Uber: To Tip Or Not To Tip?

When Uber first appeared on the landscape 5 years ago, I didn’t pay them much attention.  The vast majority of my travel didn’t require taxi cabs, so it was a piece of technology I studied from afar.  My travel patterns began changing a few years ago and I began using Uber.

There are many reasons why I prefer Uber to taxi cabs (and Lyft) but one of the primary reasons is the fact that it’s frictionless.  My credit card is already loaded into the app and I just need to hit a button.  No money is exchanged.  Until now.  As Stephanie Rosenbloom details in this New York Times piece, tipping is starting to creep into Uber’s world:

There’s no need to tip.

Uber has been saying it for years. And the car-hailing app was embraced, in part, because of it. It’s all-inclusive and cashless; one fare and one email receipt, automatically charged to your credit card after rolling up to your destination. There’s no riffling through your wallet for small bills, no idling at the curb to deal with a credit card.

But in recent weeks Uber has begun allowing drivers in two states — California and Massachusetts — to post signs in their cars that say tips are appreciated. Is this just the beginning of Uber tipping? And what does it mean for travelers?

Uber still is not in favor of allowing tipping in the cars operated by their drivers, but agreed to allow drivers to solicit tips in a couple of states. I haven’t been in California or Massachusetts since the change, but the change (and related publicity) have me thinking about how I would confront this new decision. Should you tip your Uber driver?

I initially looked at this from the prism of whether or not it would affect my Uber rating. While I maintain a high rating on Uber (4.8 last time I looked a month or two ago) I don’t believe I have a reason to do anything differently than I act today to encourage that high rating. I’m respectful of a driver’s time and am always punctual for my rides. I’m cordial and don’t leave a mess in their car. But, are there other reasons I should tip?

Should I tip because I get great service?

As a general rule, I use Uber Black when available, as opposed to Uber X or Lyft. I like having a driver who considers this his or her profession. Uber Black drivers generally have a much better grasp of the local area than those who do this on a part-time basis. If there’s traffic, I want to know my driver is aware of the alternative routes so I can get to my destination on time. And, while I’ve heard more than a handful of stories about dirty Uber X or Lyft vehicles, I haven’t yet ended up in a car like that using Uber Black.

Unless I’m on a phone call when I get picked up, I always make small talk with my driver when I get in his or her car. I’m genuinely curious how they enjoy the service and what ultimately got them interested in the service.  And, Uber drivers also have the occasional great story.

Virtually all of the drivers are very happy with the service, including business levels an ultimately how much they earn. On a rare occasion I’ll hear a driver say they’re disappointed by the number of drivers in a particular area, cutting into their income. If the drivers are happy with the amount of money they earn, I don’t feel compelled to tip.

Don’t get me wrong. I’ve handed a few drivers a Starbucks gift card when they went above and beyond my normal expectations. But, my expectations are already somewhat high. A knowledgable driver and a clear car are “table stakes”. That’s why I’m paying more than I would in a taxi cab or cheaper ride-sharing service.

In some markets, Uber has cut pricing to be more competitive, though I think that’s largely for Uber X as opposed to Black service. Those prices get to the heart of another matter. Tipping is prevalent in the US, more so than in a lot of other countries in the world. In many of the cases where tipping is customary, the employee is paid a wage by their employer that’s significantly lower than minimum wage. Their tips are what bring their income up to an acceptable level. As a rule, I feel compelled to tip a waiter or waitress in a restaurant even if the service is subpar. Right or wrong, that’s just the way I’m wired.

Given that the full-time Uber Black drivers are choosing to drive with Uber as opposed to another limo service, I don’t feel compelled to supplement their income. Plus, the rates for Black strike me as far enough above minimum wage assuming the driver can get enough passengers in a given shift.

I’ve heard that the lower amounts Uber X and Lyft drivers earn can make it very tough to earn a living. That’s a very valid point for the drivers that choose those services. But, given that I don’t expect them to have local knowledge or a clean car, I wouldn’t be inclined to tip even if encouraged to do so. I just don’t see ride-sharing as part of the “service industry” the same way I see a waiter or waitress. Again, right or wrong, that’s just the way I see it. I’d be inclined to tip an Uber X driver if they went above and beyond, but that’s probably the only situation.

The Chicken And Egg Problem

Now that the lid to Pandora’s Box is open just a little bit on tipping it puts Uber in a bit of a quandary. They’ve prided themselves on the ease of use. No cash needed, no transaction to process once you get to your destination. Hop out of the car and be on your way. They’ve been somewhat forced to allow the drivers to solicit tips in a couple of states which is likely to lead to more. Does that mean they should allow for tipping in the app, in the hopes of keeping the transaction “paperless”?

Reducing the friction on tipping will mean more tips for drivers. And, while that’s good for the drivers, it’s not good for the passengers. Uber Black is already more expensive than a cab. Make it much more expensive and Uber loses customers, leading to less profit. I’m already a fan of trains where available. While I’m unlikely to start riding the bus instead of Uber, if tipping becomes customary it might require me to “trade down” to Uber X or a cab in certain situations.

