If You Support a Livable Wage, Then Yes, You Should.

It seems that it was just few years ago that Uber and Lyft were relatively obscure startups. Today, they dominate a market once ruled by taxis. Their convenience and low prices gave riders a reason to forego dinosaur-like yellow cabs. Gone are the days of haggling with unscrupulous drivers over cab fares – Uber and Lyft's app-automated payment makes the transaction painless.

This feature is a big benefit in an increasingly cashless world and it's a key component to ridesharing's sudden success. But the cash-free nature and unclear policies of Uber and Lyft leads to some awkward questions about tipping.

Should you tip your Uber or Lyft driver? We think so. Rideshare driver wages are going down, so if you value their work, consider tipping when your driver does a good job. That one dollar tip will add up, and it helps ensure that rideshare operators maintain a high level of service and quality in the future.

Uber and Lyft's Current Tipping Policies

Uber

Uber's tipping policy has flip-flopped since their startup days. Their initial slogan, 'there's no need to tip,' combined with forbidding drivers from accepting tips made their stance clear. Tipping was a relic of taxicabs, an antiquated transaction that isn't necessary with Uber's modern approach. Eliminating the need to tip was a part of what made Uber so appealing.

But their position soon changed thanks in part to a $100 million lawsuit settlement, and they now allow drivers to solicit gratuity. According to an article in the Washington Law Review, Uber's designation of drivers as independent contractors contradicts their no-tip policy: "This policy is difficult to reconcile with the company’s belief that its drivers are independent contractors, free to engage in business relationships with customers, with Uber simply providing the app that facilitates the relationship," says the author, Henry Ross.

However, even though Uber has softened their stance on tips, their app still doesn't allow riders to add tips. All gratuity must be made in cash. People are carrying less and less cash, meaning that even well-intentioned riders who would like to tip often cannot.

Lyft

Lyft, on the other hand, allows riders to give in-app tips after completing a trip, and 100% of it goes directly to the driver. This is a big difference between Uber and Lyft, and it's often cited as a reason many drivers prefer Lyft. Riders are able to add a tip up to three days after their trip.

Why Riders Don't Tip

Both company's differing approaches to tipping has contributed to the confusion and trepidation that many riders feel when it comes to gratuity. Uber's initial message that tipping was neither required nor expected made riders accustomed to a tip-free ride. That was acceptable when drivers earned livable wages, but that is changing.

It's easy to assume that wages for Uber and Lyft's drivers are higher than taxi drivers, making tipping unnecessary. After all, both rideshare companies heavily advertise high potential earnings when recruiting drivers. A few years ago, that may have been the case. But rideshare drivers are finding that their paychecks are getting smaller.

Wages are Shrinking

The unfortunate reality is that pay rates are becoming worse for drivers with either company. As Uber and Lyft jostle to dominate the rideshare market, they're adding more drivers and promotional fares. It's not a complex equation: more drivers and lower rates lead to diminishing returns for rideshare operators.

A study by the Rideshare Guy, a blog aimed at Uber and Lyft drivers, has shown the stark reality of diminishing wages. In 2013, drivers had to travel 2.63 miles to earn $10. Today, they need to travel 4.71 miles to earn $10. That's an enormous change, and it means that drivers are earning considerably less while doing the same amount of work.

Many riders assume that a majority of their fare goes the driver, with Uber or Lyft taking a small cut. Both companies state that they take a 25 percent commission from each fare, but this ignores the booking fee. So when your ride costs $5, drivers are usually only receiving half of that. Uber and Lyft's portion often ends up being closer to 40 or 50 percent of the total fare. According to the Rideshare Guy, when fares are lowered, drivers pay the difference.

And don't forget about the extra costs that come with being a rideshare driver. They're responsible for car maintenance and gas. Plus, drivers don't receive health insurance and other benefits that full-time employees can expect. These costs add up, especially in the face of paltry paychecks.

Why Passengers Should Tip Their Lyft and Uber drivers

In an ideal world, Uber and Lyft drivers would earn enough money without tips. But we don't live in an ideal world. As rideshare driver's earnings shrink, many find themselves making minimum wage or less. Rideshare companies are a valuable component of last-mile transportation, and they are here to stay. It's important that rideshare drivers are paid a livable amount, and small tips go a long way in bridging the gap between cheap rides and fair wages

Tipping rideshare drivers is vital to ensure that the quality of service remains high. Higher wages theoretically attract better drivers, which helps to ensure that some of rideshares best benefits remain. Friendly drivers, bottled water, phone chargers, and people who strive to do their job well will be more prevalent if wages are enough to live on. If rideshare driving becomes a low-income generating gig, you can expect the same shoddy customer experience that made taxis so unappealing.

Most people don't like the obligation to tip, and that's understandable. But you should be aware of the diminishing wages faced by your rideshare driver, and you should consider giving a tip if you were satisfied with your trip. Otherwise, who knows? We might all end up on a street corner trying to hail a yellow taxi, and nobody wants that.

Do I Always Need to Tip My Uber and Lyft Drivers?

Not necessarily. Tips are meant for people who provide a high level of service. If your rideshare driver is polite, operates a clean and odor-free vehicle, helps you with your bag, and gets you to your location in a prompt and safe manner, you should tip them. Conversely, don't tip if you are unsatisfied with your ride. Dirty and stinky vehicles or rude and unsafe drivers are good reasons to withhold gratuity.

How Much Should I Tip My Uber and Lyft Drivers?

A dollar makes a big difference, especially for a short trip where drivers won't earn much. If your driver goes above and beyond – like helping you haul your bags or letting you pick the music, consider adding an extra buck. Your driver will be grateful.