Uber has been making significant upgrades to the driver experience over the past few months, but one thing missing from all of these announcements is a rate increase. Tipping and additional destination filters will have a positive effect on a driver’s bottom line, but they don’t address the core issue for many people: drivers just aren’t paid enough.
Uber and Lyft cut rates 3 years in a row from 2014-2016, so drivers are making less today than they ever have. While Uber has always claimed lower rates mean higher utilization and thus higher earnings for drivers, I have never bought that argument. Lowering rates helps Uber grow its market share, but it also means more dissatisfied drivers and higher churn rates since drivers care most about pay and flexibility.
Uber has been able to make it work with lower rates because there is a learning curve for drivers and the company is able to spend heavily on recruiting new drivers to replace those that are quitting. But with losses in the billions of dollars a year, that model isn’t sustainable forever.
And while a lot of the positive changes Uber is making as part of the 180 Days of Change campaign are a good thing, the real question is are they enough? If Uber is going to tout driving as a revolutionary new employment opportunity and wants more satisfied drivers, shouldn’t they be paying the average driver more than minimum wage?