
How Software in Half of NYC Cabs Generates $5.2M a Year in Extra Tips - iquantny
http://iquantny.tumblr.com/post/107245431809/how-software-in-half-of-nyc-cabs-generates-5-2
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nickstefan12
I just ran into this last night: I took a cab home from the airport. One: he
had no gps and took a wrong freeway change getting home. Two he barely spoke
English. Three I basically had to navigate him back on track and painfully
turn by turn.

End of the trip I go pay, and he's sad that I want to pay with a credit card.
Then the tip meter only has 20% or other. I hit other with a much lower tip.
He cancels the transaction from the front, and says that the ride is actually
150 not 100, and that's why I need to tip. So I say fine and end up tipping
him the 20% at 100.

But seriously isn't a tip like a bonus!? Why are we all required to give 20%
tips even when the service sucks?

Next time I'll just uber.

~~~
bbarn
I've had this tried on me before, in Chicago where we're supposed to have
super strict taxi laws. The correct response is to dial 911, not 311, and say
you've got a taxi attempting to rob you. Notice next time you walk across an
intersection at a stop sign, who comes to a complete stop more.. the average
driver, or a taxi cab. Taxi's fear police way more than the average driver.

~~~
k-mcgrady
>> "The correct response is to dial 911"

Is this not a bit of a waste of police time? Why can't you say "You tried
screwing me, this is all I'm giving you. Got a problem? Ok, I'll call the
police." Reading some of the comments in this thread it seems like people are
seriously scared of taxi drivers. It's like any other business. If a
restaurant tries to charge you for something you didn't order you don't pay
them for it. You don't immediately call the police.

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jack-r-abbit
There is a lot of talk about how people who get tips generally get a very low
wage to start and if they don't get good tips they make a lot less.

The federal minimum wage is $7.25 per hour (effective July 24, 2009).[1]
Furthermore, the federal government requires a wage of at least $2.13 per hour
be paid to employees that receive at least $30 per month in tips. If wages and
tips do not equal the federal minimum wage of $7.25 per hour during any pay
period, the employer is required to increase cash wages to compensate.[2]

So while it may be true that servers might get a base pay of something stupid
like $2.13, they are _guaranteed_ that they will make at least the federal
minimum wage (which still sucks but that is a different topic). And... many
states go above and beyond what the federal government requires[3]. I'm
getting a little tired of the whole "but they live off tips" rhetoric. Tip
what you want and don't let society pressure you into tipping more than you
desire. For me, since sales tax is hovering in the 9% level where I am, I
usually just double that and adjust accordingly (based on service quality,
etc). That also makes it easy to not tip based on the bill+tax amount that
they give you on the "sub total" line.

[1]
[http://www.dol.gov/whd/minimumwage.htm](http://www.dol.gov/whd/minimumwage.htm)
[2]
[http://www.dol.gov/elaws/faq/esa/flsa/002.htm](http://www.dol.gov/elaws/faq/esa/flsa/002.htm)
[3]
[http://www.dol.gov/whd/state/tipped.htm](http://www.dol.gov/whd/state/tipped.htm)

~~~
acjohnson55
I'm all for changing the absurd system where tipping is practically required
for one where a reasonable wage is paid and pre-factored into the cost of the
service. But if we all just stopped tipping suddenly, it's the most vulnerable
people who bear the brunt until the system adjusts. I think that's pretty
morally suspect.

~~~
mc32
A small sprinkle of restaurants[1] have begun trying an alternative where tips
are disallowed but include some type of additional charge on your bill and in
return the staff get paid a higher wage. According to another article this has
resulted in better service from the staff --and that would seem to be opposite
of what you might get from continental servers (who customarily don't get
tips), so it bears watching.

[1][http://www.cbsnews.com/news/more-restaurants-adopting-no-
tip...](http://www.cbsnews.com/news/more-restaurants-adopting-no-tipping-
policy/)

PS. The strata of restaurant trying this approach might skew results, so, not
sure what results one might get in a broad spectrum of restaurants.

~~~
pmoriarty
You don't have to wait for the results to come in. Just go to Europe, where
this has been standard practice for decades if not longer.

For what it's worth, in my own personal experience and that of others I've
talked with, the service in Europe is markedly worse than what you usually get
in the US. But anecdotes like mine are too little to go on. I'd be interested
to hear if there's been any cross-cultural research on the subject.

