How Uber overcharges riders and underpays drivers
.webp)
PowerSwitch Action, my organization, conducted the
largest-ever study of rideshare fares to find out. We discovered a story of
gaslighting and greed that squeezes drivers and riders alike — while funneling
our money to banks and billionaires.
In March, Minneapolis passed an ordinance requiring
rideshare corporations to pay drivers at least $1.40 per mile and 51 cents per
minute. In a desperate attempt to block this pay floor, Uber and Lyft are
threatening to leave the city, claiming the requirement would make rides too
expensive for residents.
This argument — that higher driver pay would force big
fare hikes — is one of Uber and Lyft’s favorite scare tactics. As drivers
across the country have protested poverty wages and organized for better pay,
the rideshare giants have trotted out this line again and again — in Connecticut, Chicago, New York, and Seattle, to name just a few places.
We decided to test that claim. Our team analyzed over a billion rideshare trips, comparing four years of data in Chicago and New York, the only two U.S. cities that make rideshare corporations report detailed trip data.
In New York, drivers overcame Uber’s fearmongering and
won a minimum pay standard that took effect in February 2019. In Chicago,
drivers are organizing but haven’t yet won pay protections. If Uber’s argument
were true, fares should have gone up more in New York after the pay standard
took effect.
In fact, the opposite happened. Over the four years we
studied, Uber and Lyft raised fares by 54 percent in Chicago, where drivers
have no pay protections. In New York, they only increased fares by 36 percent.
The reality just doesn’t match Uber’s scare tactics.
So if fares went up more in the city without a pay floor, what’s causing these big
price hikes? We looked at many possible explanations, but only one fits the
data: pressure from Wall Street.
For years, Uber used money from the likes of Goldman
Sachs, BlackRock, and Jeff Bezos to subsidize cheap rides and decent pay. But
now that Uber dominates the market, its investors are demanding their cut. So
Uber has jacked up fares and cut driver pay.
The strategy is working: just last month, Uber reported
an annual profit for the first time ever — and promptly announced plans to give
$7 billion to shareholders.
Letting rideshare corporations bully and bamboozle to get
their way harms all of us. Riders are forced to pay more to get around, while
drivers have to work long hours and still struggle to cover the bills. Falsely
claiming that wage protections will drive up fares seems to be a tactic to pit
drivers against passengers and obscure this massive transfer of wealth to Wall
Street.
The good news is that communities are no longer falling
for Uber’s scare tactics. In Minneapolis, the city council stood with the
city’s drivers instead of giving in to Uber’s bullying. And in Chicago, drivers
are organizing for an ordinance setting a living wage and protections against
unfair deactivations — and have the support of a majority of the city council.
These fights are far from over — already Uber and Lyft
are turning to the Minnesota state legislature, which could pass a law banning
the Minneapolis ordinance from going into effect.
But when drivers and communities stand together, these cities are showing we can say no to Uber’s bullying, ensure drivers are paid enough to provide for their families, and shape a transportation system that serves us instead of Wall Street.
Mariah Montgomery is the national campaigns director at PowerSwitch Action. This op-ed was originally published at Inequality.org and distributed for syndication by OtherWords.org.
