Hacker News Reader

Comment by vinceguidry | Hacker News Reader

I'm surprised people haven't noticed the gigantic shift in Uber's ability to control prices and costs, the ability to tip your driver.

It's already been a game changer in the restaurant world, where proprietors no longer have to price the cost of service into the menu. Sure, customers don't like it, but it does the job of price discrimination where it matters.

I submit that the US would not be able to maintain as dynamic a restaurant ecosystem as it has without tipping. Uber's business model is not sustainable with human drivers without tipping. Eventually drivers will leave once the VC money dries up and ridership declines due to price sensitivity.

Tipping is the safety valve that will allow ride markets to clear properly. Uber wanted a clean, easy user experience, right up until it becomes unsustainable. Now it is, and the only people who can keep the Uber service afloat is riders.

View on HN

I hate tipping for Uber drivers. It has made the rides so much more awkward, where the entire subtext of the (verbal/nonverbal) conversation becomes "what will my tip be".

Yeah, one of big reasons I preferred Uber over a traditional taxi was not needing to worry about how much I'm supposed to tip. I would much rather the driver make a fair wage, than have to figure out what to tip in each different situation.

Likewise.

I read on the Uber Driver's forums that many (the majority, going by the polls) will now be rating riders lower by default and then increasing the rating after a tip has been received.

I've since basically stopped using Uber. Between the increased prices since legislation was introduced here in Toronto, the drop in driver quality as more of the taxi drivers move to Uber, the forced surge pricing by colluding groups of drivers and now the expectation of tips it has essentially lost all of its appeal to me.

The off-hours public transit, which was once made unattractive by Uber, has returned to being my default go-to for now.

Uber can fix the rating-after-tip issue though - don't allow them to change it on more than a tiny number of rides. It should also be trivial to detect this tip-review-rating.

Or don't let them see the tips until clearing finances at the end of the week.

> I would much rather the driver make a fair wage

Never in anything I have read about Uber has there been anything more clear than the fact the Uber drivers make a pittance -- nothing near a fair wage.

What do you think a fair wage would be? From personal experience it's a bit more than minimum wage after all expenses which feels fair because the alternatives for unskilled labor are so much worse (retail, McDonald's, etc.)

I'd like them to make a fair market wage.

The alternative is cab service level and pricing.

Just like in the restaurant field, where if they price service into the menu, the perceived pricing uptick is enough to make people think restaurant dining is unaffordable. Sure it's worked for one restaurant, but the owner does not intend to bring the practice to his other restaurants.

Eventually tipping culture will crop up around ride share services and everyone will know how to be a good citizen in that space, and assholes will be free to be assholes.

I don't think so. In Central America (Guatemala), I get a lot of ex-cab drivers[1]. They say the payment on buying a small car to use for Uber is about 1/3rd of their taxi rental payment. Most of them tell me they're earning significantly more. Full time drivers earn 1-2x what a call center worker makes, which is about what a lower-end software dev makes. And all this is after Uber takes a 25% cut (big, but totally justifiable), and rides are about 1/2 the price of taxis.

So the alternative is not cab service or pricing. The service can always be superior, just by not having terrible queuing and apps. The pricing should naturally be lower, as taxi companies charge way higher prices.

1: The local cab companies so hilariously mismanaged things they just invited to be destroyed.

I can see it working in lower cost-of-living markets. I was more intending to analyze the US market.

Deleted the app. Between the snooping on your location post-ride feature and the tipping component I'm out. Uber can pay a fair wage to their drivers and I'll choose their service on total cost or not, rather than putting pressure on me to make up the difference between what they should pay and what they do pay.

> where proprietors no longer have to price the cost of service into the menu.

I know what you are referring to, but is this really the practice? Do you have evidence that supports this claim?

The corollary to tip-based salaries is that the employer is required to provide the difference up to the local minimum wage should the server's total tips be under the minimum wage, as per the Fair Labor Standards Act [1]. Given that this is a known cost, I would assume that to some degree the prices are set to accommodate such costs to at least a percentage of the required funds. I know based on anecdotal evidence that most restaurants are run pretty tightly, but your average chain that pays minimum wage surely must be aware of the potential for slow periods. For tourist areas with on/off seasons, I know the solution is to simply bring on and let go seasonal workers, but I would still assume that it's easier to factor in the potential cost for minimum wage than it is to get caught without available funds.

[1] - https://www.dol.gov/whd/regs/compliance/whdfs15.pdf

The reality of the situation is that waiting tables is generally not a minimum wage job in the US, because of tips. Sure, a restaurant might be required to make up the difference between earned income and minimum wage on a slow day (although hearing from my server friends this may or may not happen), but the market wage for waiters can be 1.5-2x minimum wage in a low-end chain, and much higher at high-end restaurants. Service is thus explicitly not priced into the food, because the employer is not responsible for the true market wages of the employee.

Reply on news.ycombinator.com