I dont see how Lyft gets off calling this fraudulent. Seems to me it's the system working as intended, and as it should.
Drivers dont want to drive for under a certain value, so they simply inform the app who adjusts the value to fulfill demand. Seems like its what you want to happen.
Not all. The large majority, but not all. There are very likely one or two drivers in the area that don't participate, simply because they aren't in the parking lot at the moment they orchestrate the mass logout. Surge pricing is about supply and demand, so if expected demand is high (like at an airport) they need a lot more than one or two drivers.
I don’t think it even necessarily needs to be a large majority. It just needs to be enough such that the remaining drivers aren’t sufficient to meet demand. Depending on circumstances, that could require anywhere from one driver to all of them.
It’s a great illustration of how supply and demand work to determine prices.
Indeed. And as the rate grows higher, there’s ever more incentive to defect from the scheme. This should be a case study taught in Economics 101, it’s so pure and clear!
It used to be almost exactly proportional. Lyft and Uber have been progressively trying to disconnect the two values, though; these days it's probably not possible to tell.
If one or two drivers pick up the fair before the surge they are good for 15+ minutes of being not at the airport driving someone someplace, then the surge can just happen then after they leave.
I don't know if I would call it fraud, but I can see where they are coming form. Drivers aren't individually deciding to turn off the app, but they are doing it collectively to manipulate the app into surge pricing.
> I dont see how Lyft gets off calling this fraudulent.
The workers are "defrauding" Capital out of greater-than-substance wages. It's bullshit, and they'll try to re-frame in in terms of customers, but that's essentially their view.
'ardy42 is presenting the part of the argument that Lyft and Uber can't say aloud but almost certainly believe.
Lyft and Uber have a vested interest in making their objection seem "pro-consumer," when they're primarily anti-worker; lower prices to the consumer pumps up the demand curve and Lyft makes more money.
> Lyft and Uber have a vested interest in making their objection seem "pro-consumer," when they're primarily anti-worker;
Given that Lyft and Uber are losing money, there is no difference between the two. Uber and Lyft are just vehicles (hah) for consumers to make taxi drivers work for less than what taxi drivers used to make. People use Lyft and Uber because it’s cheaper than taxis. Since Uber and Lyft don’t make any money, those savings are coming out of the pockets of drivers.
I mean, fair cop. Though a lot of my Uber and Lyft use is with the endless discounted ride offers I get, which seems to just be a transfer from investors to...well...me.
Musicians, actors, screenwriters, etc., belong to guilds which do exactly that. And, oh hey, it looks like there's already an independent drivers guild: https://drivingguild.org/
Not exactly. The percentage that Lyft takes is the same, so Lyft actually makes more money from these price-hikes. The ones suffering are the passengers.
The existence of other options implies a more elastic supply curve, but implies nothing about demand.
That passengers suffer from a price surge does not assume an inelastic demand, or even a downward-sloping one. If you pay a higher price, you're suffering more, even if somehow it leads you to buy more of that thing.
Eh--"suffering" seems a bit dramatic; as economic transactions go, the up-front price quote by Lyft and Uber makes it pretty transparent and the options available to depart DCA put an upper bound on costs. But I was more referring to how Lyft and Uber make more money off of shorter, cheaper rides. They do make more from longer rides, because of percentages, but my understanding is that volume makes them much more money and that higher prices do depress volume.
By "suffering" I just meant "paying (someone, maybe another ride service) for it".
If higher prices depress volume, then some of the very drivers temporarily striking to raise the price end up paying for it, by ending up without a client. If all the drivers gain from it, then the airport demand for their Lyft services in particular (as opposed to demand for other ride companies) would in fact appear to be pretty inelastic. (Both seem plausible to me.)
By leveraging the supply controls, which are explicitly theirs to use to communicate willingness to take on work, in a two-sided market where you're not allowed to directly set prices? Please substantiate how that is fraudulent.
If Lyft and Uber allowed direct pricing, this wouldn't happen. Drivers would set the price they're willing to work for. Instead, drivers--who, once more for emphasis, are supposed to use price fluctuations as incentive or disincentive for working, that's what "surge pricing" was in the first place--only have one message that they can send: "nope, not at that price".
Or they can be obligated to work cheap because rich people demand their labor.
Hrm. I think I now understand where the claim of "fraud" comes from.
No, they did not agree to "drive for a service for X". They entertain offers to drive at a given rate. They can choose to take those offers or not. That's the whole point of the on-demand, contractor-but-not-really relationship (see also the way that Lyft and Uber punish drivers to don't take absolutely every ride that pops up on the app) that underpins Lyft and Uber's business model.
They're refusing to entertain offers below a certain rate. That drops supply, which requires price increases to satisfy demand on the other side. The market, literally, is working as intended.
Ok, so they agreed to entertain offers. They can always say no. They have accepted those rides, so there is no possible argument to be made.
Grouping together to drop off and artificially increase prices when a flight lands sounds great because these are “the little guys”. If Google were doing it you would lose your shit.
Uber and Lyft retaliate--in ways that are at minimum unjust and in a functioning legal environment I'd bet a lot of money would be found illegal--for rejected rides.
Google doing it would be different, certainly. Companies are less important than people and poor people trying to survive get significantly more leash than multi-billion-dollar companies. If ride-on-demand companies operated with a transparent bid-ask system (see something like Taskrabbit for an example) instead of the opaque and intermediated market that they do, I don't think we'd be having this discussion. But they want to set prices and they want labor to shut up and take it, and that's not acceptable. To that end, yes, this is a fundamentally different thing than a multi-billion-dollar company controlling a market.
Not accepting a ride until an agreed (the rider can always cancel the ride) price is met is entirely different than taking a longer route after a job has started.
Also that's a bit more nuanced a topic because between the driver and the passenger they might agree to take a longer route which could cost more if it's faster, avoiding traffic or whatever.
To this point, I haven't seen it. Yes, there's collective action. You could even call it "artificial". Where's the fraud? How is it thus not fraudulent when Uber and Lyft run me and my girlfriend through their pricing models and quote me two bucks more for the same ride?
Why is this driver behavior fraud--and not the collective behavior of these ride-on-demand companies in general?
Hell, let's go back to first principles: why is choosing to refuse to take rides below a certain price ever "fraudulent"? It might be "bad", it might even violate the terms of a contract with Lyft/Uber and thus be grounds for termination of the relationship between the driver and the ride-on-demand company, but how is it "fraudulent"?
This seems like it could also torpedo their Contractor vs. Employee argument.
Contractors get to set rates, employees don't. So you can't say they're contractors AND accuse them of committing fraud when they try to set their own rates.
Now if only someone would develop an app that does this for entire cities. The app could be their version of a union.
Under the theory that Uber/Lyft employees are contractors and allowed to set prices, wouldn't coordinating ("conspiring") to do so en masse be considered price fixing?
Personally I think they should be considered employees, but a pro-management federal prosecutor could make some trouble for them.
On that note, does it make a difference that they're collectively refusing work rather than collectively setting prices? Uber and Lyft are still the ones actually setting the price.
In the end I don't think it will matter, Uber and Lyft could probably code around this pretty easily if it started to affect their bottom line. When they see 100+ drivers in the same place go offline within X seconds of each other, it's a pretty clear indication that there's coordinated action taking place. They probably have enough data from drivers' phones to see that they're sitting still waiting to go back online.
I just hope they don't decide to make an example out of these drivers by banning them...
While both companies provided consumer-friendly press statements, I would not assume that Lyft or Uber actually cares if this is happening. After all, they also make more money per ride under the scheme. As long as there are enough customers willing to pay the extra cost during surge pricing, drivers and Uber/Lyft would both win.
Speaking of price-fixing.. Competition is what usually keeps prices low in ride-sharing; if Lyft is too expensive, more people will use Uber. But if the drivers of both apps all trigger surge pricing together (in both platforms simultaneously) then it is possible that both platforms will make more money until the fake surge ends.
Seems like they could just force a delay of [x] time between individual driver logins. Call it a server side issue or something and make it so each driver can only re-login once every 15 minutes. Then by the time the surge worked the drivers instigating it would be locked out of participating.
That's an interesting question. I'm not a lawyer, but I'd be interested in the answer. From a technical perspective it seems that they'd need significantly more control over product liquidity generally, rather than locally, for it to apply; from a moral perspective it doesn't seem like a reasonable appellation at all and that the closest equivalent is labor organization--and it's worth noting that companies are not obligated to negotiate with labor organizations on behalf of contractors in the same way they are employees, but contractors are allowed to organize. Contractor labor, such as SAG, IATSE, etc. do it regularly.
Practically, the impact of a hundred airport drivers deciding to "strike" is so small that a non-mendacious prosecutor probably wouldn't even look at it. But there's a lot of mendacity around Washington, so who knows.
Note that unions are specifically exempt from antitrust laws. So just because some conduct would be legal if a union did it doesn’t mean it’s legal without an actual union in place.
At least in Uber's case this seems to have been an emergent thing originally, as in: drivers independently of each other found under which conditions the prices were surging and acted appropriately.
I think you can make an argument that it’s bid rigging. Uber/Lyft pricing can be viewed as an auction where the surge price is the market clearing price. Conspiring with others to not accept bids below a floor could probably be prosecuted as a bid rigging conspiracy.
I don't see how it could be bid rigging, when the drivers are not even able to bid. Short of what the article discusses, they must take whatever Uber / Lyft give them. If anything, this seems more akin to actual negotiation / refusal to work at the proposed price. Which, if they are contractors, is perfectly acceptable, no?
No, they don't. No one is putting a gun to their head and forcing them to work. Uber/Lyft's offer is take-it-or-leave-it, but leaving it is always an option.
That leaving is an option is what the parent comment is saying ("refusal to work at the proposed price"). The drivers in the article are refusing to drive at the non-surge price, and when the price surges, they find the price acceptable and so take the rides.
The part of parent comment that you quoted is just about how the take-it-or-leave-it nature leaves no middle ground (bidding).
But that is false. Acceptance or refusal of an offer is bidding. It's essentially an auction: Lyft/Uber asks, "Does anyone want to sell at $X? No? OK, how about $X+1?" etc.
What the drivers are doing is not bidding, it is colluding to hide the true market price, i.e. what the lowest bidder would actually be willing to accept. That is illegal.
Please note that my sympathies are very much with the drivers. Their situation sucks and needs to be improved. But breaking the law is not the way to improve it.
I wonder why the opposite is legal. If users are willing to pay more, Uber/Lyft will not automatically offer more to the drivers. Seems like the free-market works only when it is in favour of the company arbitraging.
The rules of capitalism are specifically designed to drive the price down as low as possible, in the ideal case, to the actual marginal cost of production. That's good for the buyer, bad for the seller, so sellers try all kinds of ways to get around this, some of which are legal (IP protection) and some are not (collusion, price-fixing). If you want to argue that we should change the rules I will not dispute you. But that the moment, that's where things stand.
Not usually, but a lot of these drivers were people that were screwed by Uber and Lyft's dodgy (illegal) practices (for example ignoring taxi medallion requirements, which they still are doing right now). So if the only way these people can stop their own bleeding is by responding with illegal practices of their own, Uber and Lyft don't have a leg to stand on.
> What the drivers are doing is not bidding, it is colluding to hide the true market price, i.e. what the lowest bidder would actually be willing to accept. That is illegal.
Is that what's happening? The drivers have no ability to coerce other drivers. It seems to me that if there were a driver willing to accept a lower price, they would do so. But not enough drivers are willing, so Uber/Lyft is forced to increase its offer.
Of course that's what's happening. Collusion != coercion. Collusion is voluntary.
