Only 28% Of Rideshare Trips End With a Tip, Mobility Report Shows
Americans are used to giving tips when they have food delivered, but it's not the same for those who drive people to their destinations. A recent report by Gridwise Analytics, which runs an app tracking earnings for half a million active rideshare and delivery drivers, revealed that only about 28% of rideshare trips end with a tip.
Uber's Tipping Policy
For nearly 10 years, Uber didn't allow users to tip. Tipping has been a contentious issue, particularly concerning ride-hailing companies such as Uber. Initially, Uber resisted adding a tipping feature to its app, claiming it might disrupt the smoothness of the service. However, after persistent pressure, Uber relented, leading to drivers receiving substantial tips annually. The forthcoming NBER study on tipping within the Uber system is bound to reignite the debate. Ryan Green, CEO of Gridwise, mentioned that people have become accustomed to not tipping for this kind of service. He noted instances where fares were high, sometimes over $1,000, yet no tip was given for six hours of driving. Uber, based in San Francisco, started allowing tipping through its app after drivers pushed for it.
Tipping in Case of Food and Grocery Delivery
In contrast, those who deliver restaurant orders and groceries receive tips about 88% and 74% of the time, respectively, according to Gridwise. Tips make up 51% of earnings for food and grocery delivery, but only 10% for rideshare drivers.
Importance of Tipping
Tipping has become increasingly important for Lyft and Uber drivers due to the rise in inflation. In 2023, Gridwise reported that monthly earnings for Uber drivers dropped by 17% compared to the previous year.
Ryan Green pointed out that drivers' earnings are being squeezed, especially as the cost of living goes up. He mentioned protests on Valentine's Day in some U.S. cities where drivers voiced their concerns about pay cuts. Labor groups advocating for gig workers argue that the companies are taking a larger portion of the fares.
Carlos Pelayo, a 69-year-old substitute high school teacher in San Diego who drives for Uber and Lyft to supplement his income, believes that the companies will need to give up some of the share they take from drivers.
Financial Insights and Corporate Actions
Typically, Lyft and Uber take around 40% of the fares, as noted by Green. However, Lyft recently pledged that its drivers would receive at least 70% of the fares. According to data from Gridwise, in 2023, the average gross monthly earnings for an Uber driver were $1,409.71, down from $1,699.58 the previous year. On average, Uber drivers worked 56 hours per month in 2023, slightly less than the 58 hours in 2022. Lyft drivers, on the other hand, worked about 44 hours a month in 2023, earning an average of $1,058.32.
Uber states that its drivers make a median of $33 per hour when they have a fare, including tips and bonuses. For Lyft drivers using their own vehicles, the gross hourly earnings (including tips and bonuses) amounted to $30.68, while after expenses, they earned $23.46 per hour.
This week, Uber Technologies announced plans to buy back up to $7 billion in shares after reporting its first profitable year as a public company. The move came after a strong earnings report, with Lyft also posting solid results this week.
Uber's Evolving Tipping Approach
Uber has shifted its stance on tipping in recent times. A year after introducing in-app tipping, the company announced that drivers in the US and Canada had received over $600 million in tips. Since then, that figure has significantly increased. According to a spokesperson, over the past two years, Uber drivers and Uber Eats couriers have amassed nearly $2 billion in tips. The spokesperson also emphasized Uber's dedication to enhancing features that identify and address bias on their platform.