Uber, Lyft Sweeten Job Perks Amid Driver Shortage, Lofty Fares (wsj.com) 51
A shortage of drivers in the U.S. is propelling prices for Uber and Lyft rides to record highs and pushing the services to rethink how they attract gig workers. From a report: Uber and Lyft are pouring millions of dollars into incentives for drivers to return, a short-term fix that has helped alleviate the scarcity and tempered fare increases in some areas but that has also raised the companies' costs. The labor crunch isn't projected to end anytime soon. Some analysts expect the problem will persist through the third quarter, pressuring Uber and Lyft to deal with shifting dynamics of gig labor that they acknowledge will require long-term solutions.
Executives say the model they built their businesses on -- luring riders with deep discounts and then incentivizing drivers to provide those rides -- can't be the model that sustains them. "This is a moment of deep introspection and reflection for a company like ours to pause and say, 'How do we make the proposition for drivers more attractive longer term?" said Carrol Chang, Uber's chief of driver operations for the U.S. and Canada. "It is absolutely a reckoning," she said. Ms. Chang's team, tasked with managing the shortage for Uber, is in talks to fund education and career-building programs for drivers. Lyft is exploring a new partnership aimed at reducing drivers' expenses, which could involve sizable discounts on gas or insurance or help with buying vehicles, according to a person familiar with its plans. Both companies recently began emailing drivers more insights into earnings opportunities, previously a black box for them.
Executives say the model they built their businesses on -- luring riders with deep discounts and then incentivizing drivers to provide those rides -- can't be the model that sustains them. "This is a moment of deep introspection and reflection for a company like ours to pause and say, 'How do we make the proposition for drivers more attractive longer term?" said Carrol Chang, Uber's chief of driver operations for the U.S. and Canada. "It is absolutely a reckoning," she said. Ms. Chang's team, tasked with managing the shortage for Uber, is in talks to fund education and career-building programs for drivers. Lyft is exploring a new partnership aimed at reducing drivers' expenses, which could involve sizable discounts on gas or insurance or help with buying vehicles, according to a person familiar with its plans. Both companies recently began emailing drivers more insights into earnings opportunities, previously a black box for them.
Isn't this a question for the SEC? (Score:2)
There's a disconnect here that needs to be investigated - did the realization that the Uber/Lyft business model is unsustainable come about because of Covid or were the companies aware that long term, they didn't have an approach that would scale and thrive indefiinetly?
If I were an investor, I'd really want to know the answer to that question and have somebody like the SEC validate the answer as well as hold the company executives accountable.
Re:Isn't this a question for the SEC? (Score:5, Interesting)
There's a disconnect here that needs to be investigated - did the realization that the Uber/Lyft business model is unsustainable come about because of Covid or were the companies aware that long term, they didn't have an approach that would scale and thrive indefiinetly?
If I were an investor, I'd really want to know the answer to that question and have somebody like the SEC validate the answer as well as hold the company executives accountable.
They were losing money on every ride, and then tried to make it up on volume. Seriously.
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I think their goal was really to drive competitors out of business with predatory prices and then raises prices to slightly higher than their competitors used to price once they had control of the market. Plus, use robotic company owned vehicles eventually.
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Pretty dumb for an industry with very little pricing power. Uber and Lyft (well really, investors) are just going to find out that they can't do anything anybody else can't do. If you wanna compete with them, you need .. a vehicle and a phone. The platform technology is commoditized. They're splitting the costs of the trip with the customer. This setup doesn't last forever. A lot of investors are going to wake up one day and realize their money's never coming back.
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Their goal was to get the market locked in...
They were never the cheapest, there were always individual drivers and small cab firms providing cheaper service - but how do you locate these drivers? What Uber provided was a central place where you could find a large pool of drivers, making it far more convenient for the user - especially when you were in a new location or one you don't visit frequently.
