Last year, I drove for Lyft in the Denver area. I recently posted an article analyzing my tips, discovering that under a third of my riders actually tipped me. To my surprise, this article received polar reactions on the issue of Uber/Lyft tipping etiquette. Many readers were floored that Lyft passengers don’t tip:
Yet, most others defended their no-tipping practices:
So, who’s right? What’s the appropriate tipping etiquette as a Lyft and Uber passenger? To answer these questions, I researched the origins of tipping, fair wage law, and the ridesharing industry.
But let’s first understand how this whole tipping thing came to be.
Tipping today is a uniquely American phenomenon. Few restaurant bills outside North America command a pseudo-mandatory 15–20% service fee. In fact, Americans hand out $42 billion in gratuities every year — all without a law enforcing the payment. So, how did this now-ubiquitous practice begin?
The first recorded instances of gratuity originated in Tudor England, where the aristocratic class could provide an “allowance” to the relatively poor service workers. A higher tip garnered better service, one reason that scholars surmise the word is an acronym for “To Insure Promptitude.”
Flashforward to after the Civil War in the late 19th century. Wealthy Americans traveled to Europe, and brought back with them the culture of tipping. These Americans brandished their newfound habits to demonstrate wealth and worldliness. Tipping soon went mainstream.
Many, like those of you who don’t want to tip Uber/Lyft drivers, recoiled at the idea of a tipping culture. The New York Times in 1897 published an article where it described tipping as the “vilest of imported vices.” Titled “The Itching Palm,” a 1916 author wrote that those who depended on tips suffered from a “moral malady.”
Founded in 1904, the Georgia-based Anti-Tipping Society of America successfully lobbied six states to ban tipping. However, these laws went unenforced, and were all ultimately repealed by 1926.
Today, tipping is an integrated part of the American economy. “Tip credit” legislation allows restaurants to pay waitstaff below the minimum wage, assuming an expected income from gratuity. Yet, most remain unaware of tipping’s elitist, condescending origins.
As is now evident, the age-old tipping debate is a complicated one. Most proponents of gratuity tout that tipping allows customers to incentivize and reward superior service. Others believe that tipping is an important element of control offered to purchasers, where they can course-correct for exceptional (or sub-par) treatment.
Yet, the evidence doesn’t support these conclusions. Professor Michael Lynn at the Cornell School of Hotel Administration has published over fifty papers on tipping. Lynn reports that the tip amount is rarely, if ever, correlated with the quality of service received. Instead, tip amounts increase for essentially random reasons, like if you pay with credit card or if your server writes a smiley face on the receipt. As an absurd example, Lynn says that even the weather conditions are more correlated with the tip amount than the quality of the service received.
Other opponents of tipping culture argue that tipping is a hotbed for unfair discrimination and sexual harassment. Last month, the New York Times highlighted personal accounts from service workers “weighing harassing behavior against the tips they need to make a living wage.”
Even restauranteurs dislike tipping. Tipping creates an unfair ecosystem where service workers earn more money than cooks and kitchen workers, despite their often more skilled labor. Restaurant owners struggle to pay their non-service staff a comparably fair amount, and the imbalanced opportunity undermines workplace teamwork.
When asked for his personal opinion, Michael Lynn, the guru on tipping himself, told Freakonomics Radio, “You know, I think I would outlaw it.”
Your initial response might be to stop tipping Uber and Lyft drivers. After all, tipping originated as an elitist, condescending custom. Tipping very clearly isn’t correlated with quality of service, and is the cause of several deleterious workplace practices.
The advent of ridesharing applications has created a gray area for driver tipping custom. Uber’s initial messaging informed riders they are “not obligated” to tip, claiming Uber’s drivers made fair wages without the tip. Many early Uber adopters rejoiced at the idea of a no-tip taxi service, which became one of Uber’s selling points. Yet in 2017, Uber eventually added tipping features to its platform, reaching parity with Lyft.
Uber’s initial rejection of gratuities has caused many to still refuse to tip their ridesharing driver. Some believe we can harness this ambiguity to shift American culture away from expected gratuities in the driving industry, and ultimately, to a fairer and more transparent economy.
But, as much as tips seem to be something worth abolishing, this isn’t the right way. Here’s why.
In the past month, there’s been an intense debate about the fairness of Uber and Lyft wages. It started when researcher Stephen Zoepf published a now debunked MIT study claiming Uber drivers earn $3.37 an hour. The study was flawed in several ways, and received criticism from Uber’s CEO.
After integrating the feedback, Zoepf updated his numbers, but they don’t look much better. In the best case, Zoepf claims 41% of Uber drivers make less than their state’s minimum wage at an overall median rate of $10/hour.
Lyft, anticipating similar criticism, published an infographic showing that drivers make $18.83 hourly, without expenses. They claim expenses to be about $3–5/hour, which brings the hourly wage to $12.83-$15.83. This includes tipping income.
Note: The $18.83 number includes time that drivers spend seeking rides, not just the time they are actually driving customers.
I interviewed Moira Muntz, the Independent Drivers’ Guild spokesperson, who found Lyft’s calculation to be misleading. Muntz points out that Lyft doesn’t deduct payroll tax, which is passed on to the drivers as self-employment tax, totaling to an even greater fee for the drivers.
As a former Lyft driver myself, I believe these estimates still overestimate a ridesharing driver’s median income. To even sign up as a Lyft driver I had to pay over $200 for car maintenance work, car registration, and updated insurance plans. Now factor in the gas, cleanings, and extra niceties like water bottles and gum, needed to maintain a decent rating. I also didn’t receive common benefits like overtime, health insurance, and of course, minimum wage protections.
So, are Lyft and Uber drivers compensated fairly? Are the hourly wages actually above minimum wage when considering these deductions? We don’t really know.
Should we just tip anyone who makes below a minimum wage? Why should supporting fair wages be the onus of the tipping customer? Shouldn’t companies or the government make these changes?
It’s a hard question. Muntz believes that “what drivers really need is for elected officials to regulate basic protections like a minimum pay rate.” But, in the meantime, there’s also an industry precedent here for tipping — Muntz says that “for-hire vehicle drivers have traditionally counted on tips to make up 20% of their income.” My answer: before abolishing tipping culture in the driving industry, we should push companies to guarantee a just wage system.
Imagine a group of restaurant chains proclaim you no longer need to tip its waiters. But the waiters’ wages don’t change — they’re still paid under the minimum wage. Few would observe the restaurants’ new rule, since many would feel compelled to tip out of a moral duty.
Uber’s tipping ban was built on what now appears to be an unverified claim — that its drivers make fair wages. The pre-existing gratuity culture for drivers shouldn’t be changed until we can actually ensure fair compensation.
If you believe in fighting tipping culture, there are better ways to do it than by continuing to underpay a low-income job for many who are trying to make ends meet. If you blame the industry itself for being corrupt in its business practices, then why take Uber and Lyft in the first place?
Instead, you can take steps in the right direction to change tipping culture and uphold fair ridesharing driver wages. Here’s a few ways:
I’m all for eradication of tipping culture. But let’s intentionally and fairly alter these economics.
Tipping isn’t an easy issue, and causes many people undue social stress. This article is my opinion, based on my experience as a Lyft driver, but I hope you learned some interesting history about tipping as well.
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