Uber Wants To Save Us From Racism
But drivers say its tipping policy is just protecting cheapskates
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The settlement of Uber’s labor suit is not yet final, but pissed-off drivers are already kicking off another revolt. This time it’s about tips. Drivers are peeved that tipping will still not be a part of the app. The drivers can hang DIY signs that say “We love tips,” but the actual juice must come in the form of crumply bills.
You can see why the king of algorithms wishes to banish a practice of such old-school inexactitude. Uber is seamless; tips are loaded. When not well-defined, tipping is wracked by guilt and insecurity and mushy math: When Hillary Clinton stiffs the tip jar at Chipotle, it’s not just news, it’s a trend piece about her cheapskate soul.
But Uber tipping is now ethically murky — the company saying one thing (no tips necessary), and the drivers hoping for another — and that breeds resentment on both sides of the deal. One Uber customer is rallying fellow riders to resist the pressure to tip in a Bloomberg View op-ed: “think of your fellow Uber passengers’ welfare and leave your extra bills for the hotel maid.” The Harvard Business Review, meanwhile, predicts that passengers will now feel a “Tony Soprano-like veiled threat” from drivers: “Pay up or I’ll give you a poor rating.”
How did we get to this standoff? In April, Uber and its drivers agreed to settle two class action labor lawsuits. Among other not-yet-finalized changes, the terms have Uber paying $100 million, with most of it to be divvied up among the drivers who participated in the suit. For Uber, it’s a small price to pay to keep drivers as contractors instead of as costly employees. Part of the agreement forced Uber to clarify that the app doesn’t include a tipping function.
But the reasons Uber cited for its policy in an April 28 post were not what you may have expected from the global juggernaut. It explained that tipping is arbitrary. Worse, tipping is sexist and racist.
Uber mentioned research showing that male waiters raked in better tips than females at five Virginia restaurants, and another study calculating that white waiters earned better tips than black ones at a Southern chain eatery. (Not cited is one report actually more relevant to their case, a Yale study showing taxi passengers tipped black drivers in New Haven, Connecticut, one-third less than their white counterparts.)
The chain restaurant study goes so far as to suggest tipping may be a violation of the Civil Rights Act of 1964. In the past, the Supreme Court has interpreted the law as banning even neutral-seeming policies that, in practice, have unequal effects on workers of different races (for example, requiring a high school diploma for a job that doesn’t need one).
Because some customers might get better tips than others, Uber decided to go the way of the Soup Nazi: no tips for you. Or you or you or you.
The argument closely echoes the one Ellen Pao made last year as CEO at Reddit, when she banned negotiations around starting salaries, saying that men are more likely than women to push for more money, which deepens disparities in pay. Sure, Pao might have just crafted an ingenious argument for keeping all the company’s starting salaries down in the Bay Area’s full-throttled tech market. Yet the fact that she had just sued her former venture capital firm for discrimination tends to prove Pao is all-in on this egalitarian thing.
Uber’s social justice bona fides are a bit more suspect.
It’s easy to forget that certain aspects of the Uber app have, in fact, relieved some of the racism long associated with the cab industry. The fact that Uber serves the poorer and minority sections of cities spurned by taxis has been a consistent bullet point in Uber’s stump pitch. Journalist Jenna Wortham wrote in “Ubering While Black” that the service let her skip the humiliation of getting dissed by passing cab drivers.
The app seemed to limit drivers’ ability to reject potential fares based on their race — both by only showing a first name and location, but no picture, and by reprimanding drivers if they cherry-picked customers. Still, drivers have their hacks, such as this one shared on a Reddit thread:
We’re far enough into the buildout of the app economy to have data showing people dragging their same old stubborn biases right into the app-verse. Black and Asian men getting short shrift on OKCupid. Black-sounding names garnering a 16 percent lower acceptance rate from Airbnb hosts, and black hosts having to price their properties 12 percent lower than other races to get takers.
So yes, Uber has a point that the app world is still a racist place. It’s just that Uber, in its post, says it’s not just defending drivers from the specter of racist tippers. It’s also defending its passengers, who like their rides “hassle-free” — meaning, I assume, tip-free. When I contacted Uber, a rep told me that it is simply less focused on tipping, and more interested in driving up demand for rides.
