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Uber and Lyft drivers claim that ride-hailing app companies in the US are raising fares while suppressing wages

19 Apr 2019


It has been alleged by drivers for both Uber and Lyft that riders are paying more for price surges, but drivers aren’t receiving the benefit of those surges. 


In a report in The Guardian it is believed that despite both Uber and Lyft completing over 11 billion rides worldwide, they have yet to turn a profit.

Drivers in the US, now fear that as both companies go public, they will be short-changed as the companies increase prices for customers, but not pass on those increases to drivers. 


Suspicions were raised after Chicago Uber driver Giovanny Tarrago, noticed that price surges were showing up for riders, but not for drivers.


He then went on to explain the differences shown in the Uber app for drivers compared to what is shown to riders via screenshots, and then went on to further explain that when ride-hailing companies do that, it is believed that the company pockets the difference. 


Tarrago then expressed concern at the fact that not all riders nor drivers are fully aware of this, although it is believed that other Uber amd Lyft drivers around the United States are starting to notice changes in pricing models. 


The Guardian reported that a 2018 study conducted by the JP Morgan found that rideshare drivers saw a 53% drop in their takings in 2017 compared with 2013.


Uber dismissed the findings, citing an increase in part-time drivers as a contributory factor  


Both Uber and Lyft are under pressure to glean more revenue from their business models, given the imminent launch of Ubers' IPO, as well as Lyfts' launch last month.


Lyft have come under scrutiny after becoming a public company, with their share price seemingly falling off of a cliff since their initial public offering.


It is believed that investors are deeply concerned about the company's massive losses, nearly $1bn in the previous twelve months.


In turn, reacting to investor concerms, Uber has cut the price of its share sale in the wake of a $1.8bn loss in 2018. 


Uber have acknowledged that there may be some driver dissatisfaction, with the company planning to reduce driver bonuses, accelerate its autonomous vehicle development and continued classification of drivers being independent contractors rather than employees.


It has been alleged by one driver from Cleveland, Ohio, that Ubers business model has seen his wage reduce by around $1000 per month, since joining Uber as a driver four years ago.


It has been alleged that some drivers are having to work 100 hours a week just to glean the same income as they did the previous year.


Uber and Lyft have adjusted how riders are charged by increasing what the rate for time and decreased the rate for distance. This should be of benefit to drivers stuck in traffic but it in-turn penalises those who drive greater distances in lighter traffic. 


Maurice Stucke, professor at the University of Tennessee College of Law and co-author of Virtual Competition: The Promise and Perils of the Algorithm-Driven Economy, stated that both Uber and Lyft profit from a lack of transparency.


He also commented on the fact that there is an element of trust in relying on Uber to set the market clearing price, adding that Uber and Lyft have market power, that can be distorted


Image Source: Pixabay 

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