What is really happening here is that Uber wants the drivers to play a multi-player prisoner's dilemma, and the drivers want to coordinate cooperation. Uber wants to force the price to the lowest that the market will bear and the drivers want to force the price to the highest the market will bear. The rules of capitalism are specifically designed to produce the former outcome.
Uber and Lyft don’t let their drivers set rates, but the argument (and law) is that they should — since Uber won a judgement saying their drivers were contractors, not employees, their drivers, then, are legally entitled the right to charging their own rate. For a lot of intents and purposes Uber/Lyft wanted drivers to be classified as contractors so they wouldn’t be subject to laws re: minimum wage for employees, but it seems also don’t want to be subject to all laws re: contracting (price negotiation).
Barring some extreme measure of lobbying for and passing a law that carves out an entirely new employment classification for the gig economy, Uber/Lyft/etc have to comply with at least one of the existing classifications.
Have you ever done contract coding? You don't always get to set the rates, because the rate for the contract is posted, and the other side is not going to negotiate.
Contractor here. Well you are not obligated to accept the contract if the rate is too low. These Lyft / Uber drivers do the same thing, the rate offered by Lyft/Uber for a ride is too low so they decline and only accept if they get their preferred rate. The same as software engineer contractor does, I don't accept every contract opportunity when I am in between contracts.
In Uber Pool / Lyft Line, drivers are not allowed to refuse extra riders. If they accept one of these jobs they are locked in to whatever jobs Uber/Lyft throws at them afterwards unless they want to end their shift.
That's why they log out of the app / turn off their phones instead of canceling rides. So they are just not available in the driver supply and then when they log back in they get surge price.
It seems to me that Uber's counter argument would be that they aren't obligated to offer a contract to all contractors equally. They would further argue that Uber's product is availability of drivers vs the rides themselves (remember they are only the middle men) and that they provide preference (in a binary manner) to contractors who allow them to provide consistent availability.
The thing about contracting is you don't have to take the job if they aren't willing to negotiate. If no one wants to build your website for $5, then the client is either going to have to pay more, or not make a website.
All of the drivers around that airport incur roughly the same costs for gas, wear and tear, rent, etc. So while you might find someone halfway across the world to build your website for $5, you won't be able to do the same for your driver between the airport and your hotel.
That's exactly what they did: stop accepting rides, then start accepting them again once Lyft offered to pay them enough that they thought it was worth it.
I think in that case though it’s fine (even expected) because I can choose to take or not take it and find work elsewhere as a freelancer — the pro-labor argument with Uber/Lyft is that it’s systemic versus freelance work between two individuals is personal.
having been an uber/lyft driver professionally for a year and half, I could definitely choose to take or not take it a find work elsewhere. Yes there were incentives to not reject too many, but that's true of general contracting work, too.
They aren't, and the furthermore is also true beyond a certain percentage. This is part of the reason why in a number of jurisdictions the courts have ruled that the drivers aren't independent contractors.
This is an interesting dynamic - the colluding drivers wait for Lyft/Uber to determine the surge pricing and the point-person for the drivers informs of the price increase to a target that is acceptable. Now how does the pricing affect the demand for the rides? Will a Lyft user switch to Uber if the collusion is affecting only 1 application (vice versa too)?
Why do Uber and Lyft need to take on the drivers as employees all of a sudden? I'm not saying they shouldn't be, but just curious why the seemingly sudden change in opinion from some people?
This is basically the contractor setting his rate... through an interface that the app designers did not specifically design for.
If a driver wants to work for $20, and the offered rate is currently $10, what’s the difference between them a) typing $20 into a text field and hitting a “request” button vs. b) turning a switch off and waiting for the app to increment the rate little by little up to $20?
Contractors get to set rates, employees don't. So you can't say they're contractors AND accuse them of committing fraud when they try to set their own rates.
This isn't how it works? Rates of pay are mutually agreed upon between an employer and employee regardless of classification.
I think the pro-labor argument is Uber doesn’t even consider / allow negotiating their standard contract for rate-setting.
IIRC Microsoft got in trouble in the early 2000s for doing something similar in having separate standardized pay-scales for contractors depending on how long they’ve contracted with Microsoft, and no option to negotiate, and the labor board argued that Microsoft was trying to shoehorn contractor-employment law into employee roles without the legal protections and tax burdens of employment rights
Yeah, that makes sense, because the rate of the contract should only depend on the content of the job. And contractors should be able to compete for those jobs. That's certainly the case for Lyft/Uber.
News flash: if you go out of your way to classify your entire workforce as contractors, you don't get to decide when they work or not. It turns out this has consequences on both sides.
If Lyft wants to decide when their drivers are working, there's a process for this:
They are contractors because they do not have any set obligation for time. Rate of pay or overall pay has nothing at all to do with that. According to the IRS they do not have a set schedule and they are contractors (that is 1099, not W2).
So they are contractors. What does that have to do with pay? Absolutely nothing. You want x and are willing to pay y. Maybe there’s an opportunity for me to negotiate for z, maybe not. Either way none of that has anything to do with the actual form of employment. Even if I were a salaried employee working 40 hours a week the company has a budget of $40,000 a year and that’s all they will pay. If I demand $45,000 they’ll just tell me no - they simply don’t have the money.
In this case Uber offered you $x. You agreed to $x. You have no schedule, which is the perk of the job vs driving a cab, where you will have a schedule. Need to take the kids to school or a doctor’s appointment? Well, work that around your work schedule.
And as for your third point... Uber already charges me for both time and mileage. I don’t see any problem with them paying their drivers based on both... but from the drivers I’ve talked to they already do. I can’t speak for any other service at all.
> In this case Uber offered you $x. You agreed to $x.
When did they agree on $X? There's no contract between the drivers and Uber stating they they will work for a given amount.
The app sets rates based on supply and demand. Uber offers them $X. The drivers decide they don't want to work for less than $Y. If demand is sufficient, Uber eventually offers them $Y.
Surge pricing is basically a negotiation between company and driver. Just because the drivers have found a case in which they have extra leverage doesn't make it wrong or fraudulent.
Cartels colluding together to artificially reduce supply in a market is often considered illegal market manipulation. That lyft is acting as a middle-man to set market-clearing prices here doesn't change that.
This was brought up elsewhere in the thread, and it's a valid concern. But consider that this might instead be a strike. Drivers want to be paid $Y, so they refuse to work until Lyft agrees.
I'm not sure where the line is between the two. But given that the market in question is the drivers' labor — and the ongoing question of whether the drivers are employees or contractors of these multi-billion dollar companies — I'm inclined to consider this "labor organizing" rather than "price fixing".
Yeah, and I'm not sure what's described in the article need even be considered "labor organizing". It seems to be just drivers exercising their power to not drive if the market rates aren't high enough. It seems like the weird signing off from the app actions wouldn't be needed if Lyft had better provisions for drivers to enter the rates that they're willing to provide rides at.
> In this case Uber offered you $x. You agreed to $x.
The value of x was established under different circumstances. What's wrong with bumping that to 1.5x as soon as you have the power to do so?
When the cab industry was "the system", Uber and Lyft beat the system and made money. Now the drivers are beating the Uber/Lyft system and making money.
Viva disruption.
EDIT: Actually Uber/Lyft beat the cab system and lost money, but that's another kettle of fish.
They agreed to rates for previous rides and gave those rides.
Each ride is has independent rates, there's no reason they have to accept past rates for future rides.
>They are contractors because they do not have any set obligation for time. Rate of pay or overall pay has nothing at all to do with that. According to the IRS they do not have a set schedule and they are contractors (that is 1099, not W2).
I'm not saying they're not contractors, I'm saying if Uber wants drivers who will work at a specific constant rate instead of signing out and demanding surge rates before they'll sign back in, then that's too bad for Uber. They created a market for driver contractors, and the drivers are participating in it. If they want shift employees who are obligated to stay logged in when a plane lands, they can hire some.
>In this case Uber offered you $x. You agreed to $x. You have no schedule, which is the perk of the job vs driving a cab, where you will have a schedule.
It's working exactly as intended then, Uber offers $x, drivers say "I'm not interested in driving for $x." Uber automatically counters with "Fine, I'll pay you $y."
Uber could make their system more hesitant to offering surge pricing after a bunch of drivers sign out like this, but when it comes down to it this isn't even a strike. The drivers haven't agreed to take fares at the lower rate, and Uber isn't entitled to their labor at any particular cost. They can all go home if they want to.
>And as for your third point... Uber already charges me for both time and mileage. I don’t see any problem with them paying their drivers based on both... but from the drivers I’ve talked to they already do. I can’t speak for any other service at all.
My point is that if Uber wants drivers a fixed particular price than then their "everyone is contractors" solution isn't appropriate. They can hire employees on an hourly wage to take shifts where they're paid whether or not they're currently driving a fare (mileage on top of that is to cover vehicle expenses). Sometimes they'll be busy, other times they'll have a slow night.
They don't get to have their cheap no strings attached driver arrangement cake and then also whine when drivers sign off and prices spike.
You have not agreed to 'x' until you accept the ride - and either the driver or the rider can cancel the engagement without penalty for a few minutes after the acceptance.
Plenty of contractors have set hours and come into an office. Several friends in software contracting firms for example do that. Also uber doesn't agree to pay you a damn thing. You could literally go work for 4 hours and make <$10.
> ...vs driving a cab, where you will have a schedule
Cab drivers lease their vehicles. Taxi companies are merely in the business of leasing vehicles and providing dispatching services. The drivers are independent and work on their on schedule.
There's probably a balance to be struck, because part of the ridesharing design's efficiency is that if demand drops they can drop their rates paid to drivers, and the drivers who don't want to drive at those prices will stop.
So if Lyft starts to say "we always want X drivers available as a base load, and we'll open up to contractors to fill in the demand spikes" it might make the contractor role too unreliable for anyone to bother doing it. At the very least, their costs would go up for both the employed drivers and the extra contractor drivers. Since their valuations comes mainly from a cheap labor pool, that presumably kills it.
But in the current situation, if all their drivers at the airport sign off and say "I'm not driving at these prices," you get surge pricing to make it worth driving, that increases costs too. That's what happens when you're buying labor from independent contractors - if they don't want to sell it to you at a particular time for any reason, they don't have to.
The real question here is "If Lyft recognizes when these organized sign-offs are happening, calls their bluff, and refuses to activate surge pricing, what happens?"
Do the drivers really refuse to drive at the regular pricing and go home? Or do they all give in to a more tamper-resistant algorithm and keep driving at regular rates?
Can we please stop referring to these services as "sharing"? Lyft actually started as a company that coordinated the sharing of rides, i.e., no money was involved. But the "sharing" pretense has long since past for all of these companies.
Right? It's nonsense. A grocery store isn't "food sharing", and a barber isn't "hair cut sharing". It's one party paying another for a product/service. Uber/Lyft's killer feature is the app pairing those two parties. But no one is "sharing".
We need a new word for "taxi companies with cute apps, unsustainable pricing/wages and lots of Silicon Valley venture capital propping them up" to distinguish them from old-school taxi companies if we're gonna quit saying "rideshare".
While this is accurate, I think the subtext of it conflicts with the common anecdotal claims (including mine) far preferring Uber over actual licensed taxis.
You know what it's caled when a bunch of people put up capital or labor in exchange for a portion of the retrun from coordinated activity. It's called buying a share -- from adventurers to publicly traded corporations.
Lyft isn't ride sharing because people aren't dividing up cars to rides, not because money is involved. Car2Go/Flexcar are car sharing. Carpooling is ride-sharing.
> Or do they all give in to a more tamper-resistant algorithm and keep driving at regular rates?
I wonder if they will change the algorithm to just tell the drivers what they want to hear. To wit - Introduce a new multiplier for drivers based on their behavior. This will factor into the final price, but be obfuscated. Then Lyft can tell the drivers they are receiving a greater surge than what the rider sees, and pays.