Bottom Line It For Me, Ed

The developments are interesting on a macro level but I don’t see anything positive for me as a consumer if tipping becomes the norm with Uber. I already get a great experience and the drivers seem happy with their wages. Who wouldn’t want to make more money?

Introducing tips doesn’t seem likely to improve the overall experience. If drivers aren’t get paid enough for rides, market efficiency should solve that problem, though it may take some time. In the interim, customers’ wallets may suffer a bit if tipping becomes the norm. That would be unfortunate for them.

Do you think Uber drivers should be tipped?

 The post Uber: To Tip Or Not To Tip? was published first on Pizza in Motion

14 Comments

  1. I have stopped using Uber until they fix this and will try Lyft. They should just up the rate or add a tip function. I need a reciept, and not one digitial and one paper. Think more of your drivers Uber.

    1. LF, I still don’t think there’s much room to raise rates on Black. I guess they could raise Uber X rates, but I’m not sure what percentage of customers use Lyft or Uber based on which is cheapest.

  2. After 6 months of Uber Black use 5-10x a week, I recently uninstalled Uber app from my phone. Drivers in Seattle were banding together to under rate riders who didn’t tip. Dulles drivers for Uber Black were refusing rides that were too short. The Uber X’s I (infrequently) used were often gross and unkempt cars.

      1. I’m back to renting cars with Hertz. And apparently it affects me emotionally when someone tells me I’m “worth” less than I am, so yes, it affects me.

  3. As a Uber driver I strongly believe that the option of tipping remains with the rider and it will happen based on their experience…….Uber should have a button that allows for tipping at the riders discretion……..but to not have that function is thinking less of the drivers who take time out of their lives to offer the service………in this respect über thinks only about herself…….

    1. Anita, I respectfully disagree. Uber is a job. You take time out of your life to drive someone somewhere, they pay you. If the pay isn’t high enough, you shouldn’t drive. Then the market will adjust.

  4. I have a real problem with a ride that pays $3.00. The minimum should be hire. At that rate you service is basically free.

    1. Mike, I think that’s a valid point to discuss. I agree it’s too low. I would guess the argument on the other side is that if the minimum is $5 or $10 it discourages people to get interested in the service.

  5. I believe they should add the option to TIP to the APP for a seamless tipping experience. But, another point that people often miss is that UBER is a global service product. For example, you would never TIP a taxi/limo driver (well, not NEVER, but you get my point…) in Amsterdam but you would in New York. I “like” to tip in local markets where the custom is to tip. But, I don’t tip with UBER unless it involves something above and beyond (hey, I need to make 3 stops and you have to wait 8 minutes at each stop for me… or something like that). When they add the tip function, I’ll consider it. For now, I mostly use UBER since it is seamless in a number of international cities, and I really like that.

    1. Baccaratguy, I think a reasonable compromise here might be masking the tip a customer leaves until after the driver has rated a customer. I don’t care at all what my rating is but it’s obvious some people do. Maybe that would silence some of the criticism.
      Quite frankly, I still think my incidence of tipping would be VERY low unless Uber lowered the price.

  6. Dear Edward, your article is very interesting. I am super impressed that you only use Uber black. How ever as interesting as your article is, it is still amazing to me that you can write such an article without knowing all the facts. I have worked for Uber for 2 years with a car that I bought with Uber’s approval to use as Uber black, but which until today Uber has not allowed me to use as Uber black. By the way my car is a 2014 Toyota Avalon hybrid, limited. They finally included me on select after being forced to run it on Uber X only for one year. But I could not choose to accept only Uber select. I must by Uber requirement accept all Uber X requests. This is 99.99 percent of my rides. Even those who are accepted for Uber black, must also accept Uber X requests or be deregistered. Having said that, running my expensive car for about 70 cents per mile is certainly the barest minimum any one can maintain a car with. Being a single parent with three children still at home Uber flexibility lets me be there for them when they need me, but the earnings ensure that I run over twelve hours per day, seven days per week.

    I have dealt with all sorts of people, that bully you, yell at you, disrespect you because they believe that if you do not accept all their nonsense they rate you badly and Uber would drop you. I could tell you stories that would shock you. And the worst thing is that you cannot cancel a ride even if it is dangerous for you to continue because Uber will not let you. I had a guy puke on the front passenger seat. He got the mess inside the window well because he was severally trying to puke outside the window. He would wind down the window to puke out, the puke would end up on the window half inside the car and half on the window outside. He would then wind up the window and wind it down again. He did this severally. My car stank so much that I left it for three days. It cost me $250.00 to clean it, but Uber reimbursed me only $100.00. I sent in pictures and receipt too.

    Be that as it may, even if people work part time as waiters, do they not get tipped? Do you know that in Dallas where Uber rates are the cheapest in the nation that you are paid nothing until your passenger enters your vehicle? That is so no matter how long you drove to meet the request? And even then you only get about 70 cents per mile that you drive with your passenger? Uber pretends it is inconsequential to drive those miles to get a passenger, yet their rental car payment depends on how many miles you put on it. Do you know that half of your tolls other than the airport tolls are absorbed by the driver? Are you aware that to keep the car clean is expensive? Add to it maintainance, fuel, the drivers time and tell me that 70 cents a mile is not less than a restaurant waiter makes.

