Lyft offers Educational Benefits to their Drivers

(Bick Bhangoo) #1

In an industry that is known to disassociate itself from its primary "employee" who are legally independent contractors. Lyft has decided its time to invest seriously in its most precious resource. They are now offering Lyft drivers access to a new Education program that will enable drivers access to discounted GED and online college courses.

Most rideshare drivers use Lyft and Uber for part-time work while building a career. One Baltimore based driver Shane Watkins is enrolled in an online course for a bachelor's degree in psychology said that driving allowed her time to both earn money as well as study. The flexible time of rideshare driving allows her the privilege of being at home with her kids when they need her. She drives for many gig companies including Uber, Lyft, Amazon Flex and GrubHub, and said that she turns on the various apps when the time demands it so that she can maximize her income. Most drivers have no particular loyalty. However, this new turn of events led Watkins to state that once she sees the benefit of her app, she will shift her loyalties to Lyft.

Lyft's new pilot starts with Denver based Guild Education, a start-up that connects employees to nonprofit schools providing online courses. The discount offered to Lyft is between 5% to 20%, and the calculations show that a Lyft driver can save up to $4,220 a year when enrolling in their benefits program.

Currently, the courses open to Lyft drivers include GED courses as well as English as a second language. Drivers can enroll and earn an associate, undergraduate and a graduate degree in a variety of subjects ranging from Nursing, IT, business and management, occupational therapy and social work. According to Lyft, around 47% of their drivers do not hold a college degree.

Lyft's General Manager for Denver Gabe Cohen, states that his drivers want to earn a degree and want to either start a business or find a stable workplace and through offering them access to education, Lyft gains a higher loyalty rating as well as better service for their customers.

The severe competition in the ridesharing industry and the continuous search for incentives that will push drivers to work harder for a company have led Lyft to change direction. Rather than continue to disassociate from their drivers, they are now bringing them closer by investing in their driver's future. This creates a reciprocal loyalty effect since drivers respect a company that looks out for their well being more than offering an extra dime per ride.

Lyft has led the "humanitarian" way in the US ridesharing market; the started the in-app tipping which led Uber to add that as well. Drivers are hoping that Lyfts initiative will lead Uber to follow suit. This new benefits package will be available to all drivers that complete 10 rides in the current quarter and continue to provide at least 10 rides a month.

Guild Education's Sales and Partnerships Director Zoe Weintraub stated that the bar was set low on purpose to attract as many participants as possible. The fact that Lyft is the first company to introduce the education benefit program goes a long way to show how they are prepared and are serious about their corporate image as well as competitive expansion.

Amongst other clients that Guild Education serves are Chipotle, a fast food chain. Weintraub said that there is a clear benefit for companies that offer education incentives in high turnover sectors where employees stay on the job for a few months only and then shift to a new place. Their research shows that employees that enroll in an education program stay for much longer periods of time.

There are detractors from the initiative, such as the Dean of Brandeis University's Heller School of Social Policy and Management David Weil. During the Obama administration, Weil led the team that investigated companies suspected of misclassifying workers. Weil said that ridesharing companies utilize business models and contracts to get their "independent contractors" to perform jobs with identical constraints that are similar to fully employed workers. The new initiative that Lyft is offering is not such a great deal and is another instance where Lyft is trying to cover up the way it treats its drivers by providing a benefit that will not encroach their "independent contractor" status.

Our take: you can argue that Lyft and Uber both maintain an unethical "employee" contract that disables drivers from receiving health care premium or matching a 401(k) which are only provided to full employees. However, when Lyft comes along with a plan to help drivers reduce the cost of education, you can only marvel at how people like Weil will detract from them. The independent contractor status is the core of ridesharing; it is how ridesharing grew. The development of an app that allowed private car owners the chance to earn more money by transporting co-workers and people from a location close to their route with them. This blossomed out to become a major means of transportation, and the concept that Weil and such detractors push forward is to negate ridesharing and retain Taxi services since the difference between a taxi service and a ridesharing service is the status of the driver. This leads us to conclude that behind Weil and other detractors are not a social concern for drivers, but an economic concern fueled by taxi backing. We applaud Lyft's latest initiative and hope to see Uber follow suit.

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