I think they'd retain some of that valuation. Unlike traditional cabs, they show up (I've been stranded by more cabs called by phone then I've taken, not hyperbole). But the value of some unified dispatcher framework, with penalties for abandoning customers probably isn't in the tens of billions. Maybe in the hundreds of millions? Either self driving cars change everything, quite quickly, or some people are going to lose a lot of money.
"And suddenly Uber/Lyft are like any other Taxi company just with a massive valuation." . . . which valuation would be rapidly evaporating.
I suspect this will happen one way or the other, as something that cannot be sustained will not be -- something's got to give, either rates will go up, costs will go down, or the companies will fold.
Rates probably have some room to rise. My limited experience is mostly airport rides, where they are cheaper than limo's taxis. But I'd still pay the same as the competing services, since Lyft has always been more reliable and pleasant. The main competition is parking.
Lower costs? I don't think so, short of automation. The drivers' costs & compensation have already evidently been pushed to the limit, as they are starting to strike.
Will they sort out either? I'm not buying either stock, even at the discount prices...
Not quite. Real taxi corporations have approval of city/state assembly to do business so that they control the amount of taxi cars being part of daily street flow. (Im ignoring the fact that this system is broken and corrupted)
This is really curious, in that it appears to be a normal strike for higher wages, except it's being coordinated on an hourly basis for just a few minutes until the company agrees to pay more!
Contractors can decide when and how they want to work, and therefore determine the price at which to sell their labor at, so to me it seems they are simply exercising their rights here. Like others have mentioned, if most drivers don't choose to participate, then this "scheme" wouldn't function.
Not 100% sure I'd call it a strike but its just the free market working quickly.
I have a feeling though this will spread around the world and be adapted by drivers in many other countries.
I've traveled a bit in South America and Uber drivers there really do earn barely anything - I dont know how they afford the gas - e.g. 1/2 hour trip for $3-$4.
I've also traveled in South America and relied on Uber heavily. I talked with a few drivers, and they all found Uber to actually be worth it. For example, Colombia's minimum wage when converted to 40hrs/wk/month comes out to ~$1.50/hr. It's not a bad gig there, and the cost of living is relatively low. The bigger problem is the danger of driving for Uber, as taxistas are not a fan of Uber drivers.
One is that the workers are getting paid more per the algorithm that these companies designed to charge customers - that is, they are getting the company to facilitate higher payments but the company itself isn't being charged more! So in that case, the drivers are simply arguing that uber/lyft are artificially undervaluing their time because clearly these passengers are willing to pay 15% more to them to get home...
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It is telling to me how often Lyft/Uber/et all emphasize that their philosophy is that these gig economy jobs are just something you do a tiny bit extra to get some extra cash in your pocket. That is they are designed to be a small supplement to the job that provides you with most of your income, so hey, we don't really have to worry about working conditions, etc.
But I'm not sure I believe their stats. Over the past few years it is nearly 100% of the drivers I get that are doing it full-time, and many/most of the "teacher moonlighting for extra vacation money" type drivers have given way to lots of former actual taxi drivers who quit their taxi company and now work both uber/lyft.
I wouldn't be so convinced that passengers are willing to pay these surge prices to go home. Sure, the first time a passenger encounters this artificial surge, they're already planning on taking uber/lyft home so they'll pay it because they probably don't have another option immediately available. But the next time a passenger arrives at DCA (could be a month or two), they might remember uber/lyft is expensive when they land so they would have arranged a different option to leave the airport. Consumer reaction to prices changes may not always be immediate. These drivers are operating in their own interest in the short term but who knows if they are in the long term.
100%. I fly out of DCA/IAD, and each time weigh the options of parking at the airport and taking a rideshare service. Last time I used Uber from DCA it was much more expensive than I expected, and have been parking there since.
Well, there's always the immediate option of a regular taxi!
But yes, sure, who knows, but isn't that the point the free market fundamentalists often make about price clearing? Supply and demand will somewhere theoretically clear each other and maybe it's always a dance around that spot, but in this case the drivers are using the algorithm to try to find the best price they can get for their service, rather than let Uber/Lyft determine it artificially.
I just don't understand why when capital sets the "price" of labor, it is considered free market ("No one forces anyone to drive for Lyft") even though many people literally have a choice between working or starving, which isn't much of a "free choice". But when labor tries mechanisms to find a new price, it's "collusion" and "gaming the system"
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After all, even in this, there is always room for "defectors" to take the passengers that wouldn't use the higher rate!
First time I encountered surge pricing on a return flight (almost doubled the normal fare) is when I started looking at airport parking again. I then discovered I could prepay parking (DFW) and it is 30-50% off normal rate (and several times during special promotions I only paid $6/day). On short trips Uber/Lyft would actually be more than airport parking. For a week long trip it would be comparable, but that is assuming not impacted by surge pricing again.
I still use Uber/Lyft at my destination (paying close attention to rate), but at home, never again.
"On average, Lyft drivers earn over $20 per hour."
I wonder if this figure takes into account all the waiting time, or just driving time on the app. If it is the latter, then that's a pretty scummy thing to say, considering that most drivers spend less than a third of the time actually driving people to their destination, putting the actual number closer to 7.00 an hour.
I feel like that's like the truck driver like stories where they'd talk about driver shortages and trouble finding new drivers and then quote average pay that is for someone with 10 or 15 years experience and pay you only get at the top shippers or working direct for a big company.
It doesn't. After expenses/taxes deducted, they're making less than minimum wage. To me this just shows how much financially illiterate many Americans are; zero foresight beyond the amount in their bank account at any given moment.
One of my lyft drivers had their car in the shop for 6 months (some dispute with the kia dealership, they assured me that their lemon lawyer would recover the car soon) and the car they were driving for lyft was a rental from enterprise. Desperate people are taking these gig jobs and it's scary how far in over their head some of them are.
Not to mention that, as a contractor, they have to pay SS and Medicare payroll taxes, which total an additional 7.65%. So, that $20/hour, given the overall expenses, is probably not even equivalent to the new NYC minimum wage of $15/hour.
One year I made around minimum wage (paying myself just barely enough to live during the early stage of a startup) and paid I think around 25% effective just for federal.
I now make a lot more than that with a W2 job as my primary source of income and my effective federal tax rate was about half of what it was that year.
IMO FICA cap should be raised significantly and the rate should be reduced. There are entry-level FAANG employees who aren't paying their full salary into it. But that's an entirely different topic.
You still get to deduct half of your SE tax from your ordinary income, which is fairly generous from the IRS's perspective.
From the perspective of someone like me, my W2 job already puts me in the 24% bracket this year. If you use a platform to freelance, they'll take their 5-20% cut, you'll owe FICA at ~15%, ordinary at 24% (a little less because W4 withholding tends to overestimate), and state taxes at 5-10%. It's fair because those are what the rates are and I know what I'm getting into, they just appear higher at first glance.
It's also easy for me as a software engineer to set my own rate to account for the extra taxes I'm responsible for. In fact, my rate is significantly higher on the one particular platform where I'll only see ~$150 of the first $500 billed to a new client after everyone takes their cut (on which the client also pays ~$10 in transaction fees to the platform).
It's nowhere near as easy for a Uber/Lyft driver to do so since their rate is set for them by some algorithm that tries to balance supply and demand. These companies went out of their way to classify drivers as contractors, but still want to present an interface to the riders that tells them that they're taking an Uber and not that they used Uber to find an independent driver.
IMO they can't have it both ways. Drivers should be able to set their own rates and riders should be presented with a list of drivers and rates to pick from. Uber still gets to take their cut and they can still set up surge pricing as a % of the driver's rate. There can still be an option to pick the cheapest driver for those who don't care. This would better reflect what these companies are trying to legally classify themselves as.
In a state/city with high income tax, you'll pay 13.5% social insurance tax, up to 10% state/local tax, and 10-25% Fed income tax, but you'll only hit the high end of those rates in total tax when you gross upwards of $300K/yr.
I've had rides that cost me $15 and took 45 minutes, the math does not add up at all.
In fact, I commute with Lyft nearly every day and my average 40 minute ride costs somewhere around $20. Even with another ride directly like mine it's unlikely there's enough earnings within an hour to cover Lyft's fees and pay the driver $20...
Why not? Figure the driver takes 10 min to pick up another passenger. That’s another 10 min worth of driving and we’ll just say it all goes to Lyft. Driver makes $20, Lyft makes $5, 10 minutes are “wasted”.
The hourly rated is based on the time that the app is active. So that hourly rated would include wasted time waiting for customer, driving to pick them up, etc.
When low paid workers coordinate their efforts to increase their pay it's called an "artificial price surge" and allegations of fraud are thrown around.
When highly paid executives, investors, and board members coordinate their efforts to increase their pay what does the media call it?
Indeed. I never understood how coordinated bargaining is "artificial" but the decisions about how much profit goes towards the workers versus executives is somehow... "natural"?
As much as I would be displeased if my fare were manipulated, I can only blame Uber and Lyft for this. They created an incentive for drivers to act as a unit, and groups of drivers are figuring it out. Really makes you long for the transparent, posted pricing of municipal taxis
Uber/Lyft prices are totally transparent: they show you the fixed price before the ride.
Meanwhile, municipal taxis may not have been able to charge more per minute and/or unit of distance, but they could control how many of those units the ride took.
They mentioned Malta but they were responding to a comment that was made in a general context. There are benefits to having a regulated taxi system. Saying that unless those benefits are realized at every single place on earth, they don't mean much.
I can think of a ton of technical ways Uber and Lyft can combat this. And they probably will. And they'll be short term happy and long term foolish. Because they're treating the symptoms, not the cause.
Their hands may be a bit tied on addressing this issue, because if they start rejecting drivers based on when they choose to work, it's hard to call them contractors.
Isn't that exactly what you get to do with contractors? One of your criteria in picking a contractor is showing up. Kind of a problem, I'm told, with housing contractors.
And as with housing contractors, the best way to get them to show up is to offer more money than their other offers.
Contractors are supposed to be relatively independent. You give them the outcome (a new deck), a deadline (June 1st), and any stipulations (no work after 9pm) and they organize the work however they see fit. One guy could work steadily for two weeks, or a bunch of staff could show up and knock out the deck in two days.
Employees are supposed to take more direction. You can tell an employee that she must start at 8am each day. She will dig holes for the footings on the north and west sides first, then start cutting stringers while the other guy finishes the south and east sides.
Yea, the definition of contractor that often gets thrown around in these discussions seems to exclude most real world contractors. I’ve worked as a construction contractor and a software contractor, and I did not get to set my hours in either one. It seems like the legal system is out of touch with the world of business.
The real definition of a contractor may be “an employment relationship in which the worker does not want to assert employee rights”. In my case I did not want to be an employee because contractors got paid more for the same work, and I liked taking time off between gigs.
The ability to set hours isn’t the only distinction, but it’s an easy and obvious one to test. Using your own tools is another one: it’s a rare deck builder who shows up and asks to borrow your saw.
That said, there is a lot of grey area and it’s also true that a lot of jobs are misclassified. That doesn’t make the classification meaningless though, and I would thrilled if governments were more proactive about making sure people go the rights they’re entitled to.
You can't make those stipulations on contractors whose entire relationship with the company is built on on-demand providing of on-demand rides.
You can attempt to rewrite the contracts to change the allowed and encouraged behaviors, but the more restrictions added, the more it starts to smell like an employer-employee relationship--and that will kill Uber and Lyft stone dead.
I assume you're proposing that the cause is 'low' wages. So let's say drivers earned an average of $50/hour. This would put them in an income bracket such that they earn more than 95% of Americans. Do you think that people would not then exploit a legal angle to bump their earn up to let's say $70/hour, if they found out a way to do so?
