It looks like Uber is lowering rates again, but in addition to decreasing mile rates, they’re also increasing time rates. On the surface, this doesn’t seem to make a huge difference in what drivers will get paid, but as any veteran driver will tell you, it’s important to have a healthy dose of skepticism when it comes to Uber and their rate changes. Let’s find out if drivers will be getting paid more or less after this rate change.
Earlier this year, researchers at Stanford and working with Uber released an interesting study about driver earnings, driver retention, and the wage gap between male and female drivers. Today, senior RSG contributor Christian Perea breaks down the study for us and explains some of its conclusions. Let us know what you think about the survey’s conclusions in the comments below.
Researchers from Uber and Stanford recently released a study showing that women make 7% less per hour than men as drivers on the Uber platform. They also explained the reasons why there’s a difference.
But in addition to the gender wage gap, this study actually revealed A TON of data about driving for Uber between 2015 and 2017. This study revealed hourly pay for drivers, how many drivers there are, how driving experience affects hourly pay, and that about 70% of drivers stop driving within 6 months.
You see, getting to the conclusion of why women earned 7% less per hour than men required the economists to unpack a lot of other data about driving. I’ll outline some of the most interesting data points below.
Uber has consistently cut rates in January for three years in a row now. In fact, it’s actually happened on the same day the last couple years and, as you can imagine, it’s not a happy day for drivers. Nobody likes having their pay cut overnight, but Uber has this bad habit of cutting prices AND telling drivers it’s going to be good for them too! They argue that lower prices increase demand and allow drivers to increase their utilization rate, thus making more money.
Yet, after three years of these rate cuts, I have yet to find a single driver tell me they make more money after fare cuts than they did before. Oh, and there’s the fact that rate cuts mean drivers have to drive more miles to make the same amount of money, thus increasing their expenses, which Uber never takes into account. I think rate cuts are bad enough, but Uber’s messaging around rate cuts has always caused a lot of resentment among drivers.
In the past, when Uber has cut rates, there is usually a lot of talk about driver strikes and organizing, but it typically hasn’t amounted to much. Every single driver is directly affected by rate cuts, but since a majority of drivers are part-timers doing only 10 hours a week or less, you have a lot of people who aren’t as invested in this job as someone who depends on it for their full-time source of income. There may be a lot of justifiable anger over rate cuts, but a lot of drivers just end up quitting, or scaling back their hours, and the ones who do stay are forced to work more and make less.
On Friday afternoon, Uber posted an article on their blog and let some media outlets know that they would be cutting rates in 100 cities in the US and Canada. In true Uber fashion, they made the announcement after business hours on a Friday and didn’t even e-mail drivers about it.
December and January are typically slow months for rideshare drivers, and Uber has actually pulled this stunt three years in a row now. In fact, they wrote an identical blog post last year, that even had the same title and was released on the same day they announced massive fare cuts in 48 cities.
You can read today’s (2016) Uber’s announcement here, but the gist of it is that Uber will be cutting fares in order to increase passenger demand and then drivers will make more money. Unfortunately, we’ve been through this before, and that is a total lie. When rates go down, it may increase passenger demand but drivers most definitely make less. And if they’re doing more trips per hour, their expenses are also higher. [Read more…]
Before I dig in, I just wanted to give a quick shout-out and word of thanks to Jack Ross who’s been doing the round-ups for the past few months pro-bono and been doing a great job at that. Jack is moving on to bigger and better things at VICE as a sports contributor so today I’ll be handling the round-up.
Well the big news in rideshare happened yesterday afternoon when Uber announced a slew of fare cuts in 48 cities across the US. Most cuts were in the 10-25% range but there were a few cities that saw their mileage rate cut in half. Along with the cuts, Uber also rolled out a guarantee for peak hours that ranged from $14-$20/hr depending on the city and a guarantee for non-peak hours that ranged from $10-$14/hr. This number is before Uber’s 20-25% commission so you can see that these guarantees aren’t really guaranteeing a whole lot.
Uber’s Announcement: Beating The Winter Slump
I’ll be releasing an in-depth YouTube video this weekend (now live below) with my thoughts on the whole situation but for now I think a wait and see approach is best. Obviously there are a lot of drivers who are upset and for good reason, but the only thing I can possibly think of as to why Uber has made these cuts is to get more passengers out on the road. As many of you have probably realized, the beginning of the year is a slow time for rideshare (especially compared to the Holidays) drivers and Uber is all about growth. [Read more…]