I wondered what drivers were saying about all this. I knew just the place to go to find out.
I was a low-level mole, the unauthorized passenger cargo smuggled in by a Lyft driver as we blazed into the rideshare driver lot at the San Francisco International Airport. It’s a fenced pen in the middle of the long-term parking lot, only meant for vehicles with a “U” or pink mustache in the window, a sort of purgatory for drivers awaiting a passenger to ping.
Uber has no data on tipping, of course, so I would have to ask drivers using their rival Lyft, whose tipping-friendly app (giving you the options “no tip,” $1, $2, $5, or “other” amount before closing out of a ride) plays into their Glinda-the-Good-Witch role in the rideshare market. Case in point: Lyft alerted its drivers this month that “the competitor” was forcing Lyft to cut rates on Lyft Line, the option in which multiple passengers get picked up along a route. But to sweeten this new, less lucrative deal, Lyft pitched tipping:
In the airport lot, I walked amid a merry-go-round of cars pulling in and out of spaces, with 747s roaring close overhead. Drivers were dozing in their lowered seats or making pilgrimages to the three Porta-Potties. Others were munching a banana alone in the car, or dragging on a Marlboro while leaning up against an SUV, huddled with other drivers.
I approached a pack of middle-aged men, most of whom worked for Uber. I asked about tipping, but most of them preferred to talk about how much Uber rips them off.
One Cary Grant-ish, Mediterranean-looking guy said he’d driven a cab for some 30 years in San Francisco before signing up with Uber. He said he made good money in the beginning before they slashed their rates. Now he only had vitriol: “They’re going to be in the stock market very soon! On who? On the drivers,” pointing at each guy in the circle. “68 billion dollars [valuation]! Squeezing the drivers! Sucking everything out of the drivers!”
“I sent them many emails [about tipping] and they never respond,” he continues. “Customers ask me, how am I going to tip ya? And I say I don’t know. The Uber rules say don’t ask for a tip. I don’t want to get in trouble for a couple dollars.”
And having customers tip them with cash?
“The customer doesn’t want to carry cash,” says an older, more reserved Uber driver.
Another chimes in: “The tip should be mandatory, like in the restaurant.”
A younger short guy in aviator glasses, named Pervez, who drives mainly for Lyft, chimed in: “At least give an option [to tip]. It shouldn’t be mandatory. One guy told me, ‘I don’t have a good budget, but I can afford a dollar. If I pick up 10 people, that’s 10 dollars, that’s my lunch, you know? Right? So I don’t care if it’s one dollar or 10 dollars.”
I told them how Uber argued it was protecting them from racism, but they weren’t buying it. “It’s not about the racism, it’s about the service,” says the reserved guy, who says he’s originally from Pakistan. “They can see me and hear my accent. They don’t ask me where I’m from.”
Maybe, but how would they know? It’s difficult, if not impossible, for these drivers to know if they’re being systematically tipped differently due to their race or gender, given that their primary gathering posts are these meetings in the airport lot or on Facebook forums. For its part, Lyft just says 70 percent of customers have tipped at least once, but hasn’t pulled stats on demographic differences.
I scurried around the lot, asking Lyft drivers to send me their pay stubs, until a security guard kicked me out. Eight drivers sent me a report covering all their rides during a week in April, a hopelessly anecdotal number, but enough to learn more than the company will release. What I found surprised me: one white male driver sent over seven daily reports, which allowed me to see that only about 30 percent of passengers tipped. I almost always tip unless there’s surge pricing, which I rationalize (fairly or not) as a built-in bonus. Apparently that’s not standard practice.
“People just don’t tip,” one female Lyft driver told me — and she was the one with the highest tip rate of the eight.
Pervez, the guy in the aviators, blamed it on Uber: Uber had trained all riders not to tip.