Once you account for self employment tax, gas, wear and tear on the car, and a total lack of job benefits, an Uber driving being paid $50/hour probably makes less than someone getting paid $25/hour in a steady job. For sure they would be making wayyy less than the top %5 of Americans.
I'm not a lawyer, nor do I agree with what I'm about to say, but the drivers need to be careful, because they might run afoul of collusion.
Since they are all independent contractors, they are "rivals" in the same industry, so with all of them cooperating to increase fares for their benefit (and based on my understanding of the law), they are technically colluding.
They should just form a union. Contractors can form one - they don't get all the privileges (for example, the employer isn't legally required to bargain with them, and can retaliate against strikes) but it'd probably permit this sort of short-term work stoppage.
Depends on the state, but federally, independent contractors are excluded from the right to form or participate in unions as defined by the National Labor Relations Act.
EDIT: independent contractors are excluded from the protections of their union actions.
> As an independent contractor, the terms and conditions of the work you perform are set out in a contract between you and the employer. Even though you are not considered an “employee” under federal labor law, you may still join a union. However, you should keep in mind that a unit of independent contractors is not subject to the same privileges and protections as a regular union bargaining unit. For example, an employer is not under the same obligation to bargain with a union regarding contract terms for an independent contractor that it is to bargain over issues affecting its regular employees. Also, an independent contractor who went on strike would not be protected from employer reprisals under the National Labor Relations Act.
Plenty of contract plumbers, electricians, etc. are members of unions.
But are they allowed to set a price? If the app doesn't allow them to do it then maybe it is slightly different story. Maybe it is Uber of Lyft who manipulates the prices by punishing those who doesn't want to accept low-cost rides.
Is that illegal? They can always claim it's not collusion because anyone can join uber and set another price - They are not stopping anyone from doing that. (also it seems almost trivial to fix this with a change in algorithm)
That's an interesting take. Someone else in the thread likened it to a strike for higher wages, happening multiple times in a night. I wonder where the line is between that and collusion?
I have no issue with them not being available and having rates go up. that is what they system should do. I know uber/lyft drivers that turn off the app after drops off in areas they like being so that they don't get prompted to take a nearby fare.
I do find it annoying that these drivers are upset at the fees. Look, before then all you could do is work for a taxi service and they make uber and lyft look like saints for the most part. you are free to work for whomever you want and you got into the deal knowing what it was.
> You are free to ride with whomever you want, and you got into the deal knowing what it was.
This cuts both ways, though. Taxis still exist! If you don't want to take Uber or Lyft, you are free to take a normal taxi, use public transportation, arrange your own ride, etc.
“Over 75% drive less than 10 hours a week to supplement existing jobs. On average, Lyft drivers earn over $20 per hour.”
These statistics could be very misleading. For example let’s say one driver works 4 hours, another 6 hours, another 10 hours with all three making making $25/hr and the final one works 80 hours making $10/hour. In this scenario 75% of drivers are driving 10 or less hours a week and the mean driver hourly rate is over $20. However 80% of the hours driven are by one driver making $10/hour. This one driver is clearly the workhorse of the ride-sharing company making the bulk of the profit.
Oh man these guys think this is fraudulent? They should come to China. When rebates were all the rage, where the ride hailing companies would pay drivers subsidies, they developed software that could fake the GPS address on the phone and pick up fake rides without actually driving and get massive rebates
I don't like the word "manipulating". It is like a trade union negotiating better terms. If they do it voluntarily without intimidating the drivers then I don't see any problem. They should not feel guilty.
Also, in a Lyft's statement:
> Over 75% drive less than 10 hours a week to supplement existing jobs.
I wonder, are those 75% working part-time or full-time? It must be tiring driving 2 more hours after 9-hour working day.
I’ve always been fascinated by the way Uber has implemented their market dynamics using surge pricing. Uber isn’t a market for rides in the way that, say, a stock exchange is a market for stocks. There aren’t drivers setting their asking price and riders making bids, nor is there an order book where matches are made at a clearing price, and understandably so - I can’t imagine how to build a comprehensible UX around a “true” bid-ask marketplace.
Instead, Uber presumably has historic estimates of the supply and demand curves at different locations, different times of the week, different passenger / rider populations (business travelers or tourists?) and then uses the measured “true” supply and demand to find a clearing price, and therefore decide whether or not a market is going to surge.
The UX of surge is important too - the raison d’être of surge pricing is to bring more drivers to an undersupplied market. That means that when you detect a supply or demand shock that would lead to surge pricing, you want to increase the surge as quickly as possible to send out the “we need more drivers” signal, because there’s a latency in getting more supply (drivers have to relocate). Conversely, Uber doesn’t want to drop the surge price too quickly - they want downward movement to be sticky - because you don’t want to tell drivers “there’s more money to be made over here” just to renege on that promise before the supply can even get there.
So if surge is sticky on the way down, these drivers may have found a way to exploit the pricing algorithm - simulate a price shock then reap the rewards. If surge were not sticky on the way down, this strategy might be much less effective - a few drivers would get better fares, but the market would return to equilibrium faster.
None of this is to say that you can’t have cartel behavior in a “bid-ask”-style market too, but I suspect this is a “hack” of Uber’s pricing UX as much as anything else.
This seems like a logical outcome considering the company and contractors have an increasingly disconnected and at times adversarial relationship.
The entire gig economy is based on shifting risk onto the contractor (demand changes, benefits, protections regarding injury / illness)... and to some extent onto the consumer too.
Both companies claim that drivers are independent contractors who can drive when and where they want, so how can they say that these drivers are in violation of anything?
Uber/Lyft probably knew this was going on already, but since it increases revenue, probably was looking the other way. It’s going to be hard to ignore this now that it’s getting media attention.
The only economic model that make Uber and Lyft make sense is if drivers are willing to take low pay (considering all their other costs). If they make more money than cab drivers, the whole model falls apart, because then cabs will be cheaper and the service won't be competitive. (Granted, the lack of having to pay for medallions saves them a bunch of money)
I think the only long-term business plan that makes sense for them is black cars, or people who don't want the hassle of Taxis.
Keep in mind that uber was successful early on not because of price, but because it was significantly more reliable then a cab. I was willing to pay a bit more then a cab to get to the airport because I knew I could count on that uber to arrive at my house on time.
Uber and Lyft are not trying to be cost competitive with cabs; they are trying to be cost competitive with public transit.
I'm still convinced that the only innovation that ever happened in this space by Uber was the guaranteed ride. They chose to fight (ok, ignore) the taxi regulations, but from a features perspective the taxi apps already did all this. The difference was that any random person off the street could still flag your cab so in practice you rarely got a taxi if you weren't in a "hot spot". Reliability matters.
I've definitely experienced this at DCA, and it's worth nothing as well that it sometimes take hours to get out of the airport due to the insane traffic jams right around the terminals and in the parking garages. DCA has gone from my favorite airport to literally my least favorite over the last year or so. I've been using Dulles instead even though it's way less convenient.
DCA is also one of the easiest airports in the US to access the metro(public transit) out of the terminal. Is there a reason you just don't hop on the yellow line and get off at a less congested stop closer to your final destination?
Absolutely, but in that case, the issue about extreme traffic congestion is much less likely. Even though traffic in the area can be difficult at times, 1AM seems like an unlikely time to run into that.
It's many miles farther -- but I then don't get stuck at the airport for two hours Friday night. Also, DCA is great when you're inside while IAD is the usual huge-airport security nightmare.
You forgot the kicker to the definition of a cartel: "restricting competition".
The events in the article do not indicate that they are somehow prohibiting other drivers from accessing the platform. While it's certainly possible they're strong arming the drivers at the airport, overall they're not restricting someone from signing up to become a Lyft or Uber driver.
I'm not sure if the number is accurate but I do know how amazingly stubborn humans can be in finding a new job. I've had people refuse to quit a job that they groan about every day when I've offered them almost double the salary to work elsewhere with far better terms.
Humans are risk averse and those who live paycheck to paycheck are especially so. It defies logic until you consider that their fear of the unknown + small chance they end up with no job has a massive adjustment weight applied to it in their minds.
It has a massive cost if it doesn't work out too. We're talking about an income bracket that could miss, say, one credit card payment minimum then due to a raise in the minimum for missing, probably miss the next. Situations like this are posted on reddit.com/r/personalfinance all of the time.
It's the same reason municipalities are dropping jail time for unpaid fines, etc, as hourly workers that miss one day of work unexpectedly are often fired and then end up in even more financial misfortune.
I've never met a lyft/uber driver who did it full time. Most of the people doing it need the work but can't manage committing to adding a full third shift to their life on top of their other job because they have kids/a dependent/class or just got laid off and are trying to stretch their savings while looking for work, and need the flexibility.
You're applying a healthy dose of rationalism to this. I don't have the answer but I think there's a possibility that you can't expect rationalism when you're asking people to walk away from the major pattern in their life which puts food in their kids mouths.
Some people actually do not want to be at home (I once had a taxi driver who drove us from Manhattan to Brooklyn, then waited for us to go home, hours later, all the while texting his family that he had to keep working).
Also, leaving the car turned off and waiting in a lucrative parking lot saves gas, wear and tear on the car, and drastically decreases the opportunities to get into an accident. All in all, it is not a bad plan. Taxi drivers have done this for years (which is, ironically, probably one of reasons Uber got started in the first place -- in SF it was almost impossible to get a cab, because so many cabbies just wanted to get airport fares).
That's what happens at airports. The drivers are there anyway. While they wait, they coordinate to increase pricing just before an airplane drops off a bunch of passengers.
https://callaride.com is launching next month (local to the Tampa Bay, FL area only for now), and one of their key differentiators is giving drivers the ability to set their rate. There will be minimums and maximums in-place, but they will have more control than with Uber or Lyft.
Note: I am a third-party PM working with the web and mobile application teams.
I think many people are missing some facts from the article. They aren’t so much going on “strike” as they are just turning off their apps on masse 5 minutes before plane lands to trigger surge pricing, and then turning back on to catch the passengers at surge pricing. Obviously customers are still choosing to accept such fares, but may not know that the real price (if they wait a bit) would be much lower.
The whole point of surge pricing is to get more drivers on the street. If they decrease it that quickly, then there is zero incentive for a driver to leave their house and get in their car and get out on the street, because by the time they do that, the prices are back down.
I'm fine with it. Airports are the worst sort of fares a driver could take, people could get dropped off deep in the suburbs and the driver has to take 20 mins to get back to the city where people are actually calling rides. Occasionally these distant drivers will try to snipe me too while they are out there, probably hoping I'm too drunk to notice that they will take 20 mins to arrive. It's fickle work.
Uber can predict that the drivers are at the airport -- they were logged in when they dropped off a fare, possibly when they were already in line at the cab stand, and also Uber can use a bit of common sense.
That's really all they (and, to be honest, most "marketplace" tech companies) need to say. They have the customers; here are our terms. It kinda really sucks, because the quality incentive goes out the window.
> The technology cost for a 4 mile ride is the same for a 50 mile ride.
Technically no, the real-time tracking requires constant data streaming to and from their servers, proportional to the duration of the ride.
But a more likely answer is that a fixed amount per ride makes short rides prohibitive or at least less appealing.
And if you think about it, much of the costs are probably fixed (across all rides), so you could say they should charge $millions to the first ride, then just charge marginal costs for the others. Dilution of costs across purchases is an indispensable part of doing business.
Some cities seem to get far better rates too. In Boston most of my trips were around $4-5, maybe closer to $15 to get to logan. When I was in Columbus it was like the trips were arbitrarily twice as much, hovering $7-10 for similar distances. Miami probably had the highest rates I've experienced (Like $25+ to get to the other side of the biscayne bay), traffic was terrible as well so I wasn't as shocked, but it seemed much higher than going a similar distance in LA. I was still able to get rides in 10 minutes in most cases everywhere, so it wasn't for lack of free drivers, it seemed.
