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SAN FRANCISCO – Ray Givaudan has driven for Lyft, Uber and even briefly Instacart to supplement his retirement over the last few years.
At first, the 55-year-old was loyal to Lyft. But then Uber introduced a long pickup fee to pay more if he goes out of his way to pick up a passenger. In addition, he could see what a customer paid for a trip, helping him understand if he was getting a fair share. Instacart provided more opportunities for work during the pandemic.
“The first couple of years with Lyft, you seemed to be a decent company and transparent,” the Roanoke-based driver recently wrote in a letter to Lyft co-founders Logan Green and John Zimmer. “The last couple of years, not so much.” He cited the disappearance of surge-priced pay, lagging driver rewards and the removal of helpful features such as a live phone help line for drivers.
Lyft has spent years trying to win over drivers and passengers with fun branding, an emphasis on social justice and charitable causes, and in-app tipping. The perks gave it a reputational edge in a marketplace where rival Uber was criticized for its treatment of drivers and corporate scandals, and where food and grocery delivery was a budding and uncertain sector of the gig economy, often with lower pay.
But the pandemic and related labor shortage has dramatically shifted that landscape over the past couple years. At Lyft, which remained focused on ride hailing, ridership was down by as much as 75 percent last year.
Drivers aren’t bound to one company, and can easily switch between apps. In the interim, many drivers chose to work for rival food delivery services, which experienced a boom in deliveries and offered additional transparency into earnings, along with advantages like negating the risk of interacting with passengers. Companies like DoorDash and Shipt added driver incentives, such as cash bonuses last winter in an effort to meet surging demand.
And while Uber experienced similar ridership declines to Lyft at the height of the pandemic, it doubled down with its Eats food delivery business.
Now demand for rides is returning, fueling a driver shortage. And as other companies have offered steadier work and more transparency, some drivers say they are frustrated with Lyft.
Lyft has fallen behind the gig work market in several areas, more than a half-dozen drivers, analysts and researchers say. Lyft’s take-home pay also tends to be lower than its biggest rival, Uber, owing to a combination of stiff competition and algorithms less sensitive to surges in demand.
“I think Lyft is floundering,” Givaudan said.
Lyft spokeswoman Julie Wood said the company places a priority on the driver experience. She said quoted wait times for riders on Lyft were lower than on Uber in 24 of the 30 largest markets over a recent period, according to company data points and visualizations that were shared with The Washington Post. That meant there was little indication drivers were choosing Uber over Lyft. And drivers in some cities were earning more than $35 an hour, well beyond what they would typically collect, the company said recently.
“We continue to invest in making the Lyft experience a great one for drivers,” Wood said in a statement. “We know we’re making progress because of the increased number of drivers on the platform, and the fact that they’re earning more than ever before.”
But the lack of transparency can lead some drivers to feel they’re not receiving a fair share. One driver shared screenshots with The Post showing a passenger paid more than $43 for a trip from Northwest Washington to Reagan National Airport, but he took home just over $16. The driver, a music instructor who spoke on the condition of anonymity because he did not want his students to know he was driving for Lyft, had to ask the passenger to see how much they paid for the ride.
Wood said many of the features mentioned in this story are available on the Lyft app, either through pilot programs or unlockable driver rewards. Lyft has a long pickup bonus in six markets, for example. And drivers can earn the ability to see passenger destinations through their driver rewards, she said. Lyft is also experimenting with upfront pay in two markets, allowing drivers to see the earnings and trip details on the screen before accepting a ride.
Uber spokesman Matthew Wing acknowledged the company has had to make improvements in the face of outside pressure and calls for change.
“Being the market leader comes with more scrutiny, as it should,” Wing said. “Drivers have a lot of choices and actions, not branding, are what you need to earn their trust.”
Instacart spokeswoman Natalia Montalvo said the firm met a March 2020 goal to add 300,000 shoppers, and there are stable numbers of shoppers across North America.
DoorDash declined to comment. Amazon and Shipt did not immediately return requests for comment. (Amazon founder Jeff Bezos owns The Washington Post.)
Drivers say they’ve watched a shift at Lyft from its beginnings, when it was the first ride-hailing app to implement a default tipping feature and has allowed customers to tip since its debut nearly a decade ago. Lyft also was first to let drivers pocket their earnings right away through a feature called “Express Pay,” with instant deposits for a transfer fee, it said.
In California, estimated to be the largest U.S. market for gig work with more than 1 million workers, a 2019 law that mandated companies treat gig workers as employees helped drive some changes in driver treatment. Some companies – particularly Uber – added a number of perks for drivers, including more control over fares and transparency into earnings even before a driver took on a ride. The initiatives tried to prove drivers were independent.
