Last May, Minneapolis resident Mike Dougherty started driving for Lyft — a side hustle he enjoyed until the ride-sharing giant changed the way it compensates drivers in the Twin Cities.
The adjustment last week has resulted in drivers earning less, prompting some to stop driving for Lyft altogether or switch to rival Uber, according to Dougherty and others.
“I’m not planning on driving on the Lyft platform anymore,” said Dougherty, who has a day job as a video producer. “Even for the fun and the crazy conversations you have, it’s not worth the money.”
San Francisco-based Lyft said the change, launched in at least six markets nationwide, embraces drivers’ desire to be paid the moment they accept a ride, as opposed to when the passenger actually gets in the car. However, the rate drivers earn per mile was decreased by 30 cents.
“One of the top requests we receive from drivers is to be paid for their effort while picking up a passenger,” Lyft said in a statement. “Drivers will now be paid while on their way to pick up a passenger, which will make earnings more consistent on a week-to-week basis.”
While conceding “every driver is different,” Dougherty estimates that he would make an average of $13 to $14 an hour as a Lyft driver now, compared with at least $20 an hour before the change.
The change comes as more people use ride-sharing services nationwide, and as the service increasingly becomes a critical mode of transportation. A 2018 survey conducted by the Pew Research Center found 36% of U.S. adults say they have used a ride-hailing service such as Uber or Lyft. That compares with just 15% of Americans surveyed three years earlier.
But even as ride-sharing grows in popularity, Twin Cities Lyft drivers have taken to Facebook over the past week to vent about the change in the way their compensation is calculated.
Last week, Lyft cut the amount it pays per mile on each ride from 63 cents to 33 cents, while a one-time pickup fee increased by a dime to 45 cents. A per-minute charge remained the same at 19.5 cents.
“It ends up being less pay because normally you have the passenger in the car mere minutes after accepting the ride,” Dougherty said. “You usually don’t have to drive very far to get someone.”
This is especially true in areas where ride-sharing is popular, such as the Minneapolis-St. Paul International Airport or downtown Minneapolis. There, drivers are usually already near their pickup.
“If someone is really, really far away in the suburbs it’s good because you’ll get paid to get them,” Dougherty said. “But I would say it’s an extremely rare circumstance.”
Jumping to Uber
Lyft said the pay adjustment isn’t a rate cut — drivers told the company they wanted to be paid for their effort to pick up a passenger, including time spent in traffic, avoiding road construction or at red lights.
The effect on passengers is unclear. Several Lyft drivers said they plan to either abandon their ride-sharing gigs or drive exclusively for Uber, especially because many drive for both companies. Others say a potential driver shortage could result, hurting the level of service offered by Lyft. (Uber’s compensation has remained the same.)
“As more and more drivers begin to understand the poor return on investment, they are going to eventually stop driving,” said Sean Dianchrist, of Farmington, who has been a Lyft driver in the Twin Cities for three years. “This will hurt the very people who had been relying on the service for necessary transportation.”
Since Lyft was founded in 2012, ride-sharing has become a fast-growing business. The consumer website finder.com noted that Americans spent almost $78 billion on ride-sharing services last year — about $625 a year each for those who indulge.
Lyft now has more than 30 million riders and 2 million drivers. Its market share has grown to nearly 40%, and the company began selling stock to the public earlier this year.
“As a driver, I feel lied to and cheated,” said Erika Holderness, of Minneapolis, who drives for Lyft full time. “I know a lot of people that only use Lyft because they think they treat their drivers and communities better. That used to be true; not anymore.”