Lyft test program offers drivers more rides in exchange for 10% pay cut

In late September, Earla Phillips got what she described as an irritating email from Lyft. The ride-hailing company was reaching out to drivers, like her, to notify them about a new feature called "priority mode."

"Turn on priority mode to earn more," the email boasted. When drivers opted in, it said they'd get a handful of "priority" hours per week in which they'd get more rides than drivers who weren't using the feature.

But there's a catch. In priority mode, drivers must agree to a 10% pay cut.

"I knew that this just was another way for the company to take more money from the drivers," said Phillips, who was one of Lyft's earliest drivers in Toronto. "The first week I didn't even bother turning it on."

Despite her skepticism, Phillips finally caved and gave priority mode a try. She got a few rides, used up her hours and didn't notice much of a difference. What was notable, however, was that when she turned priority mode off she said she barely got any rides.

The feature is Lyft's latest attempt to cope with the coronavirus pandemic, which has weighed on the ride-hailing industry because people around the world have sheltered in place with nowhere to go. Lyft's rides were down 75% year-over-year in mid-April, and even though the company has since seen an increase in passengers, rides were still off by 50% year-over-year in November. Drivers have been left scrambling to pick up any ride possible to make ends meet.

"We launched Priority Mode at the beginning of the pandemic to help drivers stabilize their earnings and give them another option around how to make the best use of their time," a Lyft spokesman said in an email. "It's one of the many ways we are continually working to improve the platform so drivers can reach their personal goals."

Priority mode also helps Lyft compete with Uber by keeping more drivers available to pick up rides. Since many drivers use both apps, priority mode could get those drivers to choose Lyft over Uber.

J.J. Fueser, a researcher with RideFair, a Toronto coalition working to regulate ride-hailing, said the companies need to have drivers circulating at all times to ensure passengers don't have to wait long for rides. But she said that situation has created a ride scarcity that makes it harder for individual drivers to pick up enough passengers to earn a minimum wage.

"The priority program works because the labor supply is indefinite," Fueser said. "It wouldn't work if people weren't desperate for income right now. It's a race to the bottom."

Pay cuts

Online drivers' forums are scattered with complaints about priority mode. A Reddit thread calls the feature "extremely rotten," with one commenter saying "Lyft has always been shadier (underneath their woke branding) than Uber but this takes it to the next level. Why the hell should you be paid less for doing the same work?" Similar sentiments are seen on Twitter and drivers' sites like the Rideshare Guy and UberPeople. One Lyft driver even started a Change.org petition called "Save Lyft drivers" asking the company to get rid of priority mode.

Lyft's interpretation of the feature is different. The spokesman said the company received positive feedback for priority mode during a pilot program, so it launched an updated version to more drivers in August. Currently, priority mode appears to be available to all drivers in Toronto, Austin and Miami. The spokesman declined to specify where it's available or whether Lyft intends to take it to other cities or nationwide.

The spokesman put CNET in contact with Oscar Silva, a part-time Lyft driver in Miami, who said he's made priority mode work for him. He said he gave Lyft positive feedback on the feature in a survey. Since Silva has a day job and drives off-hours, he said he can use priority mode when it's slow. He said he appreciates getting more rides during those times but would like the feature better without the 10% pay cut.

"I like priority mode to the extent that it's an additional tool in my toolbox, but I don't want to be in priority mode 100% of the time," Silva said. "The real kicker would be putting me on priority and not changing the rate."

Both Lyft and Uber have consistently cut drivers' pay over the years. About a decade ago, when the companies first started out, drivers could reportedly expect to make roughly $20 per hour after expenses. Now that number is believed to have dropped by half. According to a 2019 study by the Economic Policy Institute, Uber drivers make around $9 per hour. Uber has disputed those findings. Both Lyft and Uber went public in 2019, but neither has yet made a profit.

Over the years, the companies have taken other steps that affect drivers' earnings but aren't exactly pay cuts. For instance, Lyft has lowered its cancellation fee for riders from $5 to $2 plus time and distance. And Uber has upped its cut from drivers from 20% to 25%. Both companies have also battled regulators to oppose minimum wage laws in cities like New York and Seattle. In California, they were part of a $205 million ballot measure campaign to make sure drivers wouldn't be classified as employees in the state. 

Phillips began as a ride-hail driver with Uber in 2015 and then joined Lyft in 2017, when it launched in Toronto. At first, she said she loved it. 

She'd been working part time at a roofing supply company and needed to supplement her income. Phillips liked talking to passengers and usually made more than Toronto's $14 per hour minimum wage. When she lost her job at the roofing company, driving for the ride-hailing companies became her sole income. 

But now, with priority mode, Phillips said her earnings opportunities with Lyft have been crushed.

"I haven't gotten a single ride all week," she said in a December interview.

'Poverty mode'

Another Toronto Lyft driver, who wishes to remain anonymous out of fear of retribution, got Lyft's invite to test out priority mode a month before it launched citywide. Like Phillips, he was one of Lyft's "founding drivers" in Toronto, its first market outside the US. At first, he drove exclusively for Lyft because he saw it as "the nicer, more ethically driven company." But now he drives for Uber too because he said he sees no difference in how the two companies treat their drivers.

The driver, who has a day job and drives part time, said priority mode caused a 20% drop in his earnings.

"We joke that our nickname for priority mode is 'poverty mode,'" the driver said in a phone interview. "Of all the things I've seen Uber and Lyft do, this is the ickiest."

When Lyft notified the driver about priority mode in August, it pitched the feature by saying he'd "stay busy" because "we'll prioritize you over other drivers," according to screenshots seen by CNET. Lyft acknowledged "you'll earn less per ride" but added "we'll make sure you get more rides so you'll earn more overall."

"Lyft and Uber both speak in these Orwellian riddles," the Toronto Lyft driver said, referencing Lyft's message about being paid less per ride but earning more. "If you logically think about what they're saying, it's incongruous."

With the feature turned on, drivers in Toronto make $1.68 (Canadian dollars) per ride pickup and then $0.12 per minute and $0.54 per kilometer when a passenger is in the car, according to screenshots seen by CNET. When priority mode is off, the pickup rate is $1.87 and $0.13 per minute and $0.60 per kilometer. So, a 10-minute, 5-kilometer (3.1-mile) ride in priority mode nets drivers $5.58. With the feature turned off, they'd get $6.17.

Lyft said it limits the number of drivers in priority mode -- so even if they have hours to use, the feature may still be inaccessible, according to screenshots seen by CNET. Drivers say when they log on, priority mode often isn't available.

Originally, Lyft gave drivers in Toronto six hours of priority mode per week. At the beginning of January, the company reduced those hours to four. It dropped the hours again last week to just three. The Lyft spokesman confirmed that priority hours for drivers change each week, depending on market conditions. He said the company monitors each city to make sure those who have priority mode turned off aren't impacted.

While Phillips' earnings as a ride-hail driver were decent for the first couple of years, they started to plummet as Toronto was flooded with new drivers. When the pandemic struck, it just got worse. But priority mode takes it to another level, she said.

Phillips said she now spends hours driving in circles waiting for a ride. For example, in the last week of November, she got just 13 rides with Lyft and the majority of those were in priority mode, according to screenshots she provided CNET. Even though the 10% pay cut adds up, Phillips said she still uses the feature because it's impossible to get rides without it.

"You could go out during a snowstorm or rainstorm and get rides," she said. "Not anymore. Now I sit at home and watch the snow fall."