~~~
monksy
Are you kidding me? I've had only a handful of bad service experiences in
Europe compared to the numerous great ones.

The Europeans tend not to keep coming back to your table to ask how you're
doing, or if something is wrong. If there is something wrong with the meal
they'll come because they're watching/paying attention.

~~~
rhino369
Most people want a waiter to come by because its rude to wave a waiter over.

European service sucks.

~~~
stevekemp
No, most people probably want to eat their meal in peace and quiet.

They don't need a waiter coming over every five minutes - specifically so that
you'll remember that and equate it with "attentiveness" and "great service"
when it comes to time to tip.

~~~
rhino369
Next time you are out at a fine dining place, which tend to be very selective
about hiring wait staff, see how they do it. That's really what people want.

I'm sure there is a large minority who just want to be left in peace and
quiet, but you aren't the average customer.

A good waitress will know when to time her visits so she isn't always there
but you don't notice her absence.

~~~
monksy
For that type of waitress I will not hesitate to tip 22% or higher.

------
infinotize
I thought this was a pretty blatant cheap trick the first time I saw it
(similar to restaurants putting tip calculations on bills from 18-25% (which
are usually post-tax no less!!)) and on the occasion I am in a cab always
punch in "Other," or best option pay cash. Automatic deduction for cabbies who
often tip themselves and hand you less change without asking - give me my
change in full and I'll tip you, thanks.

To add a data point on tipping amounts I would say I usually tip 10-15% for a
good cab ride or less for a bad one, or even zero if the driver "screened" my
fare (common from yellow cabs in Queens - keeping the doors locked and asking
where you are going before letting you in, which is illegal) or takes
unnecessary routes, blatantly excessive slowing to hit red lights, etc. I
might venture into 20%+ for a good service ride to/from an airport.

Restaurants I stay around 15% for fair or better service, 20% for good, much
less than 15% requires the server to be noticably rude or inattentive.
Sometimes I do feel like an outlier or cheapskate as the "norm" service for
anything feels like it has become 20%, which I find a little ridiculous. I
won't not tip because I don't "believe" in the culture of tipping, because all
I would be doing is hurt mostly decent workers; at the same time I won't
default to a high tip for average service just because other people are doing
it. I try to find a middle ground.

~~~
madeofpalk
> less than 15% requires the server to be noticably rude or inattentive.

As an Australian, in a country that doesn't have a culture of tipping, I find
it very amusing that you would tip a server who was noticably rude.

Edit: For context as well, tipping is on the rise up in Australia, but only at
classier/fancier/modern/hipster places, and the extent of a tip would be to
round up to nearest $10 (or note, if paying cash)

~~~
bunderbunder
Tipping in the USA goes something beyond just being culture. We've even got it
ingrained into our laws. Minimum wage for servers is barely nominal, and much
less than what anyone else in the restaurant is making. It's expected that
customer tips will form the bulk of their earnings. So if you believe that
people deserve to be paid a living wage for their time even when they're not
at their best, the status quo places the onus to make sure that happens on
you.

~~~
madeofpalk
The circular reasoning is what gets me - they get less than minimal wage
because they earn tips because they get a poor wage because they earn tips
because...

~~~
rhino369
Tipping predates minimum wage law in America. When they were written the laws
just took into account the fact that some people get paid in tips.

Americans got the tipping culture from Europe before it faded away in Europe.

------
biot
I find tipping culture really confusing. How is it that when your plumber
saves the day and gets your leak fixed (saving you expensive flood restoration
costs) you pay the price on the invoice, yet for a car ride from A to B it's
worth paying 20% to 30% over the invoice price? Compare that to buying a new
vehicle where, regardless of how knowledgeable and spectacular the salesperson
is, you are considered to be getting a bad deal if you don't bargain to
_below_ invoice price.

~~~
pavel_lishin
I think that the standard rationalization is that waiters and taxi drivers
provide a subjective service. A good waiter will refill your drinks often,
make sure you have everything you need, etc. A good taxi drive will get you
someplace faster than a bad one, will know shortcuts and longcuts, and
understands patterns of traffic to avoid them. A plumber, on the other hand,
typically performs a pretty objective job, short of outright incompetence.

But yes, it's confusing, and it's probably a pretty bad deal for everyone
involved.

