The Outrage Cycle and DoorDash

One consequence of the rise of social media is the outrage cycle, in which (usually) brief but intense pressure is brought on someone due to a perceived outrage. Of course putting pressure on companies is not new at all—the word Boycott comes from Irish workers' refusal to harvest crops of absentee landlords—but social media makes pressure easier to apply and also changes the dynamics of the process. In particular, social media makes it more likely for pressure to be brought where the alleged harm can be succinctly stated in a black-and-white way. This is not necessarily bad but it can have perverse effects.

One potential example is the pressure put on DoorDash to stop guaranteeing that its delivery workers would receive tips. The basic idea is that a delivery worker earns a certain amount per delivery, perhaps a function of distance traveled or perhaps not. But the worker also earns tips from the customers. These tips are more variable than the compensation paid by the company—one customer might tip generously, another might not tip at all.

DoorDash got in trouble because it made an arrangement with its employees where if a customer tipped poorly, the delivery worker would receive a compensatory payment from DoorDash. So for instance if a customer tipped less than $3, perhaps DoorDash would pay the worker an extra $3 for the delivery.  Whereas if a customer tipped $5, DoorDash would simply pay the ordinary fee.

This was characterized on Twitter as DoorDash "stealing" tips from the workers. And this is true in a way. If you characterize the guaranteed minimum tip as part of the flat per-delivery compensation, then DoorDash is "stealing" the amount of any tip up to that amount of money. In other words, if I tip $5, perhaps DoorDash is really "keeping" $3 of it and the worker only gets $2. That is outrageous!

The logical implication of this is that it would be less outrageous not to guarantee a minimum tip. So in terms of social media outrage, consider the following two compensation formulas:

Formula A: The worker gets $5 per delivery plus $1 per mile traveled and gets to keep tips.

Formula B: The worker gets $5 per delivery plus $1 per mile traveled and gets to keep tips, and the company guarantees a tip of at least $3 (that is, to the extent a tip is lower than $3, the company makes up the difference).

According to Twitter, Formula A is good and the company should not be boycotted. (Formula A may be unfair, but it would be hard to explain why it is unfair in 280 characters.) Formula B is bad because it amounts to theft. You don't even need 280 characters to point that out, you could do it in 100.

But if you were a delivery worker, which formula would you rather use? Or to put it another way, if the company gives its workers the option of using Formula A or Formula B, which do you think they would typically choose?

Now in fairness these are not the real formulas used by DoorDash, and I don't think it ever gave its employees the right to choose different formulas. But there were indications that workers actually preferred DoorDash's compensation system to the systems used by its competitors, and some of those workers expressed anxiety when DoorDash stopped "stealing" their tips (i.e. ended its minimum tip guarantee). Also, bear in mind there is a third party here I haven't mentioned: the customer. It's possible that (A) customers felt aggrieved by the "tip guarantee"/"tip theft" model, even if workers preferred it, and (B) customers would tip less generously if they learned about the "tip guarantee"/"tip theft" (and of course they were learning about it through social media).

So I'm not necessarily claiming that what happened to DoorDash was bad for workers. But in general in the modern media environment you're better off being less generous to your employees, in a way that cannot provoke outrage in  280 characters, rather than being more generous in a way that can provoke outrage in 280 characters. The lesson here is not to be one of these assholes who retweets outrageous things without doing some research/thinking on the nature of the outrage.