They can just counteract this by refusing to turn on surge pricing if they detect a large number of drivers disappearing if they predict that they'll come back shortly. Should be easy to predict that pattern and counteract it, unless the drivers are willing to skip work for an extended period of time.
I’ve heard about this tactic from people working at Uber years ago. I think they’re aware that it happens. The way it was described to me is the Ubers are in a line at the airport and each car signs off except the very first. That way rides keep coming and the first person in line gets surge pricing
This seems easy to fix on Uber/Lyft's side --- to recognize that they don't need to maintain book depth. At the airport, since passengers are effectively queued up.
Don't Uber and Lyft lose on every ride? I wonder if the increased fair caused by this cooperation makes the average ride profitable. Perhaps the price of a ride is more elastic than Uber and Lyft think? Especially at airports.
This is hilarious. Props to the drivers. Capitalism at it's finest: assumption of information imbalance.
If uber and lyft do nothing, this behavior will autocorrect itself: expect a few drivers to rebel/revolt after the news of the behavior spreads. Keeping the secret will get harder and harder.
But it doesn't have to be secret, ad defectors only hurt themselves by accepting lower pay for the same fare. That seems like a strong incentive to play along.
All this discussion about employee/contractor situation or possible collusion won't matter after Uber/Lyft close this loophole and this can be done easily. It makes no sense that the drivers would allow the reporter to publicize this trick.
With the drivers classified as independent contractors rather than employees would cooperation between drivers to manipulate prices run afoul of antitrust law?
I personally believe that driver's compensation is a valid discussion, but defrauding the system is not the way to do it. Uber/Lyft should just carefully identify and ban the cheaters and the lesson should spread as efficiently as the planning to cheat.
They're not cheating. They're on-demand service providers providing services on-demand to on-demand consumers and they're acting according to the spirit of their agreement with Lyft and Uber--"I don't want to drive for less than $X, so I won't, and I'll wait for you to offer the money I do want."
So, with that more correct understanding of the world, your post amounts to this: "I believe that driver's compensation is a valid discussion, but only on the terms of the people holding capital and the majority of the power."
I would imagine he sees it as fraud because these are drivers who are ready and willing to drive and are waiting on fares but are not indicated on the app as so.
So when someone uses the app to find out about nearby rides, it shows no one, then it ups the rate to try and lure further drivers. Or the few drivers that are on the app currently. Then when the price is "right", all the waiting cars turn on the app at once to get the "surge" price.
These people are exploiting the rules of the system to violate the spirit of the system. The more available cars, the lower the price.
The more people find out that drivers are doing this, the more likely some form of retaliation will follow.
Either users will just start using cabs again because the price is no different or they'll do something else. Like give default bad reviews to any airport trip that they suspect of manipulating surge pricing.
Drivers are not ready and willing to drive. They are ready and willing to drive for a higher rate. Lyft and Uber provide that higher rate when there is sufficient demand and insufficient supply. Working as designed, yo.
Multi-billion-dollar companies do not need you to cape up for them. Somehow, somehow, they will survive against those mendacious poor people who have found a way to represent their requirements to the company.
Where did I say this was a good or bad thing? Nowhere.
I described things that could happen if the practice becomes too exploitative.
Also, I can see the argument that it violates the TOS for the drivers. The drivers agree to drive for the price determined by the service. They are then using exploits to manipulate that price.
If they don't want to drive for X fare, then they shouldn't be in their car.
And this is an incredibly complicated situation because there are at least three different principles involved. The driver, the company, and the passenger.
In some way, the passenger is being taken advantage of. The passenger _also_ has a contract with the company. And that part assumes that the price is determined fairly and not being manipulated by outside forces.
> Where did I say this was a good or bad thing? Nowhere.
You didn't. But nobody perturbs that many electrons if they don't have an opinion on the topic (and I'll be real, I've got one too but I'm not trying to cloak it in neutrality). And then we get this:
> In some way, the passenger is being taken advantage of.
This is nonsensical. It also proves out the hunch I expressed from my last post, so thank you for doing the legwork for me.
As to why it is nonsensical: the passenger is in no way being "taken advantage of", except insofar as Lyft and Uber already commit obvious fuckery on the regular. The prices are "being manipulated" all over the place--I get different prices on Uber than my girlfriend does when we're standing next to one another!--and there is no expectation that "outside forces" (oooooh) are somehow kept out of it.
The passenger is being given a price at which they will be transported. That's it. The driver is being given a rate at which they will do the transporting. That's it. If they both agree, the ride happens and Lyft/Uber take their cut. This is how a two-sided market maker is supposed to work.
I don't know why it would be okay for Uber and Lyft to fiddle-fart with prices but it's not okay for drivers to say "I won't drive for less than $X". Why are you choosing to shade, to preferentially "see the argument" against poor people when it means that they might make a little money using a market the way a market is supposed to work?
> This is nonsensical. It also proves out the hunch I expressed from my last post, so thank you for doing the legwork for me.
How is it nonsensical? Is the end-consumer just supposed to sit and watch drivers and the company fight to see how much money they can extract from their wallet?
Stop trying to make outside forces seem like some sort of sinister scare tactic. It betrays _your_ bias.
The agreement is that Uber/Lyft set the prices based on the number of drivers in the area. It's ok by the very nature of the agreement both the drivers and the passengers agree to for using the app.
It's ok for the drivers to say "I won't drive for less than $X". What's not ok is saying "I'll sit here and not drive and force a surge so I can then take advantage of a situation I caused." If they weren't at the airport, that's one thing. But they sit at the airport and pretend to not be waiting for fares so they can force a surge. Then they turn on the app so they can both be readily available and get the surge.
Uber/Lyft get their cut either way. The people getting the brunt of the higher fares are the passengers. So dismissing them as a concerned party is only a tactic to defend the drivers.
Are the passengers also not part of the "poor people"?
> How is it nonsensical? Is the end-consumer just supposed to sit and watch drivers and the company fight to see how much money they can extract from their wallet?
Who says the consumer has to take an Uber or a Lyft at all? They have exactly the same right as the driver to not take a ride. The demand curve is elastic; demand goes down as price goes up. Consumers are not locked into Uber or Lyft. Taxis exist. DCA is connected to two train lines.
> Stop trying to make outside forces seem like some sort of sinister scare tactic. It betrays _your_ bias.
Betrays? You get that I'm totally owning my bias, yes? And that I am not the one who is coloring driver action while ignoring Uber and Lyft's internal price fuckery?
Price fluctuations because Uber's internal model knows that I'll pay more for a ride than my girlfriend will are no more legitimate than this, and yet you just let those slide and focus, for some reason, on those "outside forces".
> But they sit at the airport and pretend to not be waiting for fares so they can force a surge. Then they turn on the app so they can both be readily available and get the surge.
So?
That is their only lever for expressing their willingness to work at a given price. If Uber and Lyft provided mechanisms for declaring price levels--"I am only willing to take rides at $X or more"--then this wouldn't happen. But that would reduce the cheap, high-volume rides that make Uber and Lyft their money, so of course they are uninterested in doing it. So drivers have their lever, and they are using it.
I'm gonna be real for a sec: what you're saying amounts to "they need to work for the rich people at the rich people's price because only rich people get to make decisions."
> Are the passengers also not part of the "poor people"?
Compared to Uber and Lyft: sure! Compared to drivers: generally not; of course, there are exceptions...but probably relatively few exceptions leaving DCA via Uber or Lyft).
But they don't have to use Uber and Lyft to leave DCA. Consumers have other options that they can leverage. If nothing else, taxis are a nearly hard upper bound on pricing.
When these services first introduced surge pricing, they told us that it was a good thing because it encourages more drivers to get on the road and take care of demand. It’s working exactly as designed.
Taxi prices are regulated because negotiation was too difficult in the pre-smartphone era and taxi drivers would take advantage of information asymmetry to screw people. None of that applies here.
The negotiation is happening between the drivers and passengers, which is how it should be. Uber and Lyft are acting as intermediaries, and are trying and failing to stop this negotiation.
Can you explain where you see a "negotiation" in this? (Don't get me wrong, I like the cut of your jib, it just seems to map better to a dysfunctional spread-based market.)
The drivers are offered a certain rate. They refuse, implicitly asking for a higher rate. This repeats until the drivers get a rate they can accept, or they give up and go home.
On the other side, passengers are offered a certain rate. They can accept it, or they can refuse and implicitly ask for a lower rate.
There's no negotiation happening, though. You don't negotiate in a bid-ask market. "I want X for $Y." "I will give X for $Y." "Done."
(And it functionally is a bid-ask market, though I'll acknowledge that it's made a bit messier by Uber and Lyft fiddling in internal-and-undocumented ways with the prices and offers that they quote.)
I dont see how Lyft gets off calling this fraudulent. Seems to me it's the system working as intended, and as it should.
Drivers dont want to drive for under a certain value, so they simply inform the app who adjusts the value to fulfill demand. Seems like its what you want to happen.
And it only works as long as all of the drivers in an area agree: one or two drivers who don't join the scheme, and it doesn't work.
Not all. The large majority, but not all. There are very likely one or two drivers in the area that don't participate, simply because they aren't in the parking lot at the moment they orchestrate the mass logout. Surge pricing is about supply and demand, so if expected demand is high (like at an airport) they need a lot more than one or two drivers.
I don’t think it even necessarily needs to be a large majority. It just needs to be enough such that the remaining drivers aren’t sufficient to meet demand. Depending on circumstances, that could require anywhere from one driver to all of them.
It’s a great illustration of how supply and demand work to determine prices.
Yeah, agreed, but these guys are going for maximum rate, so they have to get as many as possible.
Indeed. And as the rate grows higher, there’s ever more incentive to defect from the scheme. This should be a case study taught in Economics 101, it’s so pure and clear!
Well, yes. It will settle at the rate they're actually willing to be paid, not the one their "employer" is setting for them.
Maybe not all, but I wouldn't be surpised to see someone "not participating" txting a buddy "prices up".
Someone has to check it to make sure it is working.
Couldn't they check using the passenger app?
I the rate that the passenger sees always the rate that the driver is paid?
If so then yeah, but I'm not sure they're always 1:1.
It used to be almost exactly proportional. Lyft and Uber have been progressively trying to disconnect the two values, though; these days it's probably not possible to tell.
> And it only works as long as all of the drivers in an area agree: one or two drivers who don't join the scheme, and it doesn't work.
That's much easier to organize at an airport than elsewhere, since all the drivers are required to gather together in an airport waiting area.
If one or two drivers pick up the fair before the surge they are good for 15+ minutes of being not at the airport driving someone someplace, then the surge can just happen then after they leave.
And it’s not like Uber and Lyft are a monopoly. Taxis are available, and there are roughly eighteen million private car services in the area.
Its not clear to me that Lyft is calling the behavior fraudulent. That's a sketchy AF quote-out-of-context by wjla.
I don't know if I would call it fraud, but I can see where they are coming form. Drivers aren't individually deciding to turn off the app, but they are doing it collectively to manipulate the app into surge pricing.
> I dont see how Lyft gets off calling this fraudulent.
The workers are "defrauding" Capital out of greater-than-substance wages. It's bullshit, and they'll try to re-frame in in terms of customers, but that's essentially their view.
Well, Lyft drivers are supposed to be contractors, it's normal for contractors to set their rate so I don't see how this is fraudulent.
'ardy42 is presenting the part of the argument that Lyft and Uber can't say aloud but almost certainly believe.
Lyft and Uber have a vested interest in making their objection seem "pro-consumer," when they're primarily anti-worker; lower prices to the consumer pumps up the demand curve and Lyft makes more money.
