Uber gave tacit permission to drivers to ask for tips as part of a proposed settlement reached last week to resolve a major class-action lawsuit. Now the company is discouraging riders from feeling obligated to tip—and suggesting that racial minorities get shortchanged in industries that rely on gratuities.
On Thursday, Josh Mohrer, the general manager of Uber’s New York operations, sent an e-mail to customers telling them that tipping is neither expected nor required. He wrote that Uber’s decision to leave tipping out of the app when the service first launched was deliberate, because the company "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.”
A representative from the company also circulated a 2008 study by researchers at Cornell University and Mississippi College showing that restaurant customers tipped black servers significantly less than they tipped white servers, even when adjusting for how satisfied with the service they were. In parties of three or more white diners, the average tip for a white waiter was 19.4 percent of the bill, while the average tip for a black server was 14.6 percent. “On a practical level, our finding of a statistically reliable main effect of server race on tipping calls into question the legality of tipping in the United States,” the authors wrote. Other studies have shown similar disparities in tips for taxi drivers.
In addition to implying that its customers were beholden to their unconscious racial biases, Uber also suggested that they were just irrational, pointing to a Bloomberg article from 2014 that showed strange patterns in the way people tipped New York taxi drivers.
In other contexts, Uber drivers have praised the company’s hyper-rational approach as a welcome change from the traditional taxi and black car industries, which have always been governed by the cruel whims of actual people. Many of them liked the idea of an app that would automatically connect them to fares because it eliminated the need to cozy up to central dispatchers who decided which drivers got which jobs. After a lifetime of dealing with unfair humans, the reign of the machines was a welcome change.
Of course, the company has hardly eliminated bias-prone humans from its routines. All Uber drivers are acutely aware of the need to maintain a high customer rating, because they can be barred from driving if their ratings fall below a certain level. An Uber spokesman didn’t respond to a request to discuss the company’s thoughts on how biases might impact the ratings. But as it turns out, Michael Lynn, the main author of the 2008 Cornell research, has also studied whether subtle racism factors into such ratings. In a paper published in 2011, he found that white diners tended to give white waiters more favorable scores, while black diners gave black waiters more positive ones.
The findings in Lynn’s second paper “call into question the advisability to using customer evaluations as part of employee incentive systems,” and he argues that doing so may violate civil-rights laws. At the same time, racial biases play out differently in tipping (where everyone punishes black drivers) and ratings (where customers reward people of their own race). “Race played a role in both cases, but a different role,” said Lynn, who consulted for Uber in the lawsuit. “There’s some element of the tipping behavior that is more subconsciously biased than ratings.”
Other studies have found that the on-demand economy’s reliance on interactions tailored to feel personal are susceptible to racial biases in ways traditional commerce are not. Research from the Harvard Business School has found that Airbnb renters with traditionally black names had a harder time booking reservations on the site and that black hosts had to accept lower rents than non-black hosts.
Uber drivers immediately pushed back on the company’s continued reluctance to accommodate tipping. About 2,600 people purporting to be drivers signed an online petition urging the company to include tipping in the app itself. Melody Lopez, a driver in Boston, is one of them. Lopez calls the argument that disallowing tipping encourages racial equality “nonsense.” She splits her time driving between Uber and Lyft, its main rival in the U.S. ride-hailing industry. “I’m a black woman,” she said. “I can tell you I do fine with Lyft.”
In the end, Lopez’s critique of Uber is less about how she gets paid and more about how much she gets paid. She said tips would offset the lower per-ride fares that she’s been receiving as Uber continuously drops its prices. “If the fares were more reasonable, this wouldn’t be an issue.”