Uber and Lyft Ride Price Rise: Why You Should Be Prepared To Pay More
A few weeks after receiving the second dose of a coronavirus vaccine, Debora Lima returned to an old routine: she pulled out her phone and asked for a Uber go upstairs so she can meet friends for dinner.
But instead of making a five-minute trip like she planned, Uber surprised Ms. Lima with a 19-minute wait and an expensive fare. It was not a one-off problem. Ms. Lima, a 28-year-old Miami resident, planned to spend $ 100 a month on frequent Uber trips. Only two recent races have consumed half of its monthly budget.
As the Coronavirus pandemic seems to go back in the USA and more and more people are starting to travel, socialize and use ridesharing apps again, they are finding that these cheap and quick trips have become more expensive and less available. Customers across the country say they are surprised by the price increases. In some cases, they say, their Uber trips from airports cost as much as their plane tickets.
Uber and its main rival, Lyft, acknowledge that prices are on the rise and wait times are longer, but will not provide details. A recent analysis by research firm Rakuten Intelligence found that the cost of a ride was 37% higher in March than it was a year ago. In April, the cost rose 40 percent.
As many other industries, rideshare companies say prices are on the rise because they can’t find enough workers. But more than most other types of businesses, Uber and Elevator can easily pass the cost of finding these workers – in their case, drivers treated as contractors – directly to their customers.
When there are not enough drivers to meet demand, companies pay them more, sometimes using what is known as upward pricing to attract drivers to areas of high demand. Some recent surges have caused prices to jump 50% or more, said Daniel Ives, managing director of equity research at Wedbush Securities. Rising prices can be a boon to drivers, but sometimes it causes driver outrage, especially during holidays and major events when demand can cause prices to skyrocket.
“By arranging with the drivers as contractors, Uber and Lyft kind of put passengers in a position to employ these contractors,” said Wendy Edelberg, director of the Hamilton project and senior researcher at the Brookings Institution. “Every time we open our Uber app, we maybe feel a bit like the small business that can’t fill the vacancy after putting up the ‘Help Wanted’ sign.”
Uber and Lyft have invested money in additional incentives for drivers, like cash bonuses for making a certain number of trips. But the incentives don’t seem as effective as they were before the pandemic. Some drivers said they were not returning to the road because they were still worried about getting sick.
Other financial incentives can also deter drivers. Although they do not normally receive unemployment insurance because they are classified as independent contractors, Uber and Lyft drivers are eligible for Unemployment pandemic assistance fund under the CARES Act, alleviating the financial pressures that would otherwise have forced them to get back behind the wheel.
“We’ve given people a lot of tax support,” Ms. Edelberg said. “We have made it possible for people not to make these transitions in desperation, to put their health first, to put their families first. So it will take a little while. “
In an early May earnings report, Uber said it had 3.5 million active drivers and couriers in the first three months of the year, down 22% from the previous year. “We haven’t seen the supply of drivers keep pace with growing demand in the United States,” Uber chief executive Dara Khosrowshahi said in May at the press conference. JP Morgan Conference on Technology, Media and Communications.
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In May, however, more than 100,000 additional drivers also returned to the platform, a spokesperson for Uber said. Uber has aggressively increased its incentive spending, investing $ 250 million in the driver recruiting effort and branding it as a “stimulus.”
Lyft also said it does not have enough drivers and is spending a lot to recruit them. In the first quarter of the year, the company spent $ 100 million on driving incentives, according to an earnings report.
“This is something we take very seriously, but something that we are extremely confident about and I have already started to see significant movements,” Lyft President John Zimmer said at the conference. hurry. JP Morgan conference. Lyft saw a 25% increase in what it calls “drivers” – drivers interested in working for the platform – between late February and May, Zimmer said.
The incentives are starting to take effect, according to Wire rack, a service that helps concert workers track their income. Rideshare revenue has grown steadily this year, from $ 18 an hour in January to $ 25 an hour in May, Gridwise said.
The higher salary appears to be enough to entice some drivers to return. While the number of drivers is still below pre-pandemic levels, Gridwise estimates it is only down 11%, an improvement from the 25% deficit in January. Uber also said the total number of trips with peak prices was down after peaking in March.
“When employers say they can’t find the workers they need, always add the phrase ‘the wages I want to pay’,” said Heidi Shierholz, director of policy at the Institute for Economic Policy. “We know how to attract workers – give them better jobs, better wages, better working conditions. It is not rocket science; This is how you do it. “
But customers are eager to find the journeys fast and cheap. In Miami, Ms Lima said she had hoped the company would keep prices low while trying to get more drivers back on the road. “Keep customers happy,” Ms. Lima said. “At least with the price.”
Right now, she said, it’s impractical to use Uber as it once did due to the price hike. Instead of a daily utility, she said, Uber is likely to become an article of madness.
Cristine Sanchez, a hotel worker in New York City, paid around $ 20 for Uber trips to Brooklyn from Queens. Now the fare is around $ 38, she said, and a trip to the Bronx costs almost $ 45.
Ms. Sanchez recently realized that plane tickets were almost the same price as her Uber rides. When she recently found a $ 60 round-trip flight to Miami, she booked an impromptu trip with friends.
“If the choice is to go to the Bronx or to go to Miami, I go to Miami,” Ms. Sanchez said. “It’s like come on, Uber, come on, Lyft, let’s come together.”