> Lyft and Uber have a vested interest in making their objection seem "pro-consumer," when they're primarily anti-worker;
Given that Lyft and Uber are losing money, there is no difference between the two. Uber and Lyft are just vehicles (hah) for consumers to make taxi drivers work for less than what taxi drivers used to make. People use Lyft and Uber because it’s cheaper than taxis. Since Uber and Lyft don’t make any money, those savings are coming out of the pockets of drivers.
I mean, fair cop. Though a lot of my Uber and Lyft use is with the endless discounted ride offers I get, which seems to just be a transfer from investors to...well...me.
Contractors can set rates. They cannot make agreements with other contractors to not accept jobs for below a certain rate.
Musicians, actors, screenwriters, etc., belong to guilds which do exactly that. And, oh hey, it looks like there's already an independent drivers guild: https://drivingguild.org/
From the perspective of Lyft it is fraudulent.
Not exactly. The percentage that Lyft takes is the same, so Lyft actually makes more money from these price-hikes. The ones suffering are the passengers.
This assumes an inelastic demand curve. DCA has other options, such as taxis.
(edited s/elastic/inelastic - I dun goofed. Thanks, Erik!)
The existence of other options implies a more elastic supply curve, but implies nothing about demand.
That passengers suffer from a price surge does not assume an inelastic demand, or even a downward-sloping one. If you pay a higher price, you're suffering more, even if somehow it leads you to buy more of that thing.
Eh--"suffering" seems a bit dramatic; as economic transactions go, the up-front price quote by Lyft and Uber makes it pretty transparent and the options available to depart DCA put an upper bound on costs. But I was more referring to how Lyft and Uber make more money off of shorter, cheaper rides. They do make more from longer rides, because of percentages, but my understanding is that volume makes them much more money and that higher prices do depress volume.
These are good points.
By "suffering" I just meant "paying (someone, maybe another ride service) for it".
If higher prices depress volume, then some of the very drivers temporarily striking to raise the price end up paying for it, by ending up without a client. If all the drivers gain from it, then the airport demand for their Lyft services in particular (as opposed to demand for other ride companies) would in fact appear to be pretty inelastic. (Both seem plausible to me.)
*inelastic
Great point - they could be loosing a lot of passengers to taxis
The math has some nuance: an extra dollar for the driver increases his margins a lot more than it does for lyft/uber.
10 rides at 10 bucks or 5 rides at 20 is the same for uber, but way better for the driver (and worse for the consumer).
I believe you mean subsistence, not substance.
This seems the very definition of fraud, though.
Edit:
Fraudulent: "intended to deceive someone in order to get money or property".
The collusion is intended to deceive Lyft (and in the end customers) for financial gains.
By leveraging the supply controls, which are explicitly theirs to use to communicate willingness to take on work, in a two-sided market where you're not allowed to directly set prices? Please substantiate how that is fraudulent.
If Lyft and Uber allowed direct pricing, this wouldn't happen. Drivers would set the price they're willing to work for. Instead, drivers--who, once more for emphasis, are supposed to use price fluctuations as incentive or disincentive for working, that's what "surge pricing" was in the first place--only have one message that they can send: "nope, not at that price".
Or they can be obligated to work cheap because rich people demand their labor.
Hrm. I think I now understand where the claim of "fraud" comes from.
So go drive a cab instead. I hear that’s a great life.
They agreed to drive for a service for x. They can’t then complain that they are making x or manipulate the system to earn more than x.
No, they did not agree to "drive for a service for X". They entertain offers to drive at a given rate. They can choose to take those offers or not. That's the whole point of the on-demand, contractor-but-not-really relationship (see also the way that Lyft and Uber punish drivers to don't take absolutely every ride that pops up on the app) that underpins Lyft and Uber's business model.
They're refusing to entertain offers below a certain rate. That drops supply, which requires price increases to satisfy demand on the other side. The market, literally, is working as intended.
Ok, so they agreed to entertain offers. They can always say no. They have accepted those rides, so there is no possible argument to be made.
Grouping together to drop off and artificially increase prices when a flight lands sounds great because these are “the little guys”. If Google were doing it you would lose your shit.
Uber and Lyft retaliate--in ways that are at minimum unjust and in a functioning legal environment I'd bet a lot of money would be found illegal--for rejected rides.
Google doing it would be different, certainly. Companies are less important than people and poor people trying to survive get significantly more leash than multi-billion-dollar companies. If ride-on-demand companies operated with a transparent bid-ask system (see something like Taskrabbit for an example) instead of the opaque and intermediated market that they do, I don't think we'd be having this discussion. But they want to set prices and they want labor to shut up and take it, and that's not acceptable. To that end, yes, this is a fundamentally different thing than a multi-billion-dollar company controlling a market.
The article clearly mentions that this is an artificial and concerted effort to increase prices.
To me this does not seem different from taking a longer route to increase the fare.
What you describe would probably be fine if that wasn't concerted. But here they all collude to artificially trigger surge pricing.
Not accepting a ride until an agreed (the rider can always cancel the ride) price is met is entirely different than taking a longer route after a job has started.
Also that's a bit more nuanced a topic because between the driver and the passenger they might agree to take a longer route which could cost more if it's faster, avoiding traffic or whatever.
You're avoiding the point, which is the collusion and artificial price increase. That's fraudulent.
Edit: Whether this is a "regulated market" is a red herring and irrelevant.
"Fraudulent" is a word that means things. Can you please substantiate your claim beyond just the assertion?
That's what I keep doing...
To this point, I haven't seen it. Yes, there's collective action. You could even call it "artificial". Where's the fraud? How is it thus not fraudulent when Uber and Lyft run me and my girlfriend through their pricing models and quote me two bucks more for the same ride?
Why is this driver behavior fraud--and not the collective behavior of these ride-on-demand companies in general?
Hell, let's go back to first principles: why is choosing to refuse to take rides below a certain price ever "fraudulent"? It might be "bad", it might even violate the terms of a contract with Lyft/Uber and thus be grounds for termination of the relationship between the driver and the ride-on-demand company, but how is it "fraudulent"?
Words mean things.
Drivers don't set prices, Uber and Lyft do. Uber can keep prices lower and hire employees if they want.
It would if Uber was a regulated market. However, it is not, and Uber will never support making it so.
This seems like it could also torpedo their Contractor vs. Employee argument.
Contractors get to set rates, employees don't. So you can't say they're contractors AND accuse them of committing fraud when they try to set their own rates.
Now if only someone would develop an app that does this for entire cities. The app could be their version of a union.
Under the theory that Uber/Lyft employees are contractors and allowed to set prices, wouldn't coordinating ("conspiring") to do so en masse be considered price fixing?
Personally I think they should be considered employees, but a pro-management federal prosecutor could make some trouble for them.
On that note, does it make a difference that they're collectively refusing work rather than collectively setting prices? Uber and Lyft are still the ones actually setting the price.
In the end I don't think it will matter, Uber and Lyft could probably code around this pretty easily if it started to affect their bottom line. When they see 100+ drivers in the same place go offline within X seconds of each other, it's a pretty clear indication that there's coordinated action taking place. They probably have enough data from drivers' phones to see that they're sitting still waiting to go back online.
I just hope they don't decide to make an example out of these drivers by banning them...
While both companies provided consumer-friendly press statements, I would not assume that Lyft or Uber actually cares if this is happening. After all, they also make more money per ride under the scheme. As long as there are enough customers willing to pay the extra cost during surge pricing, drivers and Uber/Lyft would both win.
Speaking of price-fixing.. Competition is what usually keeps prices low in ride-sharing; if Lyft is too expensive, more people will use Uber. But if the drivers of both apps all trigger surge pricing together (in both platforms simultaneously) then it is possible that both platforms will make more money until the fake surge ends.
Seems like they could just force a delay of [x] time between individual driver logins. Call it a server side issue or something and make it so each driver can only re-login once every 15 minutes. Then by the time the surge worked the drivers instigating it would be locked out of participating.
Refusing to sell a product or a service below a specific price is literally what setting prices is.
Sounds like forced labor to me.
That's an interesting question. I'm not a lawyer, but I'd be interested in the answer. From a technical perspective it seems that they'd need significantly more control over product liquidity generally, rather than locally, for it to apply; from a moral perspective it doesn't seem like a reasonable appellation at all and that the closest equivalent is labor organization--and it's worth noting that companies are not obligated to negotiate with labor organizations on behalf of contractors in the same way they are employees, but contractors are allowed to organize. Contractor labor, such as SAG, IATSE, etc. do it regularly.
Practically, the impact of a hundred airport drivers deciding to "strike" is so small that a non-mendacious prosecutor probably wouldn't even look at it. But there's a lot of mendacity around Washington, so who knows.
Note that unions are specifically exempt from antitrust laws. So just because some conduct would be legal if a union did it doesn’t mean it’s legal without an actual union in place.
At least in Uber's case this seems to have been an emergent thing originally, as in: drivers independently of each other found under which conditions the prices were surging and acted appropriately.
I think you can make an argument that it’s bid rigging. Uber/Lyft pricing can be viewed as an auction where the surge price is the market clearing price. Conspiring with others to not accept bids below a floor could probably be prosecuted as a bid rigging conspiracy.
I don't see how it could be bid rigging, when the drivers are not even able to bid. Short of what the article discusses, they must take whatever Uber / Lyft give them. If anything, this seems more akin to actual negotiation / refusal to work at the proposed price. Which, if they are contractors, is perfectly acceptable, no?
> they must take whatever Uber / Lyft give them
No, they don't. No one is putting a gun to their head and forcing them to work. Uber/Lyft's offer is take-it-or-leave-it, but leaving it is always an option.
That leaving is an option is what the parent comment is saying ("refusal to work at the proposed price"). The drivers in the article are refusing to drive at the non-surge price, and when the price surges, they find the price acceptable and so take the rides.
The part of parent comment that you quoted is just about how the take-it-or-leave-it nature leaves no middle ground (bidding).
But that is false. Acceptance or refusal of an offer is bidding. It's essentially an auction: Lyft/Uber asks, "Does anyone want to sell at $X? No? OK, how about $X+1?" etc.
What the drivers are doing is not bidding, it is colluding to hide the true market price, i.e. what the lowest bidder would actually be willing to accept. That is illegal.
Please note that my sympathies are very much with the drivers. Their situation sucks and needs to be improved. But breaking the law is not the way to improve it.
I wonder why the opposite is legal. If users are willing to pay more, Uber/Lyft will not automatically offer more to the drivers. Seems like the free-market works only when it is in favour of the company arbitraging.
The rules of capitalism are specifically designed to drive the price down as low as possible, in the ideal case, to the actual marginal cost of production. That's good for the buyer, bad for the seller, so sellers try all kinds of ways to get around this, some of which are legal (IP protection) and some are not (collusion, price-fixing). If you want to argue that we should change the rules I will not dispute you. But that the moment, that's where things stand.
>But breaking the law is not the way to improve it.
Breaking the law is exactly what Uber and Lyft did and now that they're on the other side they're whining about it.
Two wrongs don't make a right.
Not usually, but a lot of these drivers were people that were screwed by Uber and Lyft's dodgy (illegal) practices (for example ignoring taxi medallion requirements, which they still are doing right now). So if the only way these people can stop their own bleeding is by responding with illegal practices of their own, Uber and Lyft don't have a leg to stand on.
You are implying that some drivers arr willing to accept it, but are not accepting it.
Aren’t you begging the question? How do you know this is the case?
If no drivers were willing to accept the lower rates there would be no reason for them to collude.
How can you prove they are colluding?
Did you read the article?
> What the drivers are doing is not bidding, it is colluding to hide the true market price, i.e. what the lowest bidder would actually be willing to accept. That is illegal.
