Since December, Uber has rolled out a spate of new changes for California drivers, all ostensibly to make drivers feel more like independent contractors. But that’s the question: are drivers really getting more independence from Uber, or is this all an illusion? Senior RSG contributor Jay Cradeur outlines five reasons why Uber’s changes don’t actually benefit drivers.
Yesterday, I was taking my daily five-mile walk. I am training for the San Francisco Marathon and this is how it starts. As I was walking, I was thinking about the latest change Uber has made for drivers in Sacramento, Palm Springs, and Santa Barbara – that gives them the ability to ‘set their own rates’?
As I walked, I noticed I was getting angry. I thought to myself, “Why don’t Uber and Lyft just bite the bullet and make drivers employees?”
This article will look at the perception of what Uber is doing versus the reality for the drivers on the street. I will also add my own perspective on what you and I can do about it.
1. Drivers Can’t Really Set Their Rates
In three select markets, Uber is giving drivers the opportunity to impact the price of a ride from the airport using a multiplier. Let’s say I want to get 2X (double my fee) for my ride. Then I can set my price at 2X. That is the perception Uber would like you to have. The reality is that I will not get any rides at 2X as most drivers are going to stay at 1X because they want to get a ride. If you look at the fine print, Uber will assign rides to the lowest priced driver first. 1X rides will go first, followed by 1.5X rides, and then 1.8X rides, and then 2X rides.
Since all drivers will understand this is how the system works, there will be a natural race to the bottom. The lowest price gets the business. Why would anyone increase the price and reduce their chances of getting a ride?
What you can do: I suggest leaving the price alone. Low price wins, so be that low price. Pick up your passenger and be on your way. The net effect is there is no effect.
2. Drivers Don’t Really Have a Multiplier Surge
Going back to the old surge multiplier seems like a great feature. For the first couple of years that I drove for Uber and Lyft, all we knew was multiplier surge. Uber’s surge looked like 1.5X or 3X, and once I got 5.5X. Lyft’s program was called Prime Time and it looked like 200% (3x) or 300% (4x) or 500% (6x!), which I saw once on New Year’s Day at 1 AM.
Well, Uber, for the time being, has brought this back. That is the perception. And it was the reality for about one week until we got the news the drivers can lower the surge to 1X, thereby eliminating the surge. Here again, we will see a race to the bottom as most savvy drivers will eliminate the surge in order to complete and get a ride.
What you can do: If you are in a market other than Sacramento, Santa Barbara or Palm Springs, then you are in good shape. There is nothing to do and you will probably make about the same as when you had penny surge. If you are in Sacramento, Santa Barbara or Palm Springs, I recommend you eliminate the surge and ensure you will get a quick ride.
3. Drivers Can’t Really Chose To Offer Less Expensive Rides
Remember, multiplier surge is back. But now if you are driving in an area that has a surge of, for example, 1.5X, you can lower your price down to 1X (or no multiplier surge). Here we see that Uber giveth and then Uber taketh away.
Let me ask you a question. If you are driving in an area with a 1.5X surge, and you know that other drivers are lowering their price to 1X in order to be guaranteed a quick ride, wouldn’t you do the same?
Think about it for a minute. What are your options? Wait and hope that no one is lowering their price? Wait and watch the surge diminish naturally? No, I believe you will do what I will do and lower the price to 1X and get a ride and keep working. Especially during those times where you’re sitting in the middle of a surge and not getting a ride!
The perception is that drivers are being given flexibility and control. However, market conditions are dictating your every move.
Drivers don’t have any real control. You will lower your price, and make less money, in order to stay busy and keep working. We only make money when someone is in our car. Waiting does not pay the bills.
What you can do: Keep your rates as low as possible and stay busy.
4. These Bonus Changes Do Not Benefit Drivers
We’re working on a more in-depth analysis but if I had to guess, the new Quest bonus will provide less money for the drivers. Instead of a flat dollar bonus, drivers are being offered a reduced service fee percentage. Add to this the removal of the consecutive ride bonus and my guess is that Uber will be paying out less than before.
Otherwise, why would Uber do all this? Uber is in business to increase revenue and reduce expenses. As we have seen in the past when lower per-mile and higher per-minute rates were presented as better for the drivers, we all realized quite quickly that we were making less money. I suspect the same will be true with this bonus reconfiguration
What you can do: There is not much we can do. We must take what Uber gives us. Since the majority of our earnings comes from the rides and not from bonuses, even if the bonuses are smaller, they will have a minimal impact on your weekly revenue. Drive the streets of your city and make money.
5. Drivers Are Not Really Independent Contractors
This is what it all boils down to. All these actions are in response to California’s new law, AB5. Uber is making changes to give the perception that drivers are true independent contractors. In order for this to be true, drivers must pass this test:
“The Driver is free from the control and direction of Uber in connection with the performance of the work, both under the contract for the performance of the work and in fact.”
Do you, dear driver, feel at all free from the control and direction of Uber? Of course, you don’t. Uber is throwing you a bone by allowing you to adjust Uber’s price at the airport. It is not your price, it is Uber’s price. Uber is setting the per minute and per mile rates and still controls the game. We don’t control our pricing, nor our bonuses, nor when we are deactivated.
What you can do: So what can you do? You can keep driving. This thing won’t be resolved any time soon. In addition, for now, this really only pertains to California drivers. I’m not sure how worried I would be about these changes if I lived in another state.
So, for California drivers, we can work with the changes. Figure out what is best for you and do it. Get to work on your next career. Check out our Life After Rideshare series. Get inspired. Be the change you want to see in your life. Whatever you do, don’t expect Uber or Lyft to come through for you.
I also recommend you and I don’t need to worry about it. At this point in time, we are independent contractors and nothing has significantly changed. Until something actually happens in court, continue on just like nothing is happening.
We will adjust and adapt. We will get up, fill up our cars with gas, turn on the app, and drive passengers around. Enjoy it.
I can only hope that some judge has the courage to rule against Uber and expose this charade. We are not independent contractors. You can put as much lipstick on this pig as you like and it will still be a pig. I wonder if Uber even considered the easy route of making drivers employees. All this legal expense, all the brainpower being paid to come up with these makeshift changes, the millions of dollars to put a measure on the next ballot, it must be expensive.
Without a doubt, Uber has considered this and it must make financial sense to do what they are doing. I believe they will fail, and then we will see what Uber does next.
What you can do: Let Uber be Uber. You be you. Fire up a nice cup of joe. Get a piece of paper and a pen and write down what you are going to do today to move you closer to what you really want to be doing.
There will be a life after Uber. With all these changes, it feels like a good time to refocus and take action. Have a great day and be safe out there.
Readers, do you think Uber’s changes benefit drivers? Are you worried if you are not a California driver?
-Jay @ RSG