As I’ve mentioned before on this website and on the angry website, I do some rideshare driving to help pay the bills. So it caught my attention on Friday when, at 4:10 PM local time, I received an email from Lyft with the following subject line:
Coming soon: Get paid for pickup time and distance
For some context:
The way payment has worked in Austin, since I began driving for Lyft in March, is that the driver gets paid by the minute and the mile upon arriving to pick up the passenger. With this new change, the driver’s miles and minutes will start counting as soon as she or he accepts the ride request. So if a ten-minute, five-mile ride is five minutes and two miles away, the driver will now be paid for fifteen minutes and seven miles, rather than just the ten and five.
This change is, of course, better for drivers than the prior situation, all else being equal. More minutes plus more miles equals more money.
But all else is, of course, not equal.
As I heard on a Wall Street Journal podcast the other day (we’ve got podcasts on a lot here at The Barking Crow headquarters, from the WSJ, the New York Times, The Economist, The Skimm, etc.), Lyft is under pressure from investors to cut driver pay. This makes sense for the corporation: they aren’t making a profit, investors justifiably want to see a profit, and drivers are—I’d assume—the biggest expense.
Presumably because of this pressure, included towards the bottom of the email was a note with the heading: “Valuing your time,” which read: “We’re updating your rates to better value time spent driving instead of miles traveled — so you’ll now get paid even when you’re in traffic.”
And below that was the new “rate card,” which breaks down how drivers get paid in a particular market (in this case, Austin):
(NEW RATE CARD)
For context, here’s the old rate card, which will remain in effect until the end of the day tomorrow, which is Tuesday, August 20th:
(OLD RATE CARD)
And in the middle of the email was a note stating that drivers will now be paid every time they pick up a new passenger or passengers in the middle of a shared ride, rather than receiving one flat minimum fee (called the “Pickup rate” on the new rate card and the “Base Rate” on the old rate card). If you don’t know what this means, don’t worry about it—it’s likely to be fairly insignificant. Shared rides are just rides in which multiple passengers, each with their own pickup and destination, agree to share the ride with strangers in exchange for a lower fare.
So, lumped together, here are all the changes:
Base Rate: Decreases 30 cents/ride, a 40% decrease, with the exception of shared rides. I don’t have data on how frequently shared rides have multiple pickups, but I can tell you that even if shared rides averaged two pickups per ride in Austin, they’d need to constitute 67% of all rides to make this piece of the payment net out evenly for drivers, and they do not constitute anywhere remotely close to 67% of all rides—my fairest estimate, off the top of my head, is that they’re maybe 10% of all rides.
Per-Minute Rate: Changes to include minutes spent driving to pick up passenger. Increases 1.5 cents/minute, an 8% increase.
Per-Mile Rate: Changes to include miles spent driving to pick up passenger. Decreases 23.25 cents/mile, a 33% decrease.
***
I don’t have data on how the portion of minutes and miles Lyft drivers, or even myself as a single Lyft driver, spend driving to pick up passengers, relative to the actual ride. So I can’t give an estimate of how significantly pay will decrease for drivers, or if it will even decrease for all drivers (there are rides, of course, for which this will result in an increased wage). But it’s safe to say Lyft has the data necessary to make these decisions, and that they wouldn’t be changing this unless it projects to cut drivers’ pay, on the aggregate. By how much it cuts the pay is the question.
Personally, I doubt the change is extreme. Maybe a dollar or two an hour is my best guess, based on some quick estimates. Obviously, this will hurt some folks, but I doubt Lyft is going around cutting driver pay by 25% or anything. After all, it has to compete with Uber for drivers as well as passengers.
And to be clear, I don’t have any problem with Lyft cutting driver pay in Austin. They need to be profitable to exist—I get that. I have the same constraint. Beyond that, I’m indebted to them for creating technology that allows me to so conveniently make money right now, and I wouldn’t be able to get around as conveniently as a customer without their existence. Plus, even after gas, maintenance, and depreciation, my experience indicates it’s been possible to make a living wage driving Lyft full-time in Austin.
I also understand that people out there do have problems with how much drivers are or aren’t paid. As with other anecdotes in this post, I lack data to confirm this, but my impression is that Austin has been a market in which drivers make more money than their peers in New York and San Francisco. This impression is based off of my own earnings and information cited in more prominent media outlets back in May, when some drivers and customers tried to organize a hybrid strike/boycott of Uber and Lyft in select cities. I don’t have the economic background necessary to say whether Lyft and Uber should voluntarily raise wages, keep them the same, etc. I’m also in a fortunate situation, relative to many, in which my livelihood is not entirely dependent upon being a rideshare driver (I do a variety of things, of which rideshare driving is only one, and I’m qualified to do more, having left a salaried job in Corporate America voluntarily to do things like write for this blog). But I acknowledge that there are people out there who believe Lyft and Uber drivers should be paid more, and while I don’t personally have a problem at this point with Lyft cutting driver pay in Austin, I’m open to hearing anyone’s perspective.
What I would like to point out, though, is that Lyft, while it gave advance notice of the pay change, gave that notice only four and a half days prior to the change going into effect. They mentioned the most significant change—the decrease in payment per mile—only in the context of drivers getting a small increase in pay on particularly slow rides (rides in which, based on my back-of-the-envelope math, the average rate of speed, from ride request to drop-off, is slower than four miles per hour, and I’ll leave it to you to guess how common that is). They spent the bulk of the email focusing on an accompanying change in pay that, while definitely a good idea, and something drivers should be happy about, is unlikely to outweigh the mileage pay cut for most drivers. And they sent the email at 4:00 on a Friday afternoon, one of the busiest moments of the week in terms of Lyft demand. It’s Lyft’s prerogative to communicate pay changes in this manner. It didn’t affect my understanding of how I’m paid (I read my emails, for the most part, and I know the rate card well enough that I sometimes spend quiet rides trying to guess exactly what I’ll be paid). But it might have affected that understanding for other drivers. I’ll leave the moralizing up to you.