Is that what's happening? The drivers have no ability to coerce other drivers. It seems to me that if there were a driver willing to accept a lower price, they would do so. But not enough drivers are willing, so Uber/Lyft is forced to increase its offer.
Of course that's what's happening. Collusion != coercion. Collusion is voluntary.
What is really happening here is that Uber wants the drivers to play a multi-player prisoner's dilemma, and the drivers want to coordinate cooperation. Uber wants to force the price to the lowest that the market will bear and the drivers want to force the price to the highest the market will bear. The rules of capitalism are specifically designed to produce the former outcome.
I don't think they are allowed to set prices. Furthermore, they are probably somehow punished if they don't accept the orders that app offers.
Uber and Lyft don’t let their drivers set rates, but the argument (and law) is that they should — since Uber won a judgement saying their drivers were contractors, not employees, their drivers, then, are legally entitled the right to charging their own rate. For a lot of intents and purposes Uber/Lyft wanted drivers to be classified as contractors so they wouldn’t be subject to laws re: minimum wage for employees, but it seems also don’t want to be subject to all laws re: contracting (price negotiation).
Barring some extreme measure of lobbying for and passing a law that carves out an entirely new employment classification for the gig economy, Uber/Lyft/etc have to comply with at least one of the existing classifications.
Have you ever done contract coding? You don't always get to set the rates, because the rate for the contract is posted, and the other side is not going to negotiate.
Contractor here. Well you are not obligated to accept the contract if the rate is too low. These Lyft / Uber drivers do the same thing, the rate offered by Lyft/Uber for a ride is too low so they decline and only accept if they get their preferred rate. The same as software engineer contractor does, I don't accept every contract opportunity when I am in between contracts.
In Uber Pool / Lyft Line, drivers are not allowed to refuse extra riders. If they accept one of these jobs they are locked in to whatever jobs Uber/Lyft throws at them afterwards unless they want to end their shift.
Except if you decline too many within a short time period Uber punishes you, I believe.
That's why they log out of the app / turn off their phones instead of canceling rides. So they are just not available in the driver supply and then when they log back in they get surge price.
It seems to me that Uber's counter argument would be that they aren't obligated to offer a contract to all contractors equally. They would further argue that Uber's product is availability of drivers vs the rides themselves (remember they are only the middle men) and that they provide preference (in a binary manner) to contractors who allow them to provide consistent availability.
The thing about contracting is you don't have to take the job if they aren't willing to negotiate. If no one wants to build your website for $5, then the client is either going to have to pay more, or not make a website.
All of the drivers around that airport incur roughly the same costs for gas, wear and tear, rent, etc. So while you might find someone halfway across the world to build your website for $5, you won't be able to do the same for your driver between the airport and your hotel.
Drivers are free to stop accepting rides whenever they want.
That's exactly what they did: stop accepting rides, then start accepting them again once Lyft offered to pay them enough that they thought it was worth it.
Which they're doing. En-masse. Until the fares go up.
I think in that case though it’s fine (even expected) because I can choose to take or not take it and find work elsewhere as a freelancer — the pro-labor argument with Uber/Lyft is that it’s systemic versus freelance work between two individuals is personal.
having been an uber/lyft driver professionally for a year and half, I could definitely choose to take or not take it a find work elsewhere. Yes there were incentives to not reject too many, but that's true of general contracting work, too.
They aren't, and the furthermore is also true beyond a certain percentage. This is part of the reason why in a number of jurisdictions the courts have ruled that the drivers aren't independent contractors.
Is it considered price-fixing if a union that works mostly contracts (e.g. electricians) sets a labor price? This seems to be a standard practice.
This is an interesting dynamic - the colluding drivers wait for Lyft/Uber to determine the surge pricing and the point-person for the drivers informs of the price increase to a target that is acceptable. Now how does the pricing affect the demand for the rides? Will a Lyft user switch to Uber if the collusion is affecting only 1 application (vice versa too)?
A union is basically collusion/price fixing.
Assuming that it is, can they do something about it ?
Why do you think they should be employees?
would they have to have more control over the liquidity of the market to be price fixing?
Taxi Cab Drivers were not employees either.
Why do Uber and Lyft need to take on the drivers as employees all of a sudden? I'm not saying they shouldn't be, but just curious why the seemingly sudden change in opinion from some people?
This is basically the contractor setting his rate... through an interface that the app designers did not specifically design for.
If a driver wants to work for $20, and the offered rate is currently $10, what’s the difference between them a) typing $20 into a text field and hitting a “request” button vs. b) turning a switch off and waiting for the app to increment the rate little by little up to $20?
Contractors get to set rates, employees don't. So you can't say they're contractors AND accuse them of committing fraud when they try to set their own rates.
This isn't how it works? Rates of pay are mutually agreed upon between an employer and employee regardless of classification.
They're not just talking about how much of the fee that drivers get to keep, but the rate they charge riders.
>Uber sees itself as an “agent” acting to connect the actual “merchant,” the driver, and the customer. [1]
Under the theory Uber is operating on, it's weird that drivers can't directly set rates with riders.
1. https://www.marketwatch.com/story/uber-an-early-adopter-of-n...
This has no bearing on whether drivers are employees or contractors however.
No not really, but I wasn't saying it did.
I think the pro-labor argument is Uber doesn’t even consider / allow negotiating their standard contract for rate-setting.
IIRC Microsoft got in trouble in the early 2000s for doing something similar in having separate standardized pay-scales for contractors depending on how long they’ve contracted with Microsoft, and no option to negotiate, and the labor board argued that Microsoft was trying to shoehorn contractor-employment law into employee roles without the legal protections and tax burdens of employment rights
Yeah, that makes sense, because the rate of the contract should only depend on the content of the job. And contractors should be able to compete for those jobs. That's certainly the case for Lyft/Uber.
News flash: if you go out of your way to classify your entire workforce as contractors, you don't get to decide when they work or not. It turns out this has consequences on both sides.
If Lyft wants to decide when their drivers are working, there's a process for this:
1) Hire employees
2) Give them a schedule
3) Pay them hourly plus mileage
I find it hard to agree. Hear me out...
They are contractors because they do not have any set obligation for time. Rate of pay or overall pay has nothing at all to do with that. According to the IRS they do not have a set schedule and they are contractors (that is 1099, not W2).
So they are contractors. What does that have to do with pay? Absolutely nothing. You want x and are willing to pay y. Maybe there’s an opportunity for me to negotiate for z, maybe not. Either way none of that has anything to do with the actual form of employment. Even if I were a salaried employee working 40 hours a week the company has a budget of $40,000 a year and that’s all they will pay. If I demand $45,000 they’ll just tell me no - they simply don’t have the money.
In this case Uber offered you $x. You agreed to $x. You have no schedule, which is the perk of the job vs driving a cab, where you will have a schedule. Need to take the kids to school or a doctor’s appointment? Well, work that around your work schedule.
And as for your third point... Uber already charges me for both time and mileage. I don’t see any problem with them paying their drivers based on both... but from the drivers I’ve talked to they already do. I can’t speak for any other service at all.
> In this case Uber offered you $x. You agreed to $x.
When did they agree on $X? There's no contract between the drivers and Uber stating they they will work for a given amount.
The app sets rates based on supply and demand. Uber offers them $X. The drivers decide they don't want to work for less than $Y. If demand is sufficient, Uber eventually offers them $Y.
Surge pricing is basically a negotiation between company and driver. Just because the drivers have found a case in which they have extra leverage doesn't make it wrong or fraudulent.
Cartels colluding together to artificially reduce supply in a market is often considered illegal market manipulation. That lyft is acting as a middle-man to set market-clearing prices here doesn't change that.
This was brought up elsewhere in the thread, and it's a valid concern. But consider that this might instead be a strike. Drivers want to be paid $Y, so they refuse to work until Lyft agrees.
I'm not sure where the line is between the two. But given that the market in question is the drivers' labor — and the ongoing question of whether the drivers are employees or contractors of these multi-billion dollar companies — I'm inclined to consider this "labor organizing" rather than "price fixing".
Yeah, and I'm not sure what's described in the article need even be considered "labor organizing". It seems to be just drivers exercising their power to not drive if the market rates aren't high enough. It seems like the weird signing off from the app actions wouldn't be needed if Lyft had better provisions for drivers to enter the rates that they're willing to provide rides at.
> In this case Uber offered you $x. You agreed to $x.
The value of x was established under different circumstances. What's wrong with bumping that to 1.5x as soon as you have the power to do so?
When the cab industry was "the system", Uber and Lyft beat the system and made money. Now the drivers are beating the Uber/Lyft system and making money.
Viva disruption.
EDIT: Actually Uber/Lyft beat the cab system and lost money, but that's another kettle of fish.
> In this case Uber offered you $x. You agreed to $x.
This is not true. Uber and drivers did not sign any contract specifying set rate.
Every ride that is offered to drivers has price based on supply/demand. Drivers are free to cancel jobs if they feel the offered rate is too low.
So the driver agreed to a certain amount and was paid a certain amount? Seems like I’ve heard that somewhere...
I never said they agreed to an hourly rate, I said they agreed to a rate, and they did.
They agreed to rates for previous rides and gave those rides. Each ride is has independent rates, there's no reason they have to accept past rates for future rides.
>They are contractors because they do not have any set obligation for time. Rate of pay or overall pay has nothing at all to do with that. According to the IRS they do not have a set schedule and they are contractors (that is 1099, not W2).
I'm not saying they're not contractors, I'm saying if Uber wants drivers who will work at a specific constant rate instead of signing out and demanding surge rates before they'll sign back in, then that's too bad for Uber. They created a market for driver contractors, and the drivers are participating in it. If they want shift employees who are obligated to stay logged in when a plane lands, they can hire some.
>In this case Uber offered you $x. You agreed to $x. You have no schedule, which is the perk of the job vs driving a cab, where you will have a schedule.
It's working exactly as intended then, Uber offers $x, drivers say "I'm not interested in driving for $x." Uber automatically counters with "Fine, I'll pay you $y."
Uber could make their system more hesitant to offering surge pricing after a bunch of drivers sign out like this, but when it comes down to it this isn't even a strike. The drivers haven't agreed to take fares at the lower rate, and Uber isn't entitled to their labor at any particular cost. They can all go home if they want to.
>And as for your third point... Uber already charges me for both time and mileage. I don’t see any problem with them paying their drivers based on both... but from the drivers I’ve talked to they already do. I can’t speak for any other service at all.
My point is that if Uber wants drivers a fixed particular price than then their "everyone is contractors" solution isn't appropriate. They can hire employees on an hourly wage to take shifts where they're paid whether or not they're currently driving a fare (mileage on top of that is to cover vehicle expenses). Sometimes they'll be busy, other times they'll have a slow night.
They don't get to have their cheap no strings attached driver arrangement cake and then also whine when drivers sign off and prices spike.
You have not agreed to 'x' until you accept the ride - and either the driver or the rider can cancel the engagement without penalty for a few minutes after the acceptance.
Plenty of contractors have set hours and come into an office. Several friends in software contracting firms for example do that. Also uber doesn't agree to pay you a damn thing. You could literally go work for 4 hours and make <$10.
> ...vs driving a cab, where you will have a schedule
Cab drivers lease their vehicles. Taxi companies are merely in the business of leasing vehicles and providing dispatching services. The drivers are independent and work on their on schedule.
And suddenly Uber/Lyft are like any other Taxi company just with a massive valuation.
There's probably a balance to be struck, because part of the ridesharing design's efficiency is that if demand drops they can drop their rates paid to drivers, and the drivers who don't want to drive at those prices will stop.
So if Lyft starts to say "we always want X drivers available as a base load, and we'll open up to contractors to fill in the demand spikes" it might make the contractor role too unreliable for anyone to bother doing it. At the very least, their costs would go up for both the employed drivers and the extra contractor drivers. Since their valuations comes mainly from a cheap labor pool, that presumably kills it.
