Uber takes a sharp turn, hinting at changes to come

A full-time job driving for UberX and Uber Black is 10- to 12-hour shifts, six days a week, said Virender Rana.

That’s what is necessary to pay off his car loans and support his wife, who is disabled and can’t work, the Upper Darby man said.

“If I don’t do that, then I won’t be able to cover my expenses,” said Rana, 46.

Rana, and Uber drivers nationwide, including about 20,000 in the Philadelphia region, got a de facto raise when Uber announced Tuesday that it would change how drivers are paid, including giving riders the option to tip through the Uber app. Then, on Wednesday, Uber’s founder and CEO, Travis Kalanick, resigned.

Kalanick became symbolic of a corporate culture that included allegations of sexism in the company’s San Francisco headquarters and problems closer to Philly, including flouting Pennsylvania’s courts and regulators, using potentially illegal software to stymie enforcement efforts, and underpaying Philadelphia-area Uber Black drivers by $4.3 million.

For drivers who have often felt at war with Uber, the announcement Tuesday was a surprising about face.

“Uber is now showing care about drivers and they are listening to them,” said Ali Razak, an Uber Black driver and leader of the Philadelphia Limousine Association, adding later, “This is not normal for Uber.”

Lyft, a competitor, has offered tipping through the app for almost five years, generating $250 million in tips for drivers, Lyft reported.

Rana anticipated tipping would mean a 10 percent to 15 percent increase in his income.

Uber showed an example of the new tipping screen in its app

Uber’s tipping function will debut nationwide by July. Passengers will be able to give a driver $1, $2, $5, or a custom amount, according to Uber. The changes announced Tuesday also included charging customers for making a driver wait more than two minutes and for canceling rides more than two minutes after ordering it.

Uber has said the changes have been in the works, and watchers of the company said there are signs the culture could change.

“The tipping example is a really good one in that there’s an action that’s taking place that we can see that’s representative or symbolic of a larger underlying cultural value,” said Nancy Rothbard, chair of the management department at the Wharton School of the University of Pennsylvania.

Uber’s board acknowledged as much in its statement announcing Kalanick’s resignation, which came following the sudden death of his mother last month.

“By stepping away, he’s taking the time to heal from his personal tragedy while giving the company room to fully embrace this new chapter in Uber’s history,” according to the statement.

Peter Cappelli, another Wharton professor in the management department, said that Uber’s brand had taken some serious hits and that Lyft had capitalized. Kalanick drew ire for participating in President Trump’s Advisory Council. The company’s decision to operate during a taxi strike at John F. Kennedy International Airport protesting Trump’s refugee ban led to social media’s #DeleteUber movement. These matters, along with reports of sexism in Uber’s corporate culture, were damaging with those who matter most to the company, Cappelli said.

“The thing that is important to remember about Uber and Lyft is who their customers are,” Cappelli said. “Almost all their customers and all their money come from urban areas, and those areas are Democratic.”

He also noted that Uber is contending with a labor market more friendly for workers.

Uber is valued at nearly $70 billion, and investors have too much committed to risk losing money because of bad behavior. Those who participated in pushing out Kalanick, according to the New York Times, included the venture capital firm First Round Capital, which was cofounded by Josh Kopelman, chairman of the Philadelphia Media Network, which operates the Philadelphia Inquirer, Daily News, and Philly.com. Kopelman did not comment Wednesday.

Whether Uber’s attempt at a culture shift will sink in or is merely cosmetic remains to be seen.

“Culture change takes a lot of time,” Rothbard said. “You’re going to have people throughout that company who are loyal to Kalanick.”

The changes also do not address questions about whether drivers are employees or, as Uber claims, contractors. Efforts to unionize Philadelphia’s drivers won’t end, Razak said.

Rana spent seven years as a taxi driver in Philadelphia. When Uber arrived in 2014, he saw an opportunity to ditch an expensive cab lease and use his own vehicle, but his financial troubles remain. He says he’s hopeful Uber’s steps this week are a sign of things to come.

“This was helpful, what they did,” he said.

 

Editor’s Note: This story has been corrected to accurately report Uber’s new cancellation policy, and the number of drivers in the Philadelphia region.