job description but I did it anyway. And the only way for customers to let me know they enjoyed me serving them was by giving me tips. And it was an expensive lounge/club so they were charging enough for the beverages/service.
I guess the same goes with taxi drivers. They don't have to chat with customers. They drive them from A to B. But most of them do. To some customers, this means a lot - and they show their gratitude with tips.
Yes, if: 1) you had no reason not to tip 2) that person still works there 3) that person remembers you
Ideally though if the person serving you is bad enough that they aren't getting tipped, they won't be there long. Waitstaff have to report their tips, so management very quickly knows who's bad and should fire them.
If the person is good though and you're the lone dick who didn't tip him or her, don't expect good service from that person the next time you're there.
It's a much tighter feedback loop than "if you suck, maybe your manager eventually notices, then complains to you, then fires you."
Americans are used to receiving customer service of a quality much higher than the rest of the world. (This is true of both service staff who receive tips and others.) For that reason, they don't recognize that the surly attitude of a waitress or supermarket cashier is just a cultural difference rather than a personal affront.
Should've waited a few years and outfitted with Squares.
Or better yet, a NYC-based Square competitor if there is one!
Anyone who'd like to learn more about that stuff and is in NYC (and not affiliated with other companies in the same space), drop me a line and I'm more than happy to chat about the space in more detail :)
To be clear myself, in ~15 years of being the paying party I have done this precisely once, so I'm not advocating making a habit out of it. I'm just saying, it makes the point that much more.
I did not get it. Where i live we usually tip 10% and in other countries i have been they sometimes refuse to take tips at all.
For me it looks like in many restaurants in the US the tip is part of the paycheck.
Moreover, in some cases I have seen that all tips are put together and then split after work, so you lose the direct connection between doing a good job and getting more $.
I have always found american's standard tipping uncomfortable, but the few times I've made a point to not tip, and the generally more attentive service there, keep me convinced that the system in fact works.
Sales people work on commission typically, and that system is absolutely not harmed by that on average. It's enhanced dramatically by it. A tip is a commission system that encourages the same way a traditional sales commission pay system does, including rewarding up-selling and efficiency.
The difference between earning 10% and 20% on average for tips can make a very large difference for a waiter. At a good restaurant that can add up to anywhere from $15k to $30k per year in difference. In the US, waiters can often make more than their managers because of the tip system.
The incentive is to earn as high a percentage as possible by doing as good of a job as possible. Everyone should not get paid fairly if they suck at their job and treat people poorly.
Waiters also have an opportunity to earn even more money by up-selling when it makes sense.
Not everyone would agree with your assessment. Case in point:
Typically, around 15% is acceptable - if you want to go bare minimum, 10% would probably suffice. Any less and it would be considered rude or indicates that you were unhappy with the service.
It's possible that drivers aren't earning more, they're just reporting more.
That was my initial reaction when I read this too.
I'd just had an enjoyable but naturally stressful night seeing an ex who came into the city from westchester for the day. I left her at grand central and couldn't be fucked to take the subway, but it was 11:30 at night on Friday at grand central - tough to find a free cab. But after only a few minutes of strategic searching, I finally manage to spot an open cab on the clock - score!
Now you should know this crucial NYC cab law:
> A Driver who has been dispatched must not refuse, by words, gestures or any other means to provide transportation to a person who has prearranged the trip with a destination within the City of New York, the counties of Westchester or Nassau or Newark Airport. [0]
All "prearranged" in a cab means is that the passenger is in the cab and told the driver a destination. It's a really important law - for one, it means cab drivers can't refuse destinations based on race/socioeconomic status/etc. Not all cab drivers like this law because it impacts their take, so they'll try to avoid picking you up.
Anyway, this cab driver notices I've spotted him from about 20 feet away and starts rolling down the passenger window, asking where I want to go repeatedly. If I tell him, and he doesn't like it, he'll get the fuck out of there before I get in the cab. I knew exactly what was going on, but I'd had a long god damn night and for once wasn't going to have it. So I just thought "fuck it," didn't say a single word, and just got in the cab and told him my block.
