The Uber Tipping Point: Is Aggressive Gratuity Really What Drivers Need?

By: Bridget Clerkin February 16, 2018
Uber CEO Dara Khosrowshahi’s suggestion that passengers tip more aggressively for better service and rider ratings could have larger implications—and consequences—for riders and drivers alike.
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In physics, it’s called the “observer effect”: the fact that recording a situation can alter its outcome.

In the rideshare world, it’s known as a passenger rating, and giving riders the chance to eye their own score has already unleashed enough anxiety to start changing behaviors in real-time.

While Uber drivers have long been at the mercy of the app-wielding public when it comes to the determination of their “driver score”—a factoid that could lead to their termination if left to dip too low—the tables have recently turned, with passengers also now up for critique.

Showing up late, eating in the backseat, or acting belligerently could all earn an Uber rider a low score—and just like their electronically summoned chauffeurs, passengers can see real consequences arise from their ratings.

When a mediocre passenger appears on their screen, drivers may opt instead to wait for another request, and that fact alone has led to greater rider awareness, backseat behavioral shifts, and a number of “how-to” guides on earning more stars. (Just like drivers, passengers’ scores are determined on a scale of one to five stars.)

But poorly rated riders will now not only be at the mercy of selective drivers, but the mechanics of the Uber app itself. Uber CEO Dara Khosrowshahi recently explained that Uber’s algorithm had been tweaked to match better-rated passengers with higher-rated drivers—those of the 4.8 or 4.9 variety, which he noted comprise of drivers who have “passed an array of background checks,” among other perks. And more changes are on the way to give esteemed riders better access to higher levels of service and better cars, Khosrowshahi said.

But for those who don’t make the grade, the CEO offered a piece of advice: “You should tip more,” he told CNBC. “I am a very aggressive tipper right now. I pick the highest tip every time. Somehow my score is getting better. I’m not sure if it’s aggressive tipping. Everybody, tip aggressively.

The recommendation is an interesting one coming from the millionaire head of a company that forbade drivers from receiving tips until last summer.

And while the use of gratuity is a charitable idea, especially in an industry with no shortage of difficulties, relying on it switches the focus—and financial burden—for supporting drivers squarely onto customers, allowing businesses to get away with paying their employees even less, or taking an even steeper corporate cut from their drivers’ pay. (Both Uber and Lyft have already been caught doing as much, messing with their respective financial formulas to take extra government-incurred expenses out of their drivers’ paychecks, rather than ponying up themselves, as is legally required.)

Tying the use of “aggressive” tipping—representing an extra 25-30% charge on top of a fare—directly to a passenger score, and therefore, the level of service one receives, could also help create a two-tiered class system, leaving more cash-strapped riders in the hands of less reliable drivers, per Khosrowshahi’s plans.

Too bad Uber doesn’t have a handy rating to assess its own treatment of drivers—or customers.

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