Uber has absolutely no good reason for keeping tipping out of its app

Published February 20, 2017 by lagmen
A protester holds a sign reading “Uber Cheats” outside Uber’s offices in London.

The cringe-worthy moment came 22 minutes into a Q&A between Uber drivers and Uber ride-sharing president Jeff Jones.

“Louise Thompson—love that you’re providing great service…hope you’re getting some awesome compliments!” Jones wrote on Facebook in a live discussion with drivers on Feb. 16. Jones was referring to “compliments,” an app feature the company launched this past November to let customers leave their drivers notes of appreciation when “5 stars just isn’t enough.”

The rebuke from his audience was swift. “Compliments don’t pay the bills Jeff,” Facebook user Ryan Gonzales replied.

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If only there were something Uber could do that would help drivers pay those bills… something even nicer than a compliment, when five stars just isn’t enough. Oh! Uber could make it easier for customers to tip.

Uber is unique among ride-hailing and on-demand delivery companies in its total disdain for in-app gratuities. The company maintained that tips were included in its quoted fares until a proposed class-action settlement last April forced Uber to clarify that, well, actually, they weren’t. Even then, Uber refused to add tipping to its app. Instead, it instructed riders who wished to leave a tip that they could do so in cash.

“Uber is a cashless experience,” the company’s official policy on the matter states. “Tipping is voluntary. As a rider, you are not obligated to offer your driver a gratuity in cash.”

Publicly, Uber continues to inform customers who ask that “Being Uber means there’s no need to tip!” In private though, the company has been less tactful. “Tipping is tacky,” Josh Mohrer, Uber’s general manager for New York, told the Independent Drivers Guild, a worker advocacy group, in a meeting last summer, according to guild organizer MaryGrace DeCotiis and an Uber driver who attended. (“That’s not a word I’d use,” Mohrer told Quartz, when asked about the incident.)

While Uber may see tips as tacky, to drivers they can make the difference between a comfortable living and just scraping by. In New York, for example, the living wage for a family with two children and two working adults is $19.01 an hour. According to Uber’s own data, the average UberX driver earned between $23 and $24.50 an hour in October 2015. That was after Uber’s commission but before on-the-job expenses like gas, insurance, and car maintenance that—by economists’ best estimates—run about $3.50 per hour for part-time drivers, and $5 an hour for full-timers. After those costs, the typical driver in New York is left with a bit more than $19 an hour.

Now add tips to the equation. Unlike Uber, New York’s yellow cabs prompt riders who pay with credit cards to leave a tip for their drivers. In the first half of 2015, 97% of customers who rode solo and paid by credit card took advantage of that option, leaving a median tip of $2, according to a Quartz analysis of data from the New York City Taxi and Limousine Commission. As a percentage, the most common tip was 20% of the fare (20%, 25%, and 30% are the pre-set suggestions). Elsewhere in ride-hailing, Lyft has supported in-app tipping since its launch—the company says customers have left more than $175 million to date—and driver-friendly Juno added the feature in September 2016.

Meanwhile, the typical Uber driver manages about two to three trips per hour, according to multiple drivers and ride-sharing blogger Harry Campbell. Tally that with the taxi commission data, and an Uber driver in New York could reasonably expect to see another $4 to $6 an hour—a 21% to 32% increase over $19—if the company simply had a tipping prompt in its app.

The problem is even more apparent in Uber’s food-delivery app, UberEats. Customers don’t just want to tip on takeout orders—they expect to have the option. Grubhub, the parent company of Seamless and the far-and-away market leader in online restaurant ordering, prompts customers to choose between suggested tips of 15%, 20%, and 25%. Leaving nothing requires either selecting “cash” and then not ponying up, or entering a “custom” tip of $0. The result? Grubhub customers tip on 99% of orders, with a median gratuity of 15%. “Tipping is a huge benefit to the entire delivery ecosystem—diners, drivers, and restaurants,” Grubhub CEO Matt Maloney told Quartz.

That Uber doesn’t include tipping in the Eats app is a matter of great frustration to customers (not to mention their couriers and drivers). Twitter is littered with complaints from UberEats users who were upset or taken aback upon learning that they could only tip in cash.

Is tipping a best practice in labor? Far from it. Tipping—and the tipped minimum wage—is an abomination. It doesn’t incentivize hard work, rarely correlates with quality of service, and is a racially charged minefield. At the same time, Uber hasn’t abstained from tipping because it’s the “right thing” to do, as famed restauranteur Danny Meyer explained when he debuted a no-tipping policy at The Modern, a pricey dining spot in midtown Manhattan. Uber cuts prices relentlessly and has fought tooth and nail in court to avoid classifying its drivers as employees, a status that confers both minimum-wage protection and benefits. Uber CEO Travis Kalanick is no Danny Meyer.

The issue isn’t going away, either. Last week, the Independent Drivers Guild petitioned New York City’s taxi commission to require all apps that arrange and provide private rides to have an in-app gratuity option. The formal request specifically called out Uber’s policy of telling riders to tip in cash on a ride service it advertises as “cashless.” “The current policy of the company is both confusing to riders, who are often unsure whether tipping is appropriate, and harmful to the income of drivers, some of whom are able to make a significant share of their income from tips,” the guild’s petition reads.

A few days later, Jones hosted his Q&A with Uber drivers on Facebook. Jones joined Uber from Target last summer with an explicit mandate to soften the company’s public image and improve its contentious relationship with drivers. Tipping is the simple and obvious way to do that. The Q&A was billed as Uber’s attempt at an olive branch, and drivers wondered whether Jones might offer a more sympathetic stance.

It took only four minutes to dash their hopes.

“Tipping is allowed, and riders are free to offer a cash tip,” Jones wrote in response to Facebook user Kawshar Khan, an Uber driver in Philly. “It’s true, we don’t offer a tipping option in app. Don’t think that means I don’t hear you, but we’re not making any new announcements today.”

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