Uber and Lyft fares surge as pandemic recedes – but drivers don’t get ‘piece of pie’
Socializing, parties and late night trips are all coming back as the coronavirus pandemic recedes in the US and along with them has come a surge in the price of calling a cab. It’s good news for Uber and Lyft, but for the rideshare drivers who were hit so hard by the pandemic? Not so much.
“We’re making less than normal,” said Robert Eaton of Reno, Nevada, a full-time Uber driver for over two years. He tries to work as many hours as possible every week to provide for his family, citing his most common shift is 16 hours, noon to 4am. “While fares have skyrocketed in this market, the drivers’ pay has not been raised at all.”
Eaton said several recent changes have driven down pay for drivers, including an increased cancellation waiting time, a reduction in minimum pay for long distance trips.
“As there has been a driver’s shortage in my area, Uber continues to pay lower cost per mile and offer more unattainable so-called bonuses. They’re chewing their way through a never-ending supply of drivers who think they can get bonuses only to find out that it’s nearly impossible,” added Eaton.
Giovanny Tarrago, a full-time Uber driver for four years in the Chicago, Illinois area, said rideshare drivers used to receive significantly higher portions of fares, but the percentage Uber and Lyft take from fares and distribute to drivers for compensation has reduced over the years from around 60% to 75% to a fraction of the fare in many cases. Some Uber drivers have reported even being charged for providing passengers with rides, cases that have been attributed to software glitches on the app.
“What’s happening now is Uber and Lyft are charging high in demand prices to the passengers charging them surge rates and most of the time the rates aren’t passed off evenly or fairly to drivers,” said Tarrago. “Drivers are not getting their rightful piece of the pie when riders are charged very high fares, and since fares are already so high the riders are less likely to tip on the app.”
Uber and Lyft drivers in California have reported rollback of features and pay cuts over the past several months after Proposition 22 – a ballot measure that allowed ridesharing companies to classify their drivers as “independent contractors”, rather than “employees” – went into effect last November after an expensive lobbying effort by gig companies.
The companies are currently spending millions of dollars on public relations efforts around the US, including donating to community groups through political action committees, to publish opinion stories supporting Uber and Lyft and oppose efforts to classify gig workers as employees.
Nicole Moore, an organizer with Rideshare Drivers United in Los Angeles, California, noted Uber reduced mileage rates from Los Angeles International Airport earlier this year, cutting out an important source of revenue for drivers in the area as riders in cities around the US, particularly airports, have reported long wait times and significantly higher fares.
“The companies found a great solution to the problem, drivers can no longer see what passengers pay most of the time,” said Moore in regards to Uber shifting back to a model in California used in the rest of the US where drivers’ compensation is based on time and distance driving, with added surge bonuses. “We have always been their piggy bank. They squeeze drivers when they need cash. They need a lot of cash now so they are squeezing drivers and passengers right now.”
Ken Parks, an Uber driver in the Memphis, Tennessee, area for over two years explained that based on his experience if riders are charged surge pricing, for example a ride that normally costs $10 is raised to $30, drivers only receive an extra two or three dollars from that surge.
“Drivers’ wages are not directly tied to surge pricing, so we end up getting the short end of the stick,” said Parks. “They are charging surge rates to riders and drivers see Uber take over 50% of the fare. At the end of the day we are trading wear and tear on our vehicles for exactly $.06 cents over the federal mileage write off and that’s after three years of consistent rate cuts.”
Uber CEO Dara Khosrowshahi, whose total compensation from the company decreased from $42.4m in 2019 to $12.2m in 2020, recently argued on Twitter that claims that drivers were receiving decreased shares of fare increases were false, citing proportional statistics to data Uber has refused to publicly disclose on drivers’ earnings. Uber reported losses of $6.77bn in 2020 and $8.51bn in 2019.
His comments were in response to a Washington Post article where drivers in California argued their loss of control over rides and pricing has essentially resulted in pay cuts.
A spokesperson for Uber declined to provide further details on the data cited by the Uber CEO, but added in a statement. “Surge pricing is designed to balance supply and demand in our marketplace. It goes into effect automatically when there are more riders in a given area than available drivers. For riders, it’s a premium: demand decreases as some riders wait for more drivers to become available, and the marketplace rebalances. For drivers, it’s an incentive to serve busier areas. So while rider pricing and driver pay are calculated separately in the US, more surge leads to more earnings by design.”
That’s not how Lisa Zambri Hull, a full-time Uber driver in Pittsburgh, Pennsylvania, sees it. She said support services for drivers, such as hub centers and support lines, have been cut, and drivers aren’t paid for tasks such as returning lost items left in their cars to riders or fully compensated for cleaning fees or at all for car maintenance.
“I’m making less now than during the middle of the pandemic. I have driven this whole pandemic and wages were better from last June to March. Since this May too many drivers are returning to work and there are not enough passengers to merit it,”said Zambri Hull. ‘‘Surges are down for drivers, while up for passengers. Where is all the extra money going? Who knows, not to our pockets.“