In a pioneering move to foster equitable payments in the rideshare industry, Lyft announces a national minimum pay standard for its drivers, marking a first-of-its-kind initiative. Effective immediately in most major cities and set to roll out nationally in the spring, Lyft guarantees that drivers will earn 70% or more of rider payments each week after external fees. If Lyft deducts more than the 30% rate by week’s end, the company commits to compensating drivers for the difference.
Lyft CEO David Risher emphasizes the importance of acknowledging drivers as essential stakeholders, stating, “In every one of our cars, we have two customers: a rider and a driver. Riders get a lot of attention, but drivers not so much.”
Lyft’s internal research reveals that approximately 15% of its drivers earned less than 70% of rider payments in any given week in 2023, after external fees were deducted. Last year, on average, Lyft drivers earned around 88% of rider payments after accounting for external fees.
To enhance transparency, Lyft introduces a new earnings summary feature within the app, offering a breakdown of where each cent of the rider fare goes. This transparency initiative aims to provide drivers with a clearer understanding of how earnings are shared with the company and how external fees are distributed.
In addition, Lyft releases a white paper detailing average driver earnings after expenses. According to Lyft, the median U.S. driver, utilizing a personal vehicle, grossed $30.68 (including tips and bonuses) per hour of engaged time in the second half of 2023. After factoring in expenses, including tips and bonuses, the median U.S. driver earned $23.46 per engaged hour.
Betsey Stevenson, Lyft board member and professor at the University of Michigan, emphasizes that the transparency around earnings will empower individuals to make informed decisions about driving for Lyft. She states, “Embracing making them fully informed means that only people for whom it is a useful option will be the ones to drive.”
Addressing concerns over deactivations, Lyft is introducing a national in-app button for drivers to appeal deactivations promptly. The move aims to streamline the appeal process and provide drivers with quicker responses. Lyft reports that drivers are hearing back on deactivations 10 hours faster compared to the previous system. Additionally, the company has established a specialized team to review deactivation appeals, offering greater transparency into the details and status.
Risher emphasizes, “The real focus is on getting them reactivated as quickly as possible if we can.” As Lyft reshapes the landscape of gig economy earnings, its commitment to transparency and fair compensation sets a notable precedent in the industry.