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.