Today, Apple Raises The Minimum Wage
(This post originally appeared on Forbes)
I feel kind of bad. I just ordered three coffees at a Starbucks and didn’t leave a tip in the tip jar.
Do you ever tip the barista at Starbucks? You should. Many don’t make a high wage and tips are very important to them (the average Starbucks employee does make about$9.32 an hour which is a little more than the $7.25 per hour minimum wage). Do you leave a tip for housekeeping when you stay at a hotel? You should do that too. Do you stick any money in the ‘tip jar’ at the local shop or eatery? When you go to a restaurant, do you tip 15%? 20%? Are you bad at math like me and are just sometimes not sure? There are millions of people who are working for minimum wage (and oftentimes less if you’re in the restaurant industry) who need those tips to survive. And in many cases we just don’t tip enough (some, sadly don’t tip at all).
There are reasons for this of course. But for most of us the reason why we don’t tip the barista, leave cash in the tip jar or a $10 bill for housekeeping is because…we have no cash. We’re using credit cards (and yes Starbucks’ excellent app does enable for tipping, but like most customers I don’t use it). However, that’s going to change. And the change starts today. Today Apple AAPL +1.67% releases Apple Pay, the mobile payment service you’ve heard of by now that will soon make it simple for you and me to pay for just about anything by using the iPhone (or in my case my Samsung S4, because Google Wallet, which already uses the same technology, will be keeping up). I recently wrote about how Apple Pay will kill the credit card. That will happen. But it will also have a big impact on the minimum wage debate. How?
Take taxi drivers for instance. Many don’t make minimum wage. But they all collect tips. There was a time when most drivers just took cash. But now they all have credit card technology in their cabs. You would think that they wouldn’t like this hardware because it would be cumbersome and make things too…well…”reportable,” if you get my drift. But taxi drivers love it! Why? Because, thanks to these magical machines, their tips are up sharply. “The increase in tips may have less to do with (riders’) generosity than with the preset amounts suggested to passengers on the taxi’s software systems. In many cabs, riders are offered options for their tip depending on the length of the ride. For fares under $15, a screen prompts tips of $2, $3 or $4; the numbers can range from 15 percent to 30 percent for higher fares. The presets are used about 70 percent of the time, according to industry estimates. In New York…tips, which hovered around 10 percent when cab rides were cash only, averaged 22 percent on credit-card transactions.”
Apple Pay (and similar applications using Near Field Communications (NFC) like Google Wallet) will be even easier: “Checkout counters in more than 220,000 stores, including Whole Foods, McDonald’s and Chevron, will be equipped with contactless readers. All users have to do is position their iPhone near one of the readers at a store, hold their finger on their Touch ID and they’re good to go. The simple, swift checkout motion is made easy due to the Near Field Communication antenna in the iPhone 6, which connects with the payment point to complete the transaction. A vibration and a beep will let users know that checkout was successful. There’s no need to do anything else.”
Watch as the process evolves. When paying at a restaurant, your waiter (or the kiosk/tablet being used at your table, like those at restaurants like Uno Pizzeria, Panera Bread and Chili’s) will enable you to “tap” after first being prompted to enter in a choice of pre-set, pre-calculated tip amounts like the ones you see in the cab. The same will go for Starbucks or any other small retailer where there was once a tip jar at the register. There will be contactless readers in your hotel room to pay for that $12 bottle of water, but more importantly to leave a tip for housekeeping. Like those credit card readers from Square, service professionals will be soon be equipped with their own NFC “readers” to quickly accept payments and tips from their customers. It’s easy. It’s quick. And because you’re not dealing with cash per se you’re just a little psychologically removed from the transaction – and will likely find yourself tipping a bit more than you did in the past.
Will this solve our minimum wage problem? Not entirely. The debate will continue and it’s likely that there will be enough support to raise it nationally in the next year or two. That’s a good thing. But as Apple Pay and similar NFC technologies become the mainstream, the millions working in minimum wage jobs that also benefit from tips will see a bump in their incomes. Tipping will be easier and therefore more of us will tip more. And that’s a good thing too.