Is there a simple way to pay drivers more? Maybe – but it might not be one that drivers embrace. Senior RSG contributor John Ince covers that question, plus Lyft’s increase in valuation and renting party buses in this week’s round up.
Uber drivers in New York could earn more with this simple formula [Quartz]
Sum and Substance: “For the 60 percent-plus of all New York City drivers who are full-time drivers—and who provide 80 percent of all rides—work hours are not flexible,” begins a recent report on the earnings of ride-hail drivers, thus neatly dispensing with the myth that Uber drivers in New York can be their own boss and work their own schedule.
The July 2 report was commissioned by the New York City Taxi and Limousine Commission (TLC), the local taxi regulator, in response to concerns raised about the low earnings and high operating costs—all in all, the heavy financial burden—faced by the typical driver in the city today.
The report, written by James Parrott of The New School’s Center for New York City Affairs and Michael Reich of UC Berkeley’s Center on Wage and Employment Dynamics, proposes setting a wage floor of $17.22 an hour. The goal is for drivers to take home $15 an hour after expenses like gas, maintenance, and other vehicle costs…
New York is an odd market for Uber. The vast majority of ride-hail drivers are immigrants with relatively low levels of education. Half of them have children and 54% provide more than half of their family income. Nearly one-fifth are on food stamps. This is not the population of retirees and millennial side-hustlers that you often hear talked about in the gig economy.
…The new Parrott-Reich proposal does something far more clever than de Blasio’s effort: It creates a natural, dynamic cap on drivers based on utilization.
You can think of utilization as the share of time during which an Uber driver has a rider relative to total hours spent logged into the app, which includes time commuting to and from home, cruising for a fare, or driving to pick up a passenger. Parrott and Reich propose that each company be given a utilization rate, as measured by the TLC in the previous quarter. In 2017, the TLC calculated a 58% utilization rate for Uber and Lyft, 50% for Juno, and 70% for Via. …
My Take: This article presents a fascinating idea – create an algorithm that incorporates a “utilization” data point representing how highly utilized each car is on each ridesharing platform. More rides, more riders, less down time, higher utilization.
This algorithm then gets plugged into a formula that determines how much each ridesharing company pays for the privilege of clogging up city streets. Drivers get a guaranteed base rate of $17.22 bucks an hour, which is calculated to give them about minimum wage – after expenses.
The formula promises drivers a little bit more in pay and would probably cost the companies a lot more because there are so many drivers. In other words, it would blow a hole in their business model – so don’t bet on it ever happening. And don’t expect drivers to embrace it either because the higher utilization rate incentivizes drivers to take shared rides like POOL and Lyft Line – which drivers, by and large, dislike.
How many drinks is too many for your Uber or Lyft driver? [Sacramento Bee]
Sum and Substance: A new California law may make your Uber ride home safer and more sober. But not completely.
Beginning this week, the state requires ride-share and taxi drivers to have blood alcohol levels of .04 or less when transporting passengers. Previous law allowed them to ferry passengers with up to .08 blood alcohol in their systems, the same level as most drivers.
The law brings the ride-sharing industry, led by Uber and Lyft, in line with laws that affect drivers of commercial passenger shuttles…
Ride-share companies promote their service as a safe ride home for people who have been out drinking, but have been accused of being lax about driver impairment. Over a one-year period in 2014 and 2015, Uber received 2,000 rider complaints about drivers who were possibly under the influence, and deactivated driver accounts in 574 of those cases, according to a state Public Utilities Commission report…
An Uber representative said the company has improved its internal process since then and has a published “zero tolerance policy for impaired driving and a longstanding commitment to help reduce it in California and across the country.” The company says on its website it will deactivate the account of any driver found to be under the influence of drugs or alcohol while working….
My Take: For all the sensationalized articles about drivers driving impaired and causing something bad to happen, it’s amazing to me that Uber and Lyft have not been more proactive about trying to weed out bad actors. The approach now doesn’t catch anyone violating company policy on alcohol and drugs until after the fact – and in many cases that’s too late.
Just last week, a friend on Facebook reported a scary incident with a driver who was drunk and driving recklessly. She ended the ride early and got out of the car where she requested another driver. The post was flooded with comments from friends who had similar horror stories. It’s actually surprising drivers are allowed to have any alcohol in their system, or that it took this law so long to take effect for the rideshare industry.
Lyft has doubled its valuation, again [Yahoo Finance]
Sum and Substance: Lyft has doubled its valuation in a little more than a year. Once the also-ran in ride hailing, it’s now worth over $15 billion.
The latest jump comes after a recent $600 million funding round… Lyft has partnered with JetBlue (JBLU) to provide rides to passengers during weather delays and cancellations. Walt Disney (DIS) is another partner. “We power what they call Minnie Vans on their Disney World Campus in Orlando: red-and-white polka-dotted minivans that you can request through the regular Lyft app that are powered by Lyft. Their drivers are in character costumes,” according to Baga.
Health care may be the biggest opportunity Baga sees… Lyft is trying to be part of the entire health care continuum. It’s already partnering with the top five health systems in the country. “We have partnered with payers like Blue Cross Blue Shield to bring Lyft as a benefit into their 160 million members,” says Baga. …
My Take: Wouldn’t you know it? Just after I write an article explaining why I wouldn’t invest in Lyft at current prices, a group of investors doubles down and suddenly Lyft is worth twice what it was a year ago. I still think the long term prospects for this industry are not good – primarily because the economics on a per ride basis don’t make sense. It’s a low margin business and that’s not going to change unless the rideshare companies are able to think differently about how they pay drivers.
Skedaddle has had acquisition talks with Uber and Lyft [Techcrunch]
Sum and Substance: Uber and Lyft appear to be pursuing a crowdsourced bus startup called Skedaddle, the latest indication that the ride-hailing companies want to build businesses that cover every mode of transit from last-mile solutions like scooters and bikes to inter-city travel in cars and high-capacity vehicles for longer distances.
Uber has been in discussions to acquire Skedaddle for more than a month, an unnamed source familiar with the talks told TechCrunch. Skedaddle was also in talks with Lyft more recently, another source confirmed.
… Skedaddle launched in 2015 to help people find a low-cost and easy way to travel to out-of-town events like music festivals. Think of it as rideshare, but to another town, not to the bar down the street. Skedaddle developed an app that lets individuals crowdsource private bus rides. Once there’s demand for a ride to a destination — a music festival or say, to a trailhead at a popular hiking spot — the bus is booked. The bus then picks up the confirmed riders within the origin city.
The company, which is based in Boston and New York, has largely stuck to the East Coast. But it’s recently expanded thanks in part to the Women’s March on Washington held in March 2017. Skedaddle received media attention earlier this year when the company said it transported more than 11,000 individuals to the Women’s March in Washington, D.C., from places as far away as Kansas.
Uber and Lyft have both been making moves in recent months toward a multi-modal ecosystem, a jargon term that basically means having a market share in various forms of transportation. A long-distance rideshare product that could be used as commuter transit or to events is a missing piece for both companies…
My Take: Uber’s tentacles are reaching out further and further. This is a curious business to be in – how big is the party bus market? Then again, while I can’t imagine renting a party bus for all my friends, maybe it’s something the younger generations do.
Readers, what do you think of this week’s round up?
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-John @ RSG