We’ve written a lot lately about how Uber and Lyft have been offering drivers big incentives to hit the road, due to the rideshare driver shortage.
However, not all markets are seeing that. Some markets are struggling and drivers are not making enough money to sustain themselves.
Is this due to Uber and Lyft being unprofitable? Did the pandemic put a nail in the coffin? Or is it just the time of year for slowdowns? Let’s explore these concepts together.
Drivers are Seeing Slowing Market Trends
Not all drivers are raking in the dough with incentives galore or even high demand from passengers. Some are seeing a huge decrease in requests, and their wallets are lighter because of it.
This person has posted multiple times on Reddit, most recently to share a one-hour time slot where they were actively online and got two trips for a grand total of $10.10. I think everyone can agree that $10 an hour is not great!
It’s hard to judge based on just one hour, so I looked back on this poster’s previous posts, which showed a sharp decline in earnings overall for the past several months.
The title for this particular post stated, “Welp I held on, but my markets officially dead. After 3 years my earnings went from $20.00 an hour on average to $6 -$12.00 an hour (after expenses). Good luck to all those who continue doing it!”
One person in the comments sarcastically replied, “Who would have thought that jacking up the prices for rides would lead to reduced demands.”
We’ve seen numerous news articles and postings where passengers are complaining about higher prices of rideshare. Many passengers have even claimed that due to higher prices for Uber and Lyft and a decrease in the number of drivers, they’ve switched back to using taxis instead.
Other commenters insist this is the “usual summer slowdown”. Some vacation spots are not necessarily great places to go in the summer. Most people aren’t likely choosing to vacation in Phoenix, AZ at the height of the summer – and many may be choosing other destinations due to wildfires and/or flooding.
The OP then went into more detail on what they’ve been experiencing in their undisclosed market:
It went from bad to worse to terrible real quick.
2 months ago I noticed Uber taking 40-55%, it was questionable if it was even worth it then.
2-3 weeks ago I was getting paid $12-16 after expenses with them taking 60-65% at this point I was trading gas for money while ruining my car.
Today I made $10 before expenses in 1 hour during a work week when people were getting off. Come to find out Uber is taking 75% of the trip fare.
I’m officially done; the only reason I’ll keep the app and my account so I can file taxes next year.
In another thread, someone posted, “They just started charging more and keeping the difference. I started getting a lot more negative ratings because they were unhappy with prices.
Cant downrate Uber but you can s*** on the driver. Comments like “$40 is really high, the driver was great though!” I would get $12 and a 1 star. Super Cool.”
If passengers continue to blame the drivers for the expense and give bad ratings because of it, drivers are going to walk off the platforms and never look back. Being blamed when you have literally no say in the matter is the worst.
Uber and Lyft Profit Problems?
Some believe that part of the problem with Uber and Lyft is that they are desperately trying to turn a profit. They are cutting drivers’ pay, increasing what passengers pay and dropping dead projects as quickly as possible. But is it enough?
This Redditor posted, “The long and short of it is that Uber (and other rideshare companies) have been subsidizing cheap rides with venture capital money.
Now that they’re publicly traded, they’re under pressure to produce a profit, so they keep paying drivers less and taking a larger and larger cut of the fare, sometimes in excess of 60%. So drivers, fed up at being paid less than minimum wage in many cases, have quit and are never coming back.”
It’s also been common knowledge that Uber cycles through drivers pretty quickly. The majority of drivers don’t last long on the platforms.
Eventually, potential drivers are going to run out and maybe we’re seeing that a bit now as the pandemic is calming. We have no idea how many drivers actually stopped driving during the pandemic and how many are planning on returning. Some have returned thanks to incentives, but how many thousands are still off the road?
Between drivers being permanently deactivated (sometimes without cause) to drivers not wanting to come back due to lower pay rates and bad experiences (including carjackings and murder), eventually, there might not actually be enough drivers to go around.
This driver has a strong opinion about the gig economy:
Yeah I agree, I think the “gig economy” is a bit of a failed experiment. The safety net ends up being fully paid for by the state. They are not “agile and highly scalable” they basically could only survive in a rising venture cap driven bubble. Now they’re just another company screwing their employees and throwing them under the bus.
Final Thoughts
It’s a toss of a coin whether rideshare is going to get its grip once more. There are still plenty of people ordering Ubers in most markets.
The real question is the driver’s side. Will drivers come back? Will passengers stay despite the high cost of fares and unpredictability of drivers showing up or not? Stay tuned.
Do you think Uber and Lyft are headed down a hole they can’t dig out of? Are you in a slower market? Is it worthwhile to drive where you live?
-Paula @ RSG
