A rideshare driver picks up passengers at O’Hare Airport on April 10, 2019 in Chicago, Illinois.
Scott Olson / Getty Images
After a dramatic decrease in travel last year, people are moving again. Yet despite offering cash incentives, ride-sharing giants Uber and Lyft are still scrambling to get drivers back to top speed, leading to longer customer wait times and skyrocketing prices.
Uber and Lyft have invested millions in these efforts, but some former drivers aren’t even looking at these stimulus packages or trying to get a price hike. A large percentage that still holds.
“The drivers are on a low-key strike,” Nicole Moore, a volunteer organizer for Rideshare Drivers United, told CNBC.
“Right now it’s a mini debacle for Uber and Lyft in terms of driver shortages and price increases across the United States,” Wedbush’s Dan Ives said in an email. “The controllers are about 40% below capacity.”
Former rideshare drivers stay off the road for a variety of reasons.
For many it is the fear of the continuing pandemic, which is what caused them to stop driving in the first place. Currently, less than 50% of the US population is fully vaccinated against Covid-19, according to data from the Centers for Disease Control and Prevention.
“This is not over yet, people can still get sick,” Louis Wu, a Texas resident and former rideshare driver, told CNBC. According to Uber, 80% of drivers planned to return once vaccinated. The company has also invested a lot of resources to vaccinate people, offering free trips to the places where they are vaccinated until the beginning of July, as part of its effort to get people back on the road.
Others, who want to stay in the concert economy but fear broadcasting, have switched to delivering food or groceries. That also allowed them to put less wear and tear on their cars, especially as gas prices and auto parts prices rise.
“In times of Covid, there is much less customer interaction with food delivery than there is with transporting a passenger in the back seat,” said Harry Campbell, who runs The Rideshare Guy blog, in an email. “You also spend fewer miles on your car as a delivery driver, as people place orders at nearby restaurants compared to a full-time hail driver who can easily go 1,000 miles a week or more. Many hail drivers just get tired of dealing with people too. “
Some drivers have also continued to receive unemployment benefits, which will expire later this year. For former drivers, they may be persuaded to resume offering services once the extended benefits are phased out in the fall.
“September will be the big tell-tale if drivers held out due to unemployment,” said Chris Gerace, driver and contributor to Campbell’s blog.
Uber and Lyft said they thought the supply and demand problems would pick up in the third quarter, which began July 1. However, if demand continues to outpace supply, it could pressure ride-sharing companies to make more fundamental changes to cater to drivers.
Uber, for example, is considering funding education and career development programs, according to The Wall Street Journal. Lyft is also exploring ways to reduce driver spending, according to the report released Friday.
But many drivers have had a taste of what it’s like to work outside of the gig economy. Moore said he knows former drivers who have since gotten clerical jobs or went on to drive semitrailers, with no intention of returning.
Some concert workers have grown increasingly frustrated with the way the ride-sharing giants pay, especially as price increases continue.
The Washington Post reported last month that despite the high fares that riders pay, drivers don’t get their share. And drivers have continued to criticize companies, saying it’s increasingly difficult to make a living from apps, especially compared to the early days of companies.
“When I started driving, I was guaranteed 80% of the fare,” Moore said. “If that’s where we were now, I’d see a very different equation on the road. Drivers see 20, 30, 40% of the fare sometimes ”.
But it’s a question of whether ride-sharing companies will listen and be open to fundamental change, Gerace said.
The shortage also parallels Uber and Lyft’s promises to achieve profitability on an adjusted EBITDA basis by the end of the year, and pressure on the balance sheet could make that goal even more difficult.
“If these companies had a fundamental belief that would change the paradigm, it could have a good salary for drivers, it could have good competitive rates and it could become profitable and have that mutual benefit, but you have to take that initiative and be open to trying new things.” Gerace said.
Uber declined to comment, pointing to an April blog post about its $ 250 million stimulus. A Lyft spokesperson pointed to comments made by its president, John Zimmer, in late May, saying the company was “extremely confident” in the recovery of supply.