    So get your facts straight. Full time Uber X drivers that keep their cars clean exist. Also Uber Select and Uber black drivers that accept Uber X requests not by choice, but by Uber requirements also exist. While Uber has continued to increase their cut they have continued to lower Uber X pricing.

    I know that you are wondering why I continue to drive for Uber. I will tell you why. At the time I started driving for Uber, they were charging $1.60 per mile. Although they made us pay $40.00 a month for using their phones, by the time they took their cut, I believe it was twenty percent, we were okay. At that time they advertised that their drivers made 35 dollars an hour. And that was for Uber X. Besides I bought my car with their approval to go on Uber black that was charging about 4 dollars per mile. At this time after several reductions Uber X charges a base fee of one dollar, and 85 cents per mile, and 10 cents per minute. Uber also collects $1.70 per trip within town, and $2.70 from the airport. To which they add 20 or 25 percent of what is left depending on if you are Uber X or Select. Of course if you did the minimum fare you got $2.64 while Uber got $2.36. You said Uber lowered the fare to remain competitive. Do you know that Taxi drivers charge at least two times what Uber charges, and some times much more. They actually charge here in Dallas $2.00 per mile, plus $2.00 per person in the cab. From the airport they have a base that protects them from spending hours at the airport and getting a short run. Not Uber. A driver could spend 2 hours at the airport and get a 5 mile ride. You pay three dollars toll and get 7 dollars for the ride. The amount includes 2 dollars toll return. You make up the remaining one dollar. If you went through any other tolls Uber returns half to you. Who else is Uber competing with? Lyft? All the fare lowering was initiated by Uber. Lyft followed suit. Yet Uber ends up collecting more and paying drivers less. I remember when minimum fare was 5 dollars. Uber took it down to $3.30 and then added $1.70 for herself, effectively taking that money from the driver’s pockets.

    Anyway my wife died and I could not drive tractor trailers any more because they kept me away from home for too long. Then I came across Uber offers and foolishly believed them. I tried to buy a car through Uber, but they required $1200.00 per month. Too much. I bought one by myself. Then they changed their minds about registering me as Uber black. A year later they let me be Uber select, but required me to also accept Uber X which turns out to be 99.99 percent of my rides. Being in my 50s, going to work at Mackdonald is not an option because I still have my car payments as well as mortgage and my children. The only option is to pile up mileage on my car and and drive long hours. I have sometimes slept in my car in order to Hit the ground running at 4 am. All these just to make ends meet.

    So when you say that Uber lowered prices in order to be competitive you sound like you are repeating Uber sound bites. I challenge you to get a car and run for Uber for a week and tell us your finding. May be then you may not be able to argue that Uber drivers have no need for tips. The two markets you mentioned that Uber allows drivers to solicit for tips, are those not the markets where they have been sued for lying that the tips are included in the fare, which tips they kept without giving any to the drivers? Perhaps you imagine that Uber drivers do not read your articles. We do and we resent the fact that you are perpetually blowing Uber’s horns. On the strength of that they go about getting company accounts and raising money. Does it ever occur to you that Uber money maker Uber X is making money for them on the back of drivers that were deceived with false advertising? When will you look out for the small guy? Are you not aware that Uber like business perpetuates poverty? Every body rides cheaply, Uber makes tons of money all on the back of the driver. Tip the guy. It goes a long way to alleviate slimmest of margins given by Uber.

    We all know that it takes two qualities to tip, namely: willingness and ability. If you are willing but unable, we understand. If you are able but unwilling, we understand that too. No one can force you to tip. How ever you should not discourage any one that wants to tip. Because it shows an appreciation for a thankless job. Frankly for a while I drove around resenting people who get into your car, mess it up, by for instance eating and leaving dirt in your car. Sticking their chewed gum in hidden crevices in the car. Yelling at you like a dog, and all the time paying hardly enough to maintain your car. After a while I chose to find a way to dig my self out of the hole I foolishly got into and ignore the selfish meanness of many of my riders. And I am confident that I will not be driving for Uber for a long time. How ever many will continue. In Dallas alone Uber boasts of 4000 drivers working virtually for free. Encourage people to tip them. Even if only 10 percent does so. It will still go a long way to help. Thanks.

    Ps – please forgive the disjointed nature of my response. I wrote it in between my driving.

    1. Okonkwo, I don’t imagine driving with Uber is easy for everyone (maybe not easy for anyone). But, I’ve met plenty of drivers who are earning a very good living for their family. I applaud you for doing a tough job to help support your family. I’m still not supportive of tipping for drivers. I hope that if the money isn’t good enough that you’ll be able to find something else to support your family. I really appreciate your perspective and am thankful you weighed in.

  7. With older rates you couldmake decent money. Those who think they are doing well are not considering maintainance and depreciation as they will get hit with those expenses later. Most drivers make less than the minimum wage after expenses. Not tipping a driver at this point is just plain cheap, enough people in my area tip but I would say just barely.

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