~~~
pkaye
But you are supposed to tip even poor taxi drivers and waiters.

~~~
prawn
And, in my experience, taxi drivers displeased with your tip will make it
clear, even if you have no idea what makes for a fair tip.

------
dude_abides
Some great tips here for budding data scientists:

* Form a hypothesis before you start looking at data, else you're susceptible to post-rationalization.

* When in doubt, have the raw data available to reconcile with aggregate data.

* When publishing results, include your data sources, so that others can verify your findings.

~~~
hudibras
(Since your comment appears to be the only one here about the article itself,
I'll piggyback off it.)

This is a really great data analysis. The bottom-line conclusion of "cab
drivers who are driving CMT programmed cars are making more money in tips"
will definitely cause the Verifone drivers to say "Wait, what?"

The _Businessweek_ article also shows the limitations of the so-called data
journalism. The two reporters grabbed the data from the database, made some
pretty graphs, got some quotes and called it a day. It took some readers
revisiting the data to tease out the real insights.

But that's a bit unfair to the _Businessweek_ guys. They're on a deadline and
won't get paid extra for geeking out on the data too much, so their goal is to
get the initial news out there to the world. Ben Wellington's interest
wouldn't have been piqued if the article hadn't been written in the first
place.

I guess what I'm saying is that it's a win all around.

------
codezero
Since Uber is currently banned in Vegas I took a cab and the defaults were
20/30/40 which is insane. They also take a $3.00 credit card processing fee,
also insane.

------
Someone1234
Is a 20% tip the norm for cabs? I don't live in NY and don't take cabs often,
but I would just assume tipping would be similar to eating out in the US (10%
for bad service, 15% norm, and 20%+ for good service). Anyone care to weigh
in?

Also I always heard how "cheap" taking a taxi was in NYC. That's why people
did it all the time. But looking at his example fares ($40+), that doesn't
seem cheap to me, in fact quite unaffordable.

Still cheaper than London's insane taxi fares however.

~~~
hbosch
Within Manhattan, you can usually get where you're going for under $20 sans
tip. When I lived there, I wouldn't necessarily call that "cheap" compared to
the underground alternative... but definitely just cheap enough that, after a
long day, I would raise my hand if I saw the light on instead of walking the
next block to the subway.

~~~
pkaye
But how often do people use cabs in Manhattan? If you used it say twice a
weekday then that is like $10K a year on cabs alone!

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leelin
I usually just manually type "1.00" or "1.50" as tip for a short city fare
(under $15), And "5.00" for a long trip (airport). I guess I'm cheap.

I would also be interested in a histogram of raw tip amounts to see if people
cluster at 1.00, 1.50, or 2.00 as well. We could even bucket by fair sizes.

It would also be very cool if we had metadata on the credit card, for example,
do corporate cards tip a lot better than consumer cards. Presumably company-
paid travel leads to better tips.

~~~
patmcc
>>Presumably company-paid travel leads to better tips.

Companies I've worked for have mandated the tip size (15% both places) that
they'll allow for reimbursed travel, although I'm not sure how universal that
is.

------
andykellr
I was shocked when I saw these defaults on recent trips to NYC. I lived there
before these machines and 15-20% has always been the standard--less if the
driver was rude, reckless, or deliberately slow--but almost never more than
20%.

Including the surcharge is fine because it's part of the fare, but including
tax and tolls is unreasonable.

I typically choose 20% or Other. Now I will be sure to check the software as
well.

------
yodsanklai
When I moved to NYC, there was no credit card payement in the cabs. Some
friends told me that they tip about 10% (and at least $1). I was surprised
when they introduced credit card payement to see that default tip was much
higher than that. I assumed it was just to trick people into tipping more, and
I kept with my old tipping habit. But this article makes me wonder, should I
tip more?

------
nostromo
Including taxes when calculating the tip seems like a class action lawsuit
waiting to happen.

~~~
monksy
But it's the norm and expectation. Theres a reason why the post tax total is
the biggest number on the check. (Other than thats how much you owe)

~~~
conductr
Agree. It is the norm. All restaurants, the most common places to tip, do this
too. If they calculate/print suggested tip amounts they use post tax and also
if you trigger a gratuity included they use post tax.

To be far, I think most people use post tax when calculating tip in their head
too.

~~~
ihaveajob
One thing I hear a lot is to just double the sales tax. Around CA, when it was
around 7.5%, it added up to a nice 15%. Since they recently increased sales
taxes to about 8.5-9% depending on the city, it doesn't work that way. Or yes,
if you account for tip inflation.