But in the current situation, if all their drivers at the airport sign off and say "I'm not driving at these prices," you get surge pricing to make it worth driving, that increases costs too. That's what happens when you're buying labor from independent contractors - if they don't want to sell it to you at a particular time for any reason, they don't have to.
The real question here is "If Lyft recognizes when these organized sign-offs are happening, calls their bluff, and refuses to activate surge pricing, what happens?"
Do the drivers really refuse to drive at the regular pricing and go home? Or do they all give in to a more tamper-resistant algorithm and keep driving at regular rates?
Can we please stop referring to these services as "sharing"? Lyft actually started as a company that coordinated the sharing of rides, i.e., no money was involved. But the "sharing" pretense has long since past for all of these companies.
Right? It's nonsense. A grocery store isn't "food sharing", and a barber isn't "hair cut sharing". It's one party paying another for a product/service. Uber/Lyft's killer feature is the app pairing those two parties. But no one is "sharing".
google.com/search?q=buy+a+share+of+a+cow
We need a new word for "taxi companies with cute apps, unsustainable pricing/wages and lots of Silicon Valley venture capital propping them up" to distinguish them from old-school taxi companies if we're gonna quit saying "rideshare".
Any suggestions?
The dot-cab bubble?
I prefer unlicensed taxis.
While this is accurate, I think the subtext of it conflicts with the common anecdotal claims (including mine) far preferring Uber over actual licensed taxis.
"hired car" // been in use for decades
"ride for hire"
"car for hire"
"fee for service"
Macro-cab firms.
gig cabs
You know what it's caled when a bunch of people put up capital or labor in exchange for a portion of the retrun from coordinated activity. It's called buying a share -- from adventurers to publicly traded corporations.
Lyft isn't ride sharing because people aren't dividing up cars to rides, not because money is involved. Car2Go/Flexcar are car sharing. Carpooling is ride-sharing.
> Or do they all give in to a more tamper-resistant algorithm and keep driving at regular rates?
I wonder if they will change the algorithm to just tell the drivers what they want to hear. To wit - Introduce a new multiplier for drivers based on their behavior. This will factor into the final price, but be obfuscated. Then Lyft can tell the drivers they are receiving a greater surge than what the rider sees, and pays.
I think the drivers need to use the passenger app to see the surge pricing, anyways?
> And suddenly Uber/Lyft are like any other Taxi company just with a massive valuation.
What taxi companies have drivers as actual employees and not independent contractors?
Almost all of them. You lease a car and anything over lease and gas you get to keep.
--edit--
Never mind, read that backwards...
I think they'd retain some of that valuation. Unlike traditional cabs, they show up (I've been stranded by more cabs called by phone then I've taken, not hyperbole). But the value of some unified dispatcher framework, with penalties for abandoning customers probably isn't in the tens of billions. Maybe in the hundreds of millions? Either self driving cars change everything, quite quickly, or some people are going to lose a lot of money.
"And suddenly Uber/Lyft are like any other Taxi company just with a massive valuation." . . . which valuation would be rapidly evaporating.
I suspect this will happen one way or the other, as something that cannot be sustained will not be -- something's got to give, either rates will go up, costs will go down, or the companies will fold.
Rates probably have some room to rise. My limited experience is mostly airport rides, where they are cheaper than limo's taxis. But I'd still pay the same as the competing services, since Lyft has always been more reliable and pleasant. The main competition is parking.
Lower costs? I don't think so, short of automation. The drivers' costs & compensation have already evidently been pushed to the limit, as they are starting to strike.
Will they sort out either? I'm not buying either stock, even at the discount prices...
Not quite. Real taxi corporations have approval of city/state assembly to do business so that they control the amount of taxi cars being part of daily street flow. (Im ignoring the fact that this system is broken and corrupted)
If their workforce suddenly switched from contractor to employee, I expect that valuation would evaporate.
> any other Taxi company
Except world wide (or us wide).
Well, not for long...
Exactly.
This is really curious, in that it appears to be a normal strike for higher wages, except it's being coordinated on an hourly basis for just a few minutes until the company agrees to pay more!
Contractors can decide when and how they want to work, and therefore determine the price at which to sell their labor at, so to me it seems they are simply exercising their rights here. Like others have mentioned, if most drivers don't choose to participate, then this "scheme" wouldn't function.
Not 100% sure I'd call it a strike but its just the free market working quickly. I have a feeling though this will spread around the world and be adapted by drivers in many other countries. I've traveled a bit in South America and Uber drivers there really do earn barely anything - I dont know how they afford the gas - e.g. 1/2 hour trip for $3-$4.
I've also traveled in South America and relied on Uber heavily. I talked with a few drivers, and they all found Uber to actually be worth it. For example, Colombia's minimum wage when converted to 40hrs/wk/month comes out to ~$1.50/hr. It's not a bad gig there, and the cost of living is relatively low. The bigger problem is the danger of driving for Uber, as taxistas are not a fan of Uber drivers.
Few things interesting here -
One is that the workers are getting paid more per the algorithm that these companies designed to charge customers - that is, they are getting the company to facilitate higher payments but the company itself isn't being charged more! So in that case, the drivers are simply arguing that uber/lyft are artificially undervaluing their time because clearly these passengers are willing to pay 15% more to them to get home...
--
It is telling to me how often Lyft/Uber/et all emphasize that their philosophy is that these gig economy jobs are just something you do a tiny bit extra to get some extra cash in your pocket. That is they are designed to be a small supplement to the job that provides you with most of your income, so hey, we don't really have to worry about working conditions, etc.
But I'm not sure I believe their stats. Over the past few years it is nearly 100% of the drivers I get that are doing it full-time, and many/most of the "teacher moonlighting for extra vacation money" type drivers have given way to lots of former actual taxi drivers who quit their taxi company and now work both uber/lyft.
I wouldn't be so convinced that passengers are willing to pay these surge prices to go home. Sure, the first time a passenger encounters this artificial surge, they're already planning on taking uber/lyft home so they'll pay it because they probably don't have another option immediately available. But the next time a passenger arrives at DCA (could be a month or two), they might remember uber/lyft is expensive when they land so they would have arranged a different option to leave the airport. Consumer reaction to prices changes may not always be immediate. These drivers are operating in their own interest in the short term but who knows if they are in the long term.
100%. I fly out of DCA/IAD, and each time weigh the options of parking at the airport and taking a rideshare service. Last time I used Uber from DCA it was much more expensive than I expected, and have been parking there since.
Well, there's always the immediate option of a regular taxi!
But yes, sure, who knows, but isn't that the point the free market fundamentalists often make about price clearing? Supply and demand will somewhere theoretically clear each other and maybe it's always a dance around that spot, but in this case the drivers are using the algorithm to try to find the best price they can get for their service, rather than let Uber/Lyft determine it artificially.
I just don't understand why when capital sets the "price" of labor, it is considered free market ("No one forces anyone to drive for Lyft") even though many people literally have a choice between working or starving, which isn't much of a "free choice". But when labor tries mechanisms to find a new price, it's "collusion" and "gaming the system"
--
After all, even in this, there is always room for "defectors" to take the passengers that wouldn't use the higher rate!
First time I encountered surge pricing on a return flight (almost doubled the normal fare) is when I started looking at airport parking again. I then discovered I could prepay parking (DFW) and it is 30-50% off normal rate (and several times during special promotions I only paid $6/day). On short trips Uber/Lyft would actually be more than airport parking. For a week long trip it would be comparable, but that is assuming not impacted by surge pricing again.
I still use Uber/Lyft at my destination (paying close attention to rate), but at home, never again.
"On average, Lyft drivers earn over $20 per hour."
I wonder if this figure takes into account all the waiting time, or just driving time on the app. If it is the latter, then that's a pretty scummy thing to say, considering that most drivers spend less than a third of the time actually driving people to their destination, putting the actual number closer to 7.00 an hour.
I feel like that's like the truck driver like stories where they'd talk about driver shortages and trouble finding new drivers and then quote average pay that is for someone with 10 or 15 years experience and pay you only get at the top shippers or working direct for a big company.
Also does that include repairs, depreciation, insurance etc. of the car? What about fuel?
It doesn't. After expenses/taxes deducted, they're making less than minimum wage. To me this just shows how much financially illiterate many Americans are; zero foresight beyond the amount in their bank account at any given moment.
One of my lyft drivers had their car in the shop for 6 months (some dispute with the kia dealership, they assured me that their lemon lawyer would recover the car soon) and the car they were driving for lyft was a rental from enterprise. Desperate people are taking these gig jobs and it's scary how far in over their head some of them are.
It does not.
Not to mention that, as a contractor, they have to pay SS and Medicare payroll taxes, which total an additional 7.65%. So, that $20/hour, given the overall expenses, is probably not even equivalent to the new NYC minimum wage of $15/hour.
FICA tax rate for self-employed under $128k/yr is 15.3%. Effective tax rates for self-employed workers can reach close to 50%.
50% total, or 50% marginal? There’s a world of difference between the two....
One year I made around minimum wage (paying myself just barely enough to live during the early stage of a startup) and paid I think around 25% effective just for federal.
I now make a lot more than that with a W2 job as my primary source of income and my effective federal tax rate was about half of what it was that year.
IMO FICA cap should be raised significantly and the rate should be reduced. There are entry-level FAANG employees who aren't paying their full salary into it. But that's an entirely different topic.
That’s because with a W2 job, the employer pays taxes on the behalf of the employee.
When you are self employed then you pay both sides.
It’s pretty fair.
You still get to deduct half of your SE tax from your ordinary income, which is fairly generous from the IRS's perspective.
From the perspective of someone like me, my W2 job already puts me in the 24% bracket this year. If you use a platform to freelance, they'll take their 5-20% cut, you'll owe FICA at ~15%, ordinary at 24% (a little less because W4 withholding tends to overestimate), and state taxes at 5-10%. It's fair because those are what the rates are and I know what I'm getting into, they just appear higher at first glance.
It's also easy for me as a software engineer to set my own rate to account for the extra taxes I'm responsible for. In fact, my rate is significantly higher on the one particular platform where I'll only see ~$150 of the first $500 billed to a new client after everyone takes their cut (on which the client also pays ~$10 in transaction fees to the platform).
It's nowhere near as easy for a Uber/Lyft driver to do so since their rate is set for them by some algorithm that tries to balance supply and demand. These companies went out of their way to classify drivers as contractors, but still want to present an interface to the riders that tells them that they're taking an Uber and not that they used Uber to find an independent driver.
IMO they can't have it both ways. Drivers should be able to set their own rates and riders should be presented with a list of drivers and rates to pick from. Uber still gets to take their cut and they can still set up surge pricing as a % of the driver's rate. There can still be an option to pick the cheapest driver for those who don't care. This would better reflect what these companies are trying to legally classify themselves as.
In a state/city with high income tax, you'll pay 13.5% social insurance tax, up to 10% state/local tax, and 10-25% Fed income tax, but you'll only hit the high end of those rates in total tax when you gross upwards of $300K/yr.
I think they meant this comparatively, as opposed to absolutely.
It does not, and it should not.
I've had rides that cost me $15 and took 45 minutes, the math does not add up at all. In fact, I commute with Lyft nearly every day and my average 40 minute ride costs somewhere around $20. Even with another ride directly like mine it's unlikely there's enough earnings within an hour to cover Lyft's fees and pay the driver $20...
Why not? Figure the driver takes 10 min to pick up another passenger. That’s another 10 min worth of driving and we’ll just say it all goes to Lyft. Driver makes $20, Lyft makes $5, 10 minutes are “wasted”.
Uber and Lyft are both losing money for a reason, though.
