Uber published a post on Medium Thursday clarifying the company’s policy on tipping, following the settlement of two lawsuits alleging the company interfered with drivers’ acceptance of tips.

“Tipping is not included, nor is it expected or required,” reads the post. It continued, “Riders are free to offer tips and drivers are welcome to accept them.”

In the same breath, however, the company offered the reasons it thinks tipping is detrimental for drivers and riders alike: because a culture of tipping supposedly would make wages less predictable for drivers and privilege wealthier neighborhoods for ride access.

Yet both of these issues are problems Uber already faces. Would more tipping make matters worse? Let's consider each of the arguments separately.   

Tipping causes uncertainty

Tipping creates uncertainty about ride costs and driver wages, according to Uber. “We felt it would be better for riders and drivers to know for sure what they would pay or earn on each trip -- without the uncertainty of tipping,” reads the statement. Surge pricing and decreases in the per-mile driver payment rate mean wages are already uncertain.

But tipping is hardly the only source of earnings uncertainty. Surge pricing sends drivers to central areas with high demand to chase higher returns on rides, only for supply to often outstrip demand, as Al Jazeera and the Houston Chronicle reported last year. It's hard to tell what a driver is going to make in situations like that. Per-mile drive rate is known to decline over time. In Houston, by way of example, a rate of $2.50 per mile in 2013 declined to $1.10 over the course of roughly a year or so, according to a driver cited in the Al Jazeera/Chronicle story.

Uber counters that in cases where per-mile drive rates have declined, earnings have increased, as drivers make more pickups.

Tipping shifts ride access

In the Medium post, Uber says it fears a tipping button would encourage drivers to spend more time in neighborhoods where riders give more generous tips, which could lead to higher concentrations of cars in wealthier neighborhoods and central business districts.

Uber has a track record in New York of reaching areas outside Manhattan better than taxis, so in that sense it has something to lose and the point about accessibility has some merit. Uber tells Inc. that usage in the city is growing fastest in outer boroughs, and website FiveThirtyEight confirms Uber provides more coverage to those areas than taxis. But even in outer boroughs, wealthier neighborhoods sometimes get more love from the ride-hailing startup, according to FiveThirtyEight. So it’s not like Uber doesn’t already tend to serve wealthier consumers, and it’s unclear whether tipping would shift the scales more in their favor.

Tipping isn’t fair

Uber argues that the general practice of tipping in the service industry does not improve service and that tips are unfairly impacted by the prejudices of customers. It’s a fair argument, and there are studies to prove the points, including one Uber cites from Cornell University. But for all the faults of tipping, service workers depend on tips, as the attorney for Uber drivers in the recent settlement pointed out to The Verge.

"I'm sorry if customers find it irritating or inconvenient to tip, but the workers who are providing services to them are trying to make a living or pay their bills with this work," Shannon Liss-Riordan told The Verge. "People may not like tipping waiters either, but that's how they make their money. Sure, tipping is not 'cool' for customers, but the entire hospitality and service industry depends on it.”

Uber competitor Lyft, which includes a tipping feature in its app, says it thinks allowing riders to tip drivers in-app “is the right thing to do,” framing it as a perk that draws drivers in. The company tells Inc. that 70 percent of passengers “have given tips” to their drivers. If you read between the lines, that statistic means a lot of the time--if not most of the time--riders don’t give tips. It appears there’s not a lot of pressure to show appreciation for your driver even when a pop-up screen prompts you.

The argument that not including in-app tipping somehow benefits drivers is tenuous, but it’s one Uber is apparently committing to. “Other ridesharing apps do have a built-in tipping option. That competitive pressure means that we have to demonstrate Uber offers more stable, reliable opportunities to earn money than the alternatives. And that’s what we are focused on: ensuring that Uber is the best experience for drivers across the world,” says the post.

Published on: Apr 29, 2016