He's pissed as fuck because he knows that I know he has to take me there, since I ignored him outside the cab. He doesn't even try talking me out of the cab, he just slams on the fucking gas and drives like a complete asshole so he can try to get a better fare after me. I actually am sort of glad to get home quicker but it's actually maliciously bad driving. I'll still tip him though - that's a big part of his take-home.
I realize I don't have any cash, and it was only like a 9 dollar ride, but I figure I'll tip him extra to make up for hit he'll take on the credit card. When he sees the credit card he exclaims "oh come on, credit card? fuck..."
At that point, I reminded him that he had to accept the credit card, just like he had to drive me to my home, and (in as many words) suggested he accept the laws governing his trade. Then I tipped him 0 and told the stunning blonde woman getting into the cab that the driver's a prick.
[0] §55-20a-1 http://www.nyc.gov/html/tlc/downloads/pdf/2011rulebook_ch55....
EDIT: Ok, not to Westchester but outside the city limits. Basically the law forced a guy who doesn't make that much money to engage in a transaction with you against his will. He wasn't the bad guy here.
Consider that a cab ride from grand central to westchester would cost far more than 9 dollars.
Dude. Chelsea is in Manhattan. It's uptown of the west village. It was a 5-10 minute ride. Perhaps your comments would be better focused if you were familiar with... any of this.
On point, how you could possibly turn a 5-10 minute cab ride to a city resident's home into a victimized cab driver being forced into an unwilling financial transaction is literally - literally - beyond me. Especially when the transaction in question - driving a passenger somewhere - is pretty much the sole responsibility and contribution of a cab driver.
I'm all in favor of letting cabbies pick and choose their fares. But if we do that, we also need to allow competition in the taxi market.
Sort of - the law gives the guy a monopoly on picking up street passengers. But again, these laws are broken often - livery drivers will still pick you up sometimes, depending on where you are. Definitely not in front of Grand Central, though.
It doesn't actually matter. Report him if he pulls this shit.
Source: http://nycitycab.com/NYC%20Taxi%20Guide.aspx#offduty
A NYC cab's lights look like this:
|O|Number|O|
Where "O" is "Off Duty" in smaller letters.
If just the Number is lit, they're available, on the clock.
If Just the Os are lit, they have a fare.
If both are lit, they're available, with destination discretion.
If none are lit, they're not working at all.
That being said, report them anyway and they will have to prove the time and date actually corresponds to the end of their shift. The fines are pretty steep and the drivers almost never prevail against the taxi commission.
For that matter, I did the same thing -- Tarsnap was towards the top of the 1000-4999 $ range from its December 2011 donation (which due to accounting and postal delays counted as a 2012 donation) and yesterday I said "screw this, let's hit the magic number" and wrote them a check for the remaining amount I needed to be in the $5k+ tier instead.
I've seen multiple charitable organizations engage in lengthy debates about whether they should add an $X tier and hope that people below that level will bump up their donations or whether they'd lose too much from people who were currently donating more than $X instead reducing their donation down to $X.
1) Easier and quicker to push options (20/30/40%) than key in lower amount.
2) Pre set options may lead to mistakes.
3) Customer doesn't want to embarrass themselves by entering an anoint so just pushes a button.
4) The average fare and average cash in hand leads to per tips versus card payment. Eg Avg fare $9 and most payments with a $10 note.
5) Customers willing to tip higher due to preference towards card payments.
6) Peak in typing due to early adopters using technology.
Would tips go up if the buttons were changed from 20/25/30 to 25/30/35, or would people type in their own amount more, or pay no tip more? What about if there was only one suggested tip rate, 25%? Or a slider you could drag from X to Y? Or...
As someone who's worked service jobs in my youth, I'd really like to stress the importance of cash over CC tips.
Pay is usually abysmal and CC tips don't always make it into the pockets of the people who deserve it, not to mention the delay.
Also, cash is easier to split when necessary. For example, between the wait staff and the kitchen staff.
So please always tip in cash.
Either way, it's not really relevant to this story..
The client's impression of the wait staff is greatly influenced by the kitchen staff. That's why we would split our tips.