Lyft didn’t adopt new features, as it pursued a different legal strategy. Analysts said that company likely benefited from the fact that Uber drivers were turning down trips, and the changes Uber made to its app were costly from a research, development and operational standpoint.
A judge last month ruled that a ballot proposition called Prop 22 that usurped that law’s requirement for gig workers was unconstitutional. Although it faces a promised appeal, the ruling has once again put drivers’ issues in the spotlight – particularly as gig work companies try to replicate Prop 22 with new legislation across the country.
Still, some of Uber’s changes were short lived. It uncoupled driver earnings from passenger fares earlier this year as it no longer needed to prove drivers were independent operators in a supply-and-demand-based marketplace, sparking outrage among some drivers.
That led to cases where passengers found themselves paying astronomical fares while drivers collected meager bonuses. Meanwhile, some riders trying to take a Lyft were shown reasonable prices, but there weren’t drivers to accept the fares.
Ride-hailing apps are highly dependent on their matching algorithms to pair customers with nearby drivers for a reasonable fare, at a rate that ensures gig workers are willing to make the trip.
Lyft’s algorithm is less sensitive, analysts said, meaning prices don’t spike as easily and driver bonuses can be lower and less frequent. Wood pointed to the wait time data as evidence that there is an ample supply of drivers, however.
But the differing algorithms can lead to headaches. For example, when customers pouring from an event are all demanding rides at once, they might find the price of an Uber has spiked while Lyft is comparably cheaper. In that case, Uber’s algorithm has detected a surge in demand and raises the price accordingly so customers can secure a ride with the limited supply of drivers.
Changing an algorithm in an app can cost tens or millions of dollars, said Brad Erickson, an equity analyst with RBC Capital Markets. “That is not a trivial change, product-wise,” he added.
While gig companies are known for luring drivers with high earnings potential and slowly whittling it away, there has been something of a mini perk war among those duking it out for drivers.
DoorDash provides all drivers a guaranteed rate of pay upfront, and visibility into how far drivers’ trips will take them, critical insights for drivers determining whether deliveries are worth their while. Instacart, meanwhile, began letting drivers connect with a company agent by phone in under two minutes, chat directly within the app or schedule a call with an agent.
Delivery service Shipt offered surprise “recognition” bonuses for shoppers following the busy holiday season, awarding between $50 and $500 to workers who took on a range of order amounts.
At the ride-hailing companies, bonuses constitute a large chunk of driver earnings, as Uber drivers pursue “Quest” goals that pay out hundreds of dollars for hitting certain milestones, such as 60 or 70 trips over a weekend. Lyft drivers operate under a similar system, though experienced drivers who spoke with The Post said the bonuses are fewer and farther between for all but the newest contractors.
“Lyft historically is known to have less drastic surge pricing and price fluctuation,” said Ippei Takahashi, founder of RideGuru, a website that provides fare comparisons for the ride-hailing apps. “Many historical [studies] have stated that Lyft takes a larger portion of each ride – at least in aggregate,” he added.
It’s a phenomenon gig driver Timothy Bullock experienced directly during an East Coast snowstorm in February. Bullock shared screenshots of the surge map – a map of all bonuses available to drivers – for both apps taken one minute apart.
“Uber was offering surge rewards to drivers in excess of $40 a ride, yet Lyft was offering nothing,” Bullock said. “The result was that there were no available drivers, even though a standard Lyft ride was significantly cheaper.”
Lower customer fares and longer wait times are possible amid the driver shortage, but they follow a pattern that typically benefits drivers, said Lyft spokeswoman Wood.
“When rider prices are lower, that generally helps to stimulate rider demand. More rider demand means more rides for drivers,” she said. “Drivers understand that the busier they are, the more they make.”
Lyft continues to promote its brand of social appeal, extending it to drivers. Just this month, Lyft announced it would cover drivers’ legal costs under Texas’s restrictive abortion law, which bans abortions as early as six weeks and lets anyone file a lawsuit against another person who has helped someone obtain an abortion.
Ben Valdez, a Los Angeles-based volunteer organizer with the group Rideshare Drivers United who drives for both companies, said a friend recently called him to ask for a ride because he had been waiting more than an hour on the ride-hailing apps. He’d been promised a $60 Lyft, after finding the comparable Uber ride would have cost $100.
“Uber was surging during bar rush; they wanted $100 for a 15-mile ride,” Valdez said. The friend instead embarked on an extended wait for a Lyft.
With Lyft, Valdez said, “It’s literally, ‘You get what you pay for.’ “
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