“What makes the Uber experience truly great are the people behind the wheel,” Uber writes on its website. “Our partners drive their own cars — on their own schedule — in cities big and small. Which is why more than one million people worldwide have signed up to drive.”
Well, apparently some of these drivers feel that while Uber is very generous with compliments, it is far less generous when it comes to compensating them for their hard work.
Earlier this week Uber drivers rallied in New York City against the company’s decision to cut fares by 15 percent for the popular UberX and UberXL services. According to Uber, this move is supposed to result in an increase in ridership (price goes down, demand goes up) and therefore drivers will benefit too as they will “waste less time driving around without a fare.”
Uber claimed on its website following the rallies that “we have already seen a 20 percent increase in hourly earnings for partners. This means that for every hour a partner was online they earned more money than they did two weeks ago.” In addition, the company implemented hourly guarantee for UberX drivers of $30 to $40 under certain conditions.
Some drivers welcomed this move, according to the New York Post, but it seems that many others weren’t convinced by the Uber math. One driver told the New York Times he predicted “the fare cuts would force him to work 10 to 14 hours a day to make his rent and car payments.” Other drivers also estimated they are going to work harder for less money.
In terms of pure economics it’s a question of elasticity, similarly to the classic question -- ‘If I lower the price of a product, how much more will sell?’ It will therefore take some time to see who is right about the impact of the fare reduction – Uber (everyone wins) or the drivers (everyone wins but us). However, the backlash against Uber seems to be about something much greater than price elasticity.
As one driver put it: “They call us partners, but they’re treating us like slaves.”
What about the service providers? In this model they’re perceived almost as friction, which should be eliminated to improve the user experience. As Uber CEO Travis Kalanik once explained: “The reason Uber could be expensive is you’re paying for the other dude in the car. When there is no other dude in the car, the cost of taking an Uber anywhere is cheaper.”
This model focuses on the needs of users and shareholders in terms of creating and capturing value respectively. It is inherently unsustainable as it addresses service providers not as an equal partners or even human capital that should be managed with respect and care, but more as an exploitable resource.
This is manifested in the fact that Uber, in this case, didn’t involve the New York drivers in the decision-making process, not to mention its seeming unwillingness to sit down with the protesting drivers and listen to what they have to say. I suppose it is not too surprising that Uber didn’t offer to reduce its commission, which increased last year in New York and some other markets from 20 to 25 percent – after all, in this model when it comes to value capturing, shareholders come first.
Overall, the message that Uber seems to be sending its network of about 35,000 New York drivers is crystal clear: We have no relationship with you and no commitment to making your Uber experience better. Working conditions? You must be kidding -- this is an algorithm you’re dealing with after all, one that proves the point Van Jones once made: “Technology is making an awful lot of consumers happy and an awful lot of the workers sad.”
Looking at my Uber app (with the new design!) it seems that not many drivers have joined the call of the protest organizers to go on strike and shut down their app. This effort, as the Verge noted, is similar to what happened two years ago in New York, also following fare reductions. The effort back then didn’t seem to change Uber’s decisions, although there are also examples of protests and strikes of Uber drivers (outside New York) that actually did succeed.
So, what could change the current model eventually? Judging from conversations I had with Uber drivers, it seems that competition could be a catalyst for change. In other words, if drivers have better alternative that could provide them with the ability to make a decent living, while treating them humanely, then there’s a greater chance they will leave Uber. Until then they’re trapped -- like so many workers in the gig economy -- in a job that has a great premise, but eventually falls short of their expectations, although it does so in an incremental way that still leaves the drivers with hope that things will get better and this will one day be the dream job they were promised.
Uber's ridesharing rival Lyft made some steps in the right direction in the settlement agreement it reached last month with its drivers in California, but it still falls short of creating a viable humane alternative to Uber. Right now Uber drivers seem to have two options – either they wait until Lyft will take more steps toward becoming a humane business focusing on creating great peer experiences and adopting a balanced approach when it comes to value capturing (i.e. this is not just about maximizing shareholder value), or they collaborate and design their own network, where they will have the opportunity not just to create the type of company they really wish to work for, but also to show Uber how wrong it is when it treats them like friction.
Image credit: Flickr/Jason Newport
Raz Godelnik is an Assistant Professor and the Co-Director of the MS in Strategic Design & Management program at Parsons School of Design in New York. Currently, his research projects focus on the impact of the sharing economy on traditional business, the sharing economy and cities’ resilience, the future of design thinking, and the integration of sustainability into Millennials’ lifestyles. Raz is the co-founder of two green startups – Hemper Jeans and Eco-Libris and holds an MBA from Tel Aviv University.