Wednesday, February 2, 2011

Cab Company Scams: Numero Uno - “Tipping”

It doesn’t take long for a new cab driver to realize the truth or falsity of certain sayings. Power obviously does corrupt. W. C. Fields, on the other hand, was wrong when he said, “You can’t cheat an honest man.” You can cheat anybody who’s hungry for a job.

In fact, a student who wanted to know why labor laws and unions exist could do worse than spend a month or two driving a taxi in San Francisco. It’s like a third world country that’s been corrupt for so long that nobody even remembers what corruption means. It’s just business as usual. The way things have always been and always will be.

The Independent Contract has given cab companies almost absolute power over their drivers and  business as usual means running a variety of petty scams designed to separate the drivers from their money. Underhanded practices are so widespread in this industry that I’m not going to name names (although I can if you like) from fear of failing to mention a deserving party.

Despite the fact that “tipping” is now officially illegal, it remains the number one scam. “Enforced tipping” is practiced by the majority of taxi companies in San Francisco  and  takes a minimum of $10 million to $15 million a year away from the drivers.

The official, legal average gate fee - set by the city - is $104 per shift. The standard rule of thumb for “tipping” is “$5 in and $5 out with $2 for the gas man.” At least that’s what I was told I should “tip” by two managers at two different companies. I’ve been told by drivers that some companies require up to $20 per shift. This makes the actual gate somewhere around $115 to $130 per shift.

When you consider that the average shift brings in about $120, drivers give 10% or more of their incomes to the companies - just like the 10% we catholics used to give to the Church when I was a child.

As far as I personally know, the only taxi companies that tell their drivers that they don’t have to tip are Green Cab and Richard Hybel’s Metro Cab. There may be more.

A management type recently took umbrage with me (If you’ve always wondered what “umbrage” is, I can now tell you that it’s when a guy turns blue in the face and screams at you.) for “slandering" his company by claiming that they practiced “enforced tipping.” This was especially interesting to me because I don't think I've ever mentioned his company in my blog.

But, he had a point. Drivers aren’t literally “forced” to tip. They aren’t whipped or beaten. Nobody gets thrown off a roof. On the other hand, when I stopped tipping at one company, I found myself sitting around waiting a couple of hours a shift for a taxi I could drive only to be given cabs that broke down when I did go to work - including several with bad brakes and one with no brakes at all.

Numerous drivers have written me about similar experiences. If driver doesn’t tip he or she will wait hours to go to work or not be allowed work at all, won’t get good radio orders, will be given bad (sometimes dangerous) cars, will never get a good shift and will be the first person to loose a lease when a company looses a shift.

So “enforced” is indeed the wrong word. But, so is “tip” which, by definition, is “a gratuity that is voluntarily given.” A more accurate phrase would be a “coerced fee.”

This practice is so deeply ingrained in taxi subculture that the mere public mention of it can get  a person in trouble. Despite the fact that I’m a medallion holder and can’t really be messed with, I was treated with extreme hostility by certain cashiers and dispatchers at a former company for simply writing a few posts about my experiences with tipping.

There’s good reason for such animosity. Cashiers and dispatchers (I’ll call them all dispatchers from now on because at some companies their duties overlap and cashiers usually dispatch taxis if they don’t dispatch orders.) are paid minimum wage by the cab companies - if they are paid at all. Some of them work off the books. A few years ago at one company, the dispatchers reportedly were paid minimum wage but they also had to pay the manager a “gate fee” to work their shifts.

The smallest amount that a dispatcher has ever told me that he made was $200 per shift. The most was from between $500 to $700 a shift. I’ve also been given figures of between $400 to $500 a shift. I think it would be safe to set the average at somewhere between $300 to $500 - net. Yes, that works out to $100,000 per year.

Once again, let me remind you that working cab drivers averages $120 per shift take home pay or around $25,000 a year.

Which brings up the question of whether or not managers themselves dip into the “tip jar”? Is it reasonable to think that the kind of people who set this system up would choose not to profit by it? I mean, there is around $30,000 per day in cash going through those dispatching windows. No, management wouldn’t think of touching it.

There is considerable anecdotal evidence (conversations with people who have worked in the dispatching rooms, etc) to the contrary. At least some management types take their cut. According to one story, the owner of a cab company once started a shuttle service from his share of the tips.

I think that many medallion holders support the system partly because they think they wouldn't make as much money if dispatchers were paid a decent salary and partly because they think that they paid their dues by tipping before they had their medallions and that newer drivers should do the same. It's a way for the medallion holders to get back what they paid out.

