In 2016, I signed up to be an Uber driver in Tallahassee, Florida. After 5 years and many thousands of rides, these are the things I wish my riders knew.
1. What we earn is disconnected from what you pay
The price shown to you when you order a ride is just a guess, what Uber and Lyft call “up-front pricing.” They show you an amount that they think the ride should cost based on their internal algorithms, and you tap to order the ride. At that point, your part of the equation is done.
You might assume that drivers get paid a fixed percentage of the price of the ride, but rideshare drivers are actually paid by time and distance. While the distance rate is decent (it varies by market, but I get $0.83/mile), the per minute rate is abysmal (just $0.10/minute for me). What you are shown has only a fleeting relationship with how I get paid. We could run into traffic, take a detour, or decide that it’s quicker to hop on the interstate than try to take main roads.
The difference between what you are shown and what we earn is the company’s profit, known as a “take rate” (remember that term, because we’re going to talk about it later). This amount changes depending on how much the company ends up paying out to the driver. For now, just let it sink in that your driver on that $20 ride is probably only going to make $8–10.
2. Tips are a rarity
“But I always tip!” you say. If you do, then congratulations, because you are in the vast minority. The reality is that just 16% of passengers tip their driver. In my college town of Tallahassee, passengers who tip are an extreme minority. College students don’t have much money to start with, and it’s easy to understand why they’d rather save a few dollars for another drink at the bar before they’d give it away to the person behind the wheel.
When I first started driving, tipping wasn’t even integrated into the app, so any tips I received were in cash. It was such a rarity that I actually developed social engineering strategies to try to shake a few bucks out of passengers. Casually mentioning a tip from a previous passenger (even if it hadn’t happened) and then breezing past it in the conversation was one method. By planting the seed that other people tipped, I could sometimes guilt a few dollars out of someone’s wallet. It makes you feel dirty, but it’s just another way of earning a living.
How profound is the impact of a tip on a driver’s earnings? After a busy 2019, I sat down with my end of the year reports from Uber and Lyft and concluded that if every person who sat in my backseat tipped me just $1, I could have worked 10 fewer hours per week. That’s an entire 40-hour workweek that could have been avoided each month for a single dollar. That’s time I could have spent sleeping or playing with my son or doing literally anything else but sitting behind the wheel of a car trying to make ends meet.
3. Ratings matter for us, not for you
After every ride, both passenger and driver are presented with an option to rate each other. Rideshare companies talk a good game about the importance of these ratings, but they actually mean very little for riders. Don’t fret if your passenger rating dips below five stars. You’re giving the company money. They’re not going to get rid of you unless you give them a really good reason.
How little does the passenger rating matter? I once picked up a college student with a rating of 3.6 stars. He was exactly as drunk and obnoxious as you’d imagine. Other drivers I’ve talked to have seen ratings even lower. Since your rating is an average of encounters with multiple different drivers, try to imagine how many times a person would have to misbehave for their numbers to get that low. Now remind yourself that there are no consequences for these people.
Meanwhile, a high rating is a necessity for a driver. If a driver’s rating drops below 4.6, we risk being deactivated from the platform. Since star ratings only come in whole numbers, giving me anything less than five stars is voting to fire me. I’m not saying you should always give five stars, but try not to ding your driver because they missed your turn or got held up on traffic. A lot of what drivers deal with is beyond their control.
4. Stops are the bane of our existence
Remember how I said that drivers are paid by distance and time? The time portion of that equation is so little that it is basically negligible. At $0.10/minute, any time spent sitting still is time earning less than minimum wage, and that’s before you factor in the gas we’re burning by idling in a parking lot.
The sitting still issue has been compounded for drivers in recent years because rideshare apps now let you add stops to the ride. Let me be clear, drivers hate rides with stops. Unless you are simply picking up another person on the way to a final destination, a stop is a guaranteed way for a driver to lose money.
Rideshare companies specify that stops should be short (no more than 5 minutes), but riders don’t use them this way. I’ve been asked to wait while riders did their grocery shopping, got a haircut, or took a shower, but nothing compares to the dreaded fast food drive-thru. A person who orders a round-trip ride to go through a drive-thru is a special type of hell, a ride worth virtually nothing compared to the gas I’m burning that forces me to sit and watch the minutes tick by because the drunk in the backseat absolutely needed a Popeye’s chicken sandwich.
Sometimes these people will offer to buy me food, but I’m not doing this because I need a hot meal. I’m doing it because I need money. If you have something that will take more than a few minutes, then don’t expect a driver to sit and wait for you. Because time is (no) money, asking us to sit still is asking us to forego the money we could earn on a different ride. Don’t do it!
5. No, we’re not making big bucks
“You’re going to make big money tonight.”
I hear it every Friday night. Right as demand picks up for Happy Hour, riders pile into my backseat and insist that I’m going to be raking in cash from all this driving. I laugh and agree, but the reality is much less glamorous.
Rideshare drivers make terrible wages compared to workers at large. People see that a ride on a Friday night can cost a lot, and their assumption is that the person picking them up is making good money. In raw numbers, this is sometimes true, but it ignores all the expenses, both immediate and delayed, that come with being a driver.
Remember that term, “take rate?” Let’s circle back to that. Compared to what you are being charged, the driver is earning a lot less. On their website, Uber lists a “service fee” of 25% taken from any ride, and IPO filings showed that Uber’s take rate was just 21.7% in 2018. Meanwhile, an analysis of thousands of rides by Jalopnik found that the actual number was closer to 38%. In my experience, the cut is 60–40 on most rides.
The hourly wage for a rideshare driver is often advertised as being $20 or more, but drivers actually earn between $8.55 and $11.77 per hour. How is that possible? One word: expenses. Take out the gas, wear and tear, and repair costs, and what looks like a decent wage rapidly evaporates.
There’s also the possibility that no one needs a ride when you’re working, a situation that means you spend hours waiting for money that never comes. As you roll around town burning gas, you can turn the radio off and faintly hear the money draining out of your bank account.
Bonus Fact: Most drivers don’t stick around.
As a multi-year veteran of rideshare driving, I’m the exception. If your driver seems clueless, unprepared, or a little over-eager, it’s probably because they’ve been doing this for just a few months. The attrition rate for rideshare drivers is ridiculous. A report from 2017 estimated that just 4% of drivers stuck around more than a year, and more recent studies aren’t much better.
This is probably due to a combination of low wages, poor treatment, and difficult work. Maybe, as some studies show, it’s because drivers move on to higher-paying jobs and quit driving around strangers for money. Maybe drivers quit the first time someone pukes in their backseat. I’m sure there are all sorts of reasons.
Meanwhile, Uber and Lyft have begun to gin up their advertising campaigns to try to lure drivers back out onto the roads. As the pandemic subsides and people start going out again, the lack of drivers is a real problem for Uber and Lyft, and they’ll hurl money at the problem until it goes away.
Hurling money at problems is one of the things at which these companies excel. Uber is probably the most successful financial bonfire in history, a purpose-built machine for setting venture capital money on fire. It’s a shame they can’t pass a little more of it along to the men and women who do the actual work.