Uber wants to earn loyalty from its drivers by offering extra pay and free college. But the company also wants to treat its drivers as contractors, not employees. No wonder they jump ship when a better opportunity comes up.
In a bid to retain its top performers, Uber Technologies Inc. is creating a program to reward its most popular and prolific drivers with extra pay and the prospect of an online college education through Arizona State University.
Uber continues to duel with rival Lyft Inc. for drivers in the U.S. But the two ride-hailing companies are hindered by a booming job market. As Amazon guarantees workers $15-an-hour minimum wage and unemployment remains low, low-wage workers willing to drive for Uber are in short supply. Sixty-eight percent of drivers who work for the company quit within six months, according to a study co-authored by Uber’s chief economist.
Drivers who stay with the company feel a loyalty to Uber, said Daniel Danker, head of driver product. “What we wanted to do is recognize those drivers that are doing that.”
On Thursday, Uber announced a pilot program called Uber Pro, which offers gold, platinum and diamond status for drivers in eight cities, including Seattle and Chicago. Drivers who work for Uber for more than three months and obtain an elite driver rating of 4.85 or above are eligible for rewards that include higher pay and discounts on gas and other services.
“I think this is definitely in direct response to the major problems Uber has had with driver turnover,” said Harry Campbell, who wrote a book titled “The Rideshare Guide.”
Some Uber Pro drivers who record more than 3,000 trips will be eligible for a free online college degree for themselves or a family member through Arizona State University’s online education program. The tally will count retroactively, so some drivers will be immediately eligible. Uber says many active drivers can complete that many trips in a year or two of working for the company.
“It’s not going to be a home run for everyone but I do think it is a meaningful feature for a small number of people,” Campbell said. “Most drivers don’t care about college education or little benefits — they just want to make money.”
Under Uber Pro, drivers receive a percentage-based increase to the time and distance formulas the company uses to calculate pay. The higher the tier, the larger the boost. For instance, gold tier drivers receive a 3 percent increase on the time and distance formula, which varies from city to city. Platinum tier drivers receive 6 percent over base pay.
The new system moves Uber deeper into the world of gamification. Uber Pro has drivers collect points to increase their status, instead of simply maximizing their pay during that hour. Uber has already developed a complicated system of bonuses that push drivers to work longer as they chase payouts tied to their weekly total trips.
©2018 Bloomberg L.P.
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Photo credit: Uber is trying to retain its best drivers. Pictured is a car driving for the company. John Taggart / Bloomberg