But the amount of money taken in by "tipping" is far in excess of the standard salary for dispatchers in similar industries and I won't live long enough to collect the $40,000 to $50,000 that I was coerced into paying. If I'd invested that money, I wouldn't need a medallion

This is  a  corrupt system that has existed for over 30 years. That’s way beyond enough. If the taxi business is going to be reformed, let’s do it all the way.

Dispatchers, cashiers, gasmen and order takers all do valuable jobs and they should be well paid. But, they should be paid by the companies - not by drivers who are barely making minimum wage to start with.


  1. keep up the good work your my hero, and quiet knowledgeable, really your journalist but also a historian of distinct subculture..I appreciate that..

    H Mackinder

  2. The crookedness of it all is evidenced by the fact that they all work behind bullet-proof glass.

  3. Bravo, Ed! It's ironic that the SFMTA has set a goal of taking $15 million/yr from the cab industry. At Green Cab we have it in our bylaws(?) that you can not tip. I worked for three years at Metro, and never gave a tip, never was asked to give one.

    I could write forever about this subject. I thank you deeply for getting this emotional subject on the table. Talk about our Tunisia, our Egypt... IF this subject can't light a fire under the "masses" of cab drivers, what can? And tipping hotel doormen for airports is in the same league...

    Anyway, gotta get out the door to my cab...

    Again, big fat BRAVO! (Parting shot: any pleas that cab company owners make about how concerned they are for their drivers, are drowned out by the screams that this issue causes...)

  4. Thanks for the mention of Green and Metro being notable exeptions to the disgusting practices you outline.
    The most frustrating part for me is that not one co. has ever been taken to task since 1998 when the TC was formed.
    SFPD put a wire on a driver that was threatened by management for not paying off a hotel doorman and the DA did nothing. (The hotel thing is another outrage that goers unpunished) I'm told Sgt. Reynolds had documentary proof a while back and was allowed to do nothing.
    There are rules on the books and aside from lip service when a new director comes in nothing is done. As much as I admire the current Director the pattern continues.
    Likewise, every green pea knows a med. holder that is forging waybills and how many have been caught and punished? One that I know of.
    I think of the cab business as like being in the middle of a riot and everybody is looting cuz the cops are just watching and doing nothing. I'm a total sucker for not stealing my share from drivers.
    Ed a medallion holder that is disdainful of these practices is a rare as hen's teeth so good on you.

  5. "Tipping" is a euphamism for what I prefer to call a protection racket. At Yellow Cab, where I worked for 15 years (admittedly some years ago), I learned early on that I was supposed to pay off the dispatcher. I started paying $1 a day, which at that time (1983) was minimally acceptable for the day shift. (Most drivers were giving $2-3 at that time, as I recall.)

    As the years went by, I continued to push my dollar bill through the window, though the expected ante had gone up. As a result, I was mostly driving the dregs of the fleet, spares or regular cabs on their last legs. One day I found out by accident that the office had assigned me to a medallion holder's brand-new cab. But the dispatcher didn't bother to tell me about it, and I rarely if ever got to drive it. Even after I raised a stink about it with managment, I only got it some of the time.

    When the Taxi Commission got started, I tried to light a fire under this issue. But it went nowhere, even though there were, as I recall, three drivers on the Commission at the time.

    Mark Gruberg

  6. This practice is universal in the cab industry in every large city I've ever heard of.... your implication it was dreamed up by some greedy managers in San Francisco is just stupid.

  7. As usual Anonymous you miss the point. But what can you expect from a person too cowardly to use his or her own name.

    I was writing about the potential for abuse that the "Independent Contract" gave to the owners of cab companies in San Francisco and the way that it was applied by "greedy owners" here. I'm quite sure that it was also applied by "greedy managers" across the country - once they understood the power that the "Independent Contract" gave them.

    On the other hand, are you sure that Jim Steele wasn't the first "greedy manager" to shaft his drivers using this contract?

    Ed Healy

  8. Hello, I am currently a cab driver in Sacramento. I have been a cab driver for the largest Company here in Sacramento now for 7 years. I am currently saving my money to move to San Francisco to be a Cab Driver there. I am from Alameda and have lived here in Sacramento 10 years. Do you have any suggestions for me as far as good opportunities in the Cab business, or good cab companies I should check out when I get to town? I will be moving in or around November of 2011. Thank You for your concern and participation in Cab affairs and standing up for what is right.