Transportation

Here's How Much You Should Be Tipping Your Cab Driver


Ever wonder if you’re tipping your cabbie the right amount? Could you be thinning your wallet with too generous of a tip—or unwittingly stiffing the driver?

A publicly available data set detailing every New York City taxi fare in 2013—that’s almost 100 million cab rides—reveals what a good, and bad, tip looks like.
 
Last year, 55 percent of taxi trips in New York (about 51 million rides) were paid for with credit cards. The database shows both the metered fare and tip amount that the in-cab computers logged for each of these rides. The data also show the metered fare for the 45 percent of rides paid for with cash. Unsurprisingly, the records for cash tips aren’t as complete, so we set the cash transactions aside and zeroed in on the credit card rides.

It turns out the three most common tip amounts are a generous 20 percent, 21 percent, and 22 percent, putting them at or above the customary gratuity for good service at a restaurant. We asked Bhairavi Desai, executive director of the New York Taxi Workers Alliance, for on-the-ground insight into the numbers. The “general consensus is that 20 percent is the new average for tipped workers,” she says.  The venerable 15 percent tip—which years ago was a rule of thumb for wait staff and cabbies—is now significantly below average.

The prevalence of 20 percent tips may also have something to do with the credit card machines inside New York City cabs. Onscreen buttons suggest three default tip levels—20 percent, 25 percent, and 30 percent. The chart shows spikes at each of those levels. Desai agrees that the button choices are influencing rider behavior.

Not everyone is so generous. Zero percent is the 7th most common tip amount. “The zero is what sticks out the most” to Desai. She says this has been a problem for taxi drivers since credit card machines were introduced in 2007. ”People feel less compelled to have to tip,” she says, “and it’s easier for them to disappear.”

Time of day also affects how much a cabbie gets. The average tip overall is 19 percent, but starting at 4 p.m., it ticks up to 20 percent and stays above 19 percent into the evening.

“During rush hour, people appreciate the privacy and convenience of a taxi more than being packed in a subway,” Desai says. “Most of the riders who take taxis in those hours are regulars, who tend to talk more to drivers and have a more sensitive understanding of driver economics. Many regular riders know that tips at end of the year can make a significant impact on a driver’s income. The afternoon also has more business-class type of commuters, who either feel they can afford it—or could be using a company card.”

The overnight shift is the worst for cabbies when it comes to tips. In the wee hours of the morning, people are tighter with their money. A greater number of people leave no tip, and the average gratuity dips toward 18 percent.

“At late hours, people are randomly taking a taxi after an unplanned late night,” says Desai. “Or one where they’ve been out socializing.” Which may be a polite way of saying that drinking and tipping don’t mix.

Eric-chemi
Chemi is head of research for Businessweek and Bloomberg TV.
Giorgi is a data researcher and visual journalist for Bloomberg Businessweek.

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