The taxi ranks and car rental desks in airports work in the same way, you could get cheaper elsewhere but if
Varied by market (Score:3)
Actually, I'd argue that sometimes they were the cheapest. Uber, Lyft and such were in numerous markets around the world, after all. In some areas the Taxi charge is set by consensus/regulation, you'll be charged the same for any ride by an official taxi in the area.
As I understand it, where Uber/Lyft fit into the individual markets depended upon the market. In some areas they're actually more expensive than the Taxis - but you could actually get a car NOT stinking of vomit, so bonus there. Service was
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From a cost stand point, Uber and Lyft can never compete. The costs of hire car are car purchase, maintenance, insurance, and drivers. Uber and Lyft put all those on individual drivers. The thing is fleet management and maintenance has economies of scale, that Uber and Lyft's individual drivers can never touch. So, the only option for them is to squeeze that additional cost out of the drivers and somehow also squeeze out a profit for themselves. Of course, when they squeeze drivers too much then people won'
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I think their goal was really to drive competitors out of business with predatory prices and then raises prices to slightly higher than their competitors used to price once they had control of the market. Plus, use robotic company owned vehicles eventually.
The goal was to get the VC money until they could manage an over-inflated IPO. The venture capitalists would be fooled into thinking they were the next Amazon whilst they had no plans for profitability above getting lots of media attention. This business model has been failing as the IPOs haven't been as lucrative as they wanted as investors are realising that being "edgy" and "disruptive" isn't the same as profitable.. The second tech bubble burst a while ago, well not exactly burst rather deflated rapidly
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If I had mod points, I'd mod you funny. And yet you're serious. Seriously funny.
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This is a question that was asked and answered long ago, it's nothing new by any stretch. The long term goal was autonomous driving.
Now, autonomous driving was based on lies in terms of the dates, 5 years ago it was "7-10 years away" and right now it's at least 7-10 more years away, so there is that but in terms of their strategy it's old news.
Re:Isn't this a question for the SEC? (Score:4, Insightful)
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Right, but outside of very carefully controlled circumstances and very much walled-in locations self driving has always been overhyped. It's an extremely difficult problem to solve, and companies like Tesla way overpromised.
We will certainly get there, I heard some bobble head on NPR claiming our whole approach was wrong and it will basically never work, which I think is silly. But nor do I think it's "right around the corner" in terms of (full, complete self driving) being in even 1% of cars in the next de
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and go there to find a free taxi
But if you are not there already, how would you get there? Hail a cab?
Isn't this how it's supposed to work? (Score:5, Insightful)
Take out the cost of buying a medallion, required for driving a cab in many places, and the cost of a taxi goes way down. So much so you're now competing with nothing to do all day types willing to do gig work at sub-minimum wage, because they aren't smart enough to factor in all costs. And those sub-minimum wage type will either figure it out, or their joy in talking to strangers will make it worthwhile.
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Obviously the capitalists don't want it to work that way because it means they have to pay market rate for staff.
One of the ways they try to mitigate supply/demand pricing is by making Uber drivers independent contractors rather than employees. Another is to lobby hard to make sure there are enough desperate people willing to take low paid jobs just to keep a roof over their head and food on the table that they get applicants.
COVID has thrown a spanner into the works of their schemes and wages are rising, c
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I don't mind paying more due to better worker's rights and conditions, because those things raise all boats and mean I will have more money to afford them.
Look at places like Norway and Sweden. Very high tax rates, very high wages, very high levels of happiness and quality of life. 30% of people in Norway, Sweden and Denmark work for the government, and the government owns stakes in many private companies and operates a bit like a union, doing collective bargaining for everyone.
If there is a system that pro
Their model is built on one thing (Score:5, Interesting)
I've taken several Uber/Lyft rides over the years and every one had the same story of being laid off from a decent paying job but having a car left over from those days. Uber is basically extracting that equity from those people.
That wasn't going to last forever. Eventually that equity was going to be used up, and without a boom cycle to replace it (e.g. a
On top of that what few drivers are left are delivering groceries, which is safer and more profitable.
Mix in the lack of students to take advantage of and yeah, they're going to have problems.
Re:Their model is built on one thing (Score:4, Interesting)
With lockdown orders taking effect in many places, drivers often had no choice but to start doing deliveries since demand for deliveries increased while passenger numbers plummeted.
But while carrying passengers generally requires a large car with several seats plus space for bags, delivering food is much more profitable on a small motorbike - especially takeout meals where you can't load up a vehicle with multiple orders as they will go cold before you finish delivering them.
I ordered a lot of takeout while we had a lockdown in effect, and there were a handful of orders that got delivered by car but once you figure in the cost of the car, the fuel, etc, even assuming that the traffic was much lower than usual due to lockdown, it probably still wasn't very profitable for the driver.
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I've taken several Uber/Lyft rides over the years and every one had the same story of being laid off from a decent paying job but having a car left over from those days. Uber is basically extracting that equity from those people.
So, rather like delivering pizza?
as an 1099'er they can't say no to having an gun! (Score:2)
as an 1099'er they can't say no to having an gun! Unless they want to make you w2 and pay at least minwage for all hours worked + the full IRS mileage.
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What? Are you telling me they should turn into a TAXI company? How dare you! They're a ride sharing company!
Guaranteed minimum wage... (Score:3)
...and provide basic benefits such as health insurance and retirement plans, that is what these companies need to do to attract more workers.
Re: country still hasn't got proper healthcare yet (Score:2)
It never will.
They still don't get it. (Score:4, Informative)
'How do we make the proposition for drivers more attractive longer term?"
Pay the drivers more, you cheap fucks.
Re:They still don't get it. (Score:4, Informative)
That money has to come from somewhere. All that means is the cost of rides will go up and subsequently demand will go down, or someone else who is still willing to work for the lower wages will step in.
Given lockdowns and home working, the number of journeys people make has gone down significantly.
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Uber spent a lot of money on its failed autonomous driving systems and on paying damaged to people who complained about its toxic work environment and C level behaviour. That money could have been invested in drivers instead. Or just slash wages at the top, redistribute the cash to the bottom.
In some places companies exist primarily to make profit and get the executive level employees and shareholders rich. In other places they exist to provide employment. Guess which offers the better wages.
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It can come from money bloated venture capitalists, just like it does now.
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Sounds like a failed business model to me. You can't build a model that skirts all classification/worker protection laws, lobby millions to bypass them, and then be upset when people finally figure out that their "wage" is subsidizing the low fares that give you your target market.
They suck.
It's always about wages (Score:1)
Let's be clear. Both of these companies lobby aggressively in California to not pay any increase in wages or benefits. They do not want gig workers to be considered regular workers. They lobbied against that state proposition. They won.
Sure, they revolutionized the taxi industry. But they are not profitable right now. But whatever, these companies will basically do anything but pay workers more (the amount of money lobbied spent is ridiculous). Anti-worker and anti-union practices. They can shove it.
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Didn't need even one single law passed. Which is good - you don't need a long-term solution for a short term issue.
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How about this perk? (Score:2)
Increased pay!
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And it took zero government intervention. (Score:2)
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Lyft is exploring reducing drivers' expenses (Score:2)
So your plan is to subsidize them. Wow. How many MBAs did it take to come up with that? Now how many MBAs will it take to point out subsidizing those costs is not a sustainable model. At some point you want to end the subsidy.
The Problem is obvious (Score:1)
Not so difficult, really (Score:2)
"How do we make the proposition for drivers more attractive longer term?" Pay them better by raising fares and reducing the company's cut. Make them employees and give them proper benefits.
The ride share companies are a better experience for passengers than traditional taxis. You can call them with an app. You don't have to communicate your location or your destination by voice to a dispatcher or driver. The lack of restrictive rules on vehicles means that they can use a wider range, including SUVs for larg