I decided the cleanest stat would be to divide their total tips by the number of rides they gave that week, for an average tip per ride. Since most passengers don’t tip, it always hit below a dollar. Among my tiny sample, here are the average tips per ride, listed by the individual driver’s race and gender during one April week in the Bay Area:
White female: 72 centsAsian male: 71 centsMiddle Eastern male: 56 centsWhite male: 47 centsLatino male: 47 centsBlack male: 44 centsAsian male: 39 centsMiddle eastern male: 30 cents
These results don’t look great for Uber’s hypothetical claims: the one female in the lineup made the best tips. And the black driver, so disfavored in all the academic studies, emerged a bit below average.
Another of Uber’s anti-tipping claims is more dubious still. The company says that tipping urges drivers to hover in rich areas, which it argues would erode its claim to providing better service to poor areas of town than taxis. Yet Uber’s hypothetical is not borne out by Lyft, which, of course, does allow tips. A Lyft spokesperson wrote in an email that in Chicago, specifically, “63% of rides start or end in areas the city has defined as traditionally underserved by traditional transportation.”
But drivers are less interested in how virtuous the company looks on paper. One older white woman from Berkeley (not the one who shared her tip stats) was sitting in her minivan, looking more like she belonged in the Whole Foods lot than the Uber one. She said she drives for both apps mostly to stave off boredom before work in the mornings, not for the money, and Lyft pings her constantly for her meager 65 percent acceptance rate. “They say this is your third warning. I say if you told me where people are going I wouldn’t have to decline….They don’t want people redlining. If someone tells me they’re going to East Oakland, I’m not going. I don’t care. I’m a woman, I’m 67 years old, I don’t go into places I deem unsafe.”
Though hard data on tipping remains tough to come by, it is clear that the way that tipping is built into an app — or not — affects customers’ behavior. The food delivery service Postmates learned this lesson after introducing a set of changes to the app in early 2015, as chronicled in a San Francisco Weekly story.
Originally, customers would decide on a tip using the delivery person’s own phone during a food handoff, almost like signing off on a FedEx delivery. “People are more inclined to be generous when they’re right in front of you,” one former New York-based Postmate told me. But in February of last year, the company moved the tipping mechanism to the customer’s phone, and now the transaction could be completed long after the delivery person had left. As the Weekly reported, an email to customers said, “You asked, we listened. After careful consideration, we’ve improved the checkout process to ensure faster drop-offs and less friction.”
Tips tanked.
“These people are like millionaires, getting $300 to $400 dollars worth of sushi, and they tip you like five dollars,” the former Postmates worker told me, about life after the app’s changes.
While Uber hasn’t outlawed tipping, it is making it really awkward if customers do — having to go off-app and grab bills out of their wallet. Right now, passengers could give drivers a lower rating for hanging a sign in the car urging a tip. Low ratings still mean Uber can throw them off the app, so the choice is a gamble.
“My hope is if they start uniformly using it,” says the Uber plaintiff’s attorney Shannon Liss-Riordan, then “no one has to worry about a passenger getting upset with any particular driver. Customers will just come to learn from this they’ve been duped all along.”
Michael Lynn is a Cornell University economist and a leading scholar of tipping — in fact, Uber cited one of his studies. But Lynn doubts that Uber is motivated by a desire to protect its drivers from racism or sexism. It’s mostly protecting people who don’t want to tip, he says. But now that tipping has re-entered the picture, the only thing Uber has ensured with the current wishy-washy policy is that no one comes away happy.
Well, except for other developers. Since Uber refuses to allow in-app tipping, another company stepped in to do it for them. SherpaShare, a platform allowing rideshare drivers to track their earnings, created a way this spring for passengers to send tips by SMS: they must text their driver’s referral code to a SherpaShare phone number, and then follow a link to pay via Stripe, which would require them to enter their credit card info, a process that doesn’t exactly scream “frictionless.” Will any fan of sleek-and-simple Uber jump through such hoops? The service is still in a pilot at the moment, with a couple dozen tips to date.
Perhaps more useful are the decals SherpaShare is giving out for free to drivers, reading “Tips are Appreciated” and “We Love Tips.” They’ve already gotten a few thousand requests, coming to an Uber near you.
Gif by Backchannel.
***This is the beginning of a tip comparison but we’d like more. If you’re a driver, please send us a weekly Lyft earnings statement from April, as well as your gender and race to backchannel@medium.com, and we’ll write a follow-up once we collect more data.***
