Uber just got cheaper in eighty cities in the US and Canada, and Uber drivers are pissed. “We’re reducing prices to heat up demand,” the company wrote in an e-mail to drivers for its Uber X and Uber XL services. Demand, many drivers point out, does not necessarily mean higher earnings for them, and they claim instead they’re subsidizing the new rates with paltry earnings.
Drivers claim that while Uber continues making the same rate as before the rate cut, their earnings are directly impacted; indeed, in some markets, they will be subsidizing the costs to chauffeur passengers. Since Uber actively prohibits drivers from collecting data in its driver agreement, there is not much insight available publicly into Uber driver data.
One Denver driver, in breach of his Uber contract, supplied me with his pre-rate cut driver data in spreadsheet form. His data demonstrated that, on 75% of rides, his net earnings were less than $5 and 15% of his driver fares net less than $1 after taxes and expenses. Denver is one of the higher paying markets for Uber drivers.
His data demonstrated that, on minimum fare rides, which account for 30% of total driver rides, Uber deducted nearly 50% of the total fare for itself. Before the recent rate cut, and after taxes and expenses, he earned between 55 cents and 90 cents per mile on minimum fares, which comprised 30% of his rides. Coming up with how much a driver earns per mile is difficult because Uber does not calculate miles driven towards a passenger.
The 2015 IRS estimate for costs to operate a vehicle is 57.5 cents per mile. Drivers in multiple North American cities reported making less than this amount per mile after the new rate cuts, such as in Detroit where drivers earn 30 cents per mile.
When the tech giant launched its new cost structure, Uber marketed a new “guarantee” to drivers. In order to be eligible for the guarantee, drivers must accept two rides per hour (sometimes demand does not allow for this) and be online during pre-stipulated “peak” hours. Otherwise, the guarantee is voided. I spoke with one former Detroit Uber driver, where rates are among the lowest, who stopped driving after the new rates were announced.
“It’s a joke,” the driver, who wished to stay anonymous, said.
Can’t make any money now, and the guarantees are a joke too.
The driver notes that Uber rates were already less expensive than a taxi’s in his city. “Now this is a minimum wage job at best,” he noted.
YouTube personality Uber Man, whose city earns nearly twice as much as Detroit, released a video in which he quit in protest of the new Uber rates. He calls the rate cuts “drastic and widespread.” He cites that many drivers will now essentially be paying to drive their passengers around, such as in Detroit. Drivers claim that Uber will be making the same exact money as before.
“The ones that are still driving are the ones that have no clue what their actual expenses are,” Colorado Springs Uber driver Karac Kirby said, listing some of the expenses.
“I do need the money, but there is none to be made.”
In Houston, drivers are striking, and claim to have caused a false surge in the area due to too few drivers on the roads.
“When I started in 2014, it was roughly three cents a mile and sixty cents a minute [to drive] and now we’re at 87 cents a mile and 11 cents a minute,” one Houston area driver told a local news stations covering the strike.
In a survey conducted of 215 Uber drivers, 92.1% believe the new rates are “terrible.” 90.6% do not believe they can make a “livable wage” at the new rate. 48% do not know if they will continue driving for Uber, while 40.7% say they will not. The overall sentiments from those who left comments in the survey are disgust, anger and discouragement.
An Uber spokesperson stated to me via e-mail that the company foresaw a slowdown for January based on data from the company’s five-and-a-half years of operation. “Reducing prices for riders can keep drivers busier,” the company wrote in an e-mail to Hacked. The company confirmed they will keep a close eye on the seasonal price cuts to understand the results and will reverse them “if we don’t see drivers do as well or better.”
While drivers remember previous rate cuts becoming permanent, the company cites examples in the past where price cuts were temporary, such as in Charlotte where a 40% price cut became a 29% price cut, and “earnings for drivers grew by nearly 20%.” The company also noted that in two cities, including Seattle (where Lyft recently lowered rates but kept driver pay the same), they reversed price cuts because prices were clearly too low “and earnings have remained stable since.”
Uber drivers shared with me stories of past wage cuts which, while marketed as temporary, became permanent.
Featured image from Shutterstock.