This past week, Uber reversed course and announced that they would allow tipping in an effort to increase the satisfaction level of their increasingly dissatisfied driver base (rival Lyft has a much more positive rating from drivers – in part due to higher wages from tipping). The move came just after the resignation of the app’s CEO, and also following the resignation of a board member who made a “sexist” comment about women talking more than men (which was a shame both because the comment was true and because he missed out on making a better joke about women drivers). Uber had risen to prominence touting the simplicity of its cash free, one charge transaction – but the car service quickly found a new American value: getting customers to pay your employees for you under the table.
It was not so long ago that tipping was reserved for waiters and bellhops as a reward for good service, but now it seems that everyone from Subway sandwich artists to the person who takes your order at Dunkin’ Donuts is handing you a receipt with a prominent gratuity line. While the Subway request is forgivable (after all, they are artists), one can only speculate as to the purpose of tipping the clerk at Dunkin’ Donuts. Is it to reward them for the extraordinary care they use in putting the munchkins into a paper bag? Does it make sense for a customer to show monetary appreciation for the herculean task of putting a lid on coffee? That isn’t to say that these aren’t difficult or stressful jobs – only that the tasks at issue are the basic duties their employer is paying them to perform.
But tipping is no longer connected to good service in any way. In fact, it’s been shown that while tipping is nearly unaffected by the quality of service a customer receives, it is influenced much more by the size of a waitresses breasts or by whether or not she draws a heart on the check. Tipping does not encourage people do a good job, it encourages them to get a boob job. If history is any indication, the only change to Uber’s level of service is that we can expect to be picked up in cars with unnaturally large headlights.
The thing tipping is actually most closely correlated to is the customer’s bill – which leads to perverse incentives where you are paying a waiter more because he convinced you to spend more. To a waiter, a glass of water is half empty while a glass of scotch is half full – though they are the same size, carrying one item to the table nets them nothing while carrying the latter nets them an additional $10.
And while the connection between tipping and service in the restaurant industry is tenuous at best, in other industries it’s like trying to find a link between watching the MTV show Promposal and getting a job at the Large Hadron Collider. An increasing number of businesses are adding tip lines for their services that are filled out before they’ve even began work on the delivery. So in essence, your tip is based on whether or not you predict that the pizza guy will get there in 30 minutes or less with the right order – none of which is probably within his control anyway.
But the bigger problem with tipping is that it shifts the onus of paying employees from the person profiting off the employees’ labor to the customer and his conscience – skirting a variety of tax reporting obligations in the process. In the end, an Uber driver’s wage is no longer decided by the company’s founders, some of whom have a net worth of $6.7 billion, but instead by how guilty the person in the backseat feels.
By allowing tips, Uber is admitting that its drivers make a wage that is not sufficient to live, and that the kindness of the app’s customers must bridge that gap. When you order an Uber, you are not just getting a ride to the airport, you are taking on the responsibility of Uber’s HR department. It is up to you to decide if the driver should be tipped enough to afford to buy Christmas presents for his kids.
Because even though Uber offers sign-up bonuses to recruit new drivers, the company has settled lawsuits to make it clear that those drivers are “independent contractors” and not employees. When Uber advertises that you can “be your own boss”, what they really mean to say is that Uber is not going to pay your health insurance or payroll taxes. They’re also not going to tell you that the company’s long-term strategy is dependent on replacing you with a robot car at the very second the robot car is more profitable (even though they helped you get a loan to purchase a non-robot car so that you could work for them) .
This is an increasingly familiar business model for Silicon Valley. While Trump drones on about how he is saving coal miners (but not really), the tech industry is making more and more people billionaires by “disrupting” industries through clever schemes to replace middle class jobs with “side hustles” that pay less than minimum wage when you factor in depreciation.
In the future San Francisco will be an island of billionaires, while the rest of America has no income or health insurance. We will just pass the tip jar from one person to the next, hoping one of our overlords throws in a twenty dollar bill. But on the bright side, we will have the ability to be driven around by our neighbor in his 2006 Honda Civic hatchback for a very reasonable rate.