As Uber & Lyft Recruit New Drivers, Some Existing Drivers Are Upset

CNN Business reports on Uber & Lyft's recent initiatives to attract more drivers back as passenger demand returns. What does it mean for the NYC for-hire transport market?

"We want drivers to take advantage of higher earnings now because this is likely a temporary situation." - Uber

CNN Business recently published an article about Uber’s (and Lyft) recent push to recruit new drivers in order to meet surging demand as the pandemic subsides. In certain markets driver earnings are bouncing back aggressively with reports of drivers from Phoenix to Philadelphia earning above $25 per hour and in some cases as high as $40 per hour. (Note: these figures include tips and are before expenses so represent a gross wage vs. a net wage). A simple glance on several NYC focused Uber/Lyft Driver Facebook pages also reveals that drivers here are being offered promotions, which was more common when the apps were rapidly growing from 2014 to 2018.

One of the main themes of the article is Uber / Lyft have historically used driver incentives to lure people on their platforms, temporarily inflate their earnings and then ultimately not care about driver earnings when they no longer have a driver shortage. This in turn makes existing drivers, especially those who worked through the pandemic upset.

"If they oversaturate with drivers, that means we're sitting longer, we're idling. There's still wear and tear on our cars but we're not getting any rides…I take it as an insult. What about your drivers that put themselves in jeopardy that you paid nothing extra to during the pandemic?" - Angela Davis , Phoenix-based driver

Uber believes it’s inaccurate to portray the dynamic in that way and the article cites an official spokesperson who notes that incentives sometimes vary based on location and other factors but not tenure. In addition, the spokesperson notes there are some earnings guarantees for new or returning drivers, meaning the company will "top off the promised amount" if the driver doesn't earn enough to meet the promised guarantee.

NYC Dynamics

As is almost always the case, the NYC ridehailing market has different dynamics then the rest of the country because of its unique rules and regulations (i.e. driver minimum pay standard). While we have personally seen drivers come off the Uber / Lyft driver waitlist, which started back in April 2019, I think that will be relatively short-lived as the word about increased earnings combined with the pandemic subsiding will get more drivers back on the road. My prediction is by the Fall, as enhanced unemployment benefits go away, the driver waitlist will return along with the driver scheduler (perhaps the scheduler will make an appearance in early 2022 vs. this year).

So, enjoy the driver shortage while it lasts, but we don’t think it will last long given (1) for-hire vehicle supply is limited now (i.e. TLC Plate cap), (2) the minimum pay standard ensures elevated wages and (3) the return of the driver scheduler (Lyft effectively has a similar mechanism to Uber) will convert the NYC market into one that consists mostly of full-time drivers who will stick with a platform for the longer term due to improved earnings visibility.

What do you think? Have we got this wrong?

Link to article

Auto Marketplace NYC Newsletter is written by Dawood Mian, Founder & CEO of Auto Marketplace NYC. He covers the NYC for-hire transportation industry and related news. Search Auto Marketplace NYC for cars, parts, tires, technicians, body shops, reviews & more. Find great deals at TLCMKT.COM (new site AutoMarketplace.io to be launched soon, sign-up to the newsletter if you are interested to learn more ahead of launch)