When Uber cut fares in Washington D.C. last February, the Observer spoke to several drivers and learned the price reduction had left many scrambling to make ends meet. The move was a tactic by the multi-billion dollar company to gain ground in the taxi app war, but this customer perk came at a heavy cost to the company’s workforce. Now, following the recent fare cuts in more than 100 cities, Uber’s employees are being exploited nationwide, and to an even greater extent. Fares have been cut by as much as 45 percent in some cities, and while Uber is guaranteeing this will actually lead to larger earnings for drivers, the opposite has already proven to be true—drivers are reporting they’re making as little as $2.89 per hour.
“Yes, the rate cuts have affected my earnings. I am less motivated to go out and drive. Instead, I’m focusing more on my other business, which is already making me more money per week than I earned through Uber on New Years week,” one New Jersey Uber driver, who asked to remain anonymous, told the Observer via Facebook messenger. He added that the fare cuts have also reduced the level of customer service he provides. “I now do not wait over five minutes for a passenger to show up when I arrive, because I get $5 for a cancel fee rather than driving them three miles to get the same $5. I stopped offering bottled water to my passengers. If the passenger did not put in the correct pickup address I won’t drive unpaid miles to the correct address if they call me, I’ll just collect the cancellation fee” he said.
In Facebook groups for Uber drivers, many others have also reported not picking up passengers because their rides won’t turn a profit. “I generally accept all rides, and then cancel on the ones I am not willing to take. Before I cancel though, I send this text: ‘Due to Uber’s latest pay cuts in the Hampton Roads area, it is not financially possible to complete your ride request. Learn more here: tiny.cc/hr-uber,'” wrote one Virginia driver on Facebook.
According to Uber, lower fares will increase demand and, subsequently, the amount of money drivers can earn. It’s been proven, time and time again, however, that the result is not the fairytale Uber is pushing. As we explained when reporting on the Washington D.C. fare cuts last year, any small increase in pay is for a substantial amount of work. A closer look at a chart Uber supplied (but didn’t thoroughly explain) to drivers to convince them the price cuts are a good thing, a driver would have to increase productivity by 45 percent to earn only a few more dollars under the lower fares.
“I don’t think there’s a single driver that’s been around for any amount of time that thinks lower fares means that they’re going to make more. I don’t buy that for one second,” Harry Campbell, who runs The Rideshare Guy, a popular blog and podcast on the subject, told Bloomberg.
In just the short time since the fare cuts were announced, Uber drivers have already taken to social media to share just how much they’re earning. According to Not Cool Uber, a living document currently tracking this issue on Medium, drivers are reporting hourly earnings in the realm of $2.89 and $3.22, and, after vehicle fees are taken for those who must pay Uber for their cars, $0. Additionally, it’s important to note that these earnings are drivers’ totals before spending any money on gas or maintenance.
As outrage begins to grow, drivers have began protesting and circulating a boycott flyer online. At a protest rally in Philadelphia, Uber Black drivers announced a plan to sue the company over their status as independent contractors, which they say leads to unfair wages, according to Buzzfeed. Others plan to begin driving for Lyft instead, according to Mike Dean of Rideshare Report, who spoke to several protesting Uber drivers at a recent rally in San Francisco. There have also been large protest rallies in Houston and Tampa, among other cities.
Uber is defending the move by touting “hourly guarantees,” meaning that if a driver makes less than a certain amount, the company will fork up the cash for the difference. A closer look at this structure, however, shows it’s not the salary saver Uber is making it out to be. First, not all drivers even qualify for the hourly guarantees from the beginning, and how drivers are chosen for the guarantee program isn’t clear. Secondly, qualifying drivers must then get a certain number of rides and have a certain acceptance rate. Courtesy of Rideshare Guy, here are the requirements for Detroit, which he says have been upped since last time Uber cut fares and implemented the guarantee system:
At first sight, those guaranteed wages ranging from $10 to $20 don’t seem too bad, but they’re before Uber takes its 20 percent cut. What’s more, surge pricing is of virtually no benefit to the drivers under this system.
“You know that surge pricing you get all excited about? It means very little now because whatever you make on surge will go towards your hourly guarantee,” Mr. Campbell writes in a post. “Last year I found that I would have several slow hours and get a big surge ride at 2 AM. It didn’t matter though because those rides were still under what I made via the guaranteed hourly, and all I did was take a lot of risk driving drunk people for no extra benefit.”
And then there’s the fact that, in the past, hourly guarantees only lasted so long before they disappeared, according to BuzzFeed.
It’s also obvious that the company knows lower driver earnings will be the outcome of the fare cuts. It’s happened before, and Uber has even found itself needing to reverse the cuts in the past. Besides, there’s something to be said about the way Uber went about announcing the price cuts. The news came out on a Friday night (when it was least likely to be scrutinized by the media), and drivers weren’t notified ahead of time.
Uber has not responded to our request for comment.