Merryn's Blog

The gig economy and the death of tipping

The rise of the cashless society and the “gig economy” has led to a decline in the rate of tipping. It raises a lot of interesting social questions, says Merryn Somerset Webb.

161219-uber-b

I've been taking a lot of Ubers recently. The company has now expanded into Edinburgh, and, given that the cars turn up quickly and I don't need any cash to get into them, the whole thing works very nicely for me.

However in the course of chatting to a few drivers the subject of tips has come up. Because the cost of the trip goes straight to a credit card with no cash changing hands, Uber drivers never get tips on top of the basic fare. That makes sense to me. I've always hated the tipping culture a world in which the price is the price seems to me to be a better (and more respectful) one than a world in which the price changes dependent on the mood of the customer. But there is a problem with this.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

What happens when an Uber driver really does perform an out of the ordinary service that doesn't fit into the company's charging structure? Two drivers have recently told me about going far out of their way to return phones/wallets to people who have left them in their cabs. They haven't been paid for this (no one has called a cab so it doesn't go into the system), but when they have handed over the stuff, they haven't been tipped either. By coincidence both drivers had also previously been black cab drivers, so both had plenty of experience with returning left behind items in that role. Then, they both said, the meter didn't run when they drove to return the items but they were always generously tipped by the recipient. So why the difference?

Writing in the FT today, Izabella Kaminska suggests that the way in which the gig economy works "dehumanises the transaction" to the extent that tipping people doesn't make sense any more. I rather suspect it might be entirely the opposite.

Advertisement
Advertisement - Article continues below

The rating system that Uber uses, along with the fact that no cash changes hands, seems to me to completely humanise the transaction in that it equalises the parties on each side of it. And once that is done, tipping seems wrong.

The gig economy when it comes to Uber at least doesn't stop tipping because it dehumanises the service provider, it stops it because it equalises them with the customer. And people don't tend to tip people they perceive as equals.

I can't answer the question of whether this is all good or bad at the moment (bad financially for Uber drivers, good for society?) But it does raise some interesting social questions about how going cashless will change the way we interact with each other.

Advertisement

Recommended

Visit/519858/how-long-can-the-good-times-roll
Economy

How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019
Visit/516758/beyond-the-brexit-talk-the-british-economy-isnt-doing-too-badly
Economy

Beyond the Brexit talk, the British economy isn’t doing too badly

The political Brexit pantomime aside, Britain is in pretty good shape. With near-record employment, strong wage growth and modest inflation, there is …
17 Oct 2019
Visit/economy/uk-economy/600824/how-the-bbc-can-survive-the-end-of-the-tv-licence
UK Economy

How the BBC can survive the end of the TV licence

The TV licence that funds the BBC is looking way past its sell-by date, says Matthew Lynn. Here's how it could survive without it
16 Feb 2020
Visit/economy/uk-economy/600837/rishi-sunak-new-chancellor-spending-splurge
UK Economy

Britain has a new chancellor – get ready for a major spending splurge

The departure of Sajid Javid as chancellor and the appointment of Rishi Sunak marks a change in the style of our politics. John Stepek explains what's…
14 Feb 2020

Most Popular

Visit/investments/property/house-prices/600840/the-biggest-risk-facing-the-uk-housing-market-right-now
House prices

The biggest risk facing the UK housing market right now

For house prices to stagnate or even fall would be healthy for the property market, says John Stepek. But there is a distinct danger that isn't going …
17 Feb 2020
Visit/economy/uk-economy/600824/how-the-bbc-can-survive-the-end-of-the-tv-licence
UK Economy

How the BBC can survive the end of the TV licence

The TV licence that funds the BBC is looking way past its sell-by date, says Matthew Lynn. Here's how it could survive without it
16 Feb 2020
Visit/economy/600838/money-minute-monday-17-february-good-news-ahead-for-the-uk-economy
Economy

Money Minute Monday 17 February: good news ahead for the UK economy?

Today's Money Minute looks to a week in which we get the latest employment and inflation numbers, plus retail figures for January and a slew of eurozo…
17 Feb 2020
Visit/investments/stockmarkets/european-stockmarkets/600725/is-2020-the-year-for-european-small-cap
Sponsored

Is 2020 the year for European small-cap stocks?

SPONSORED CONTENT - Ollie Beckett, manager of the TR European Growth Trust, on why he believes European small-cap stocks are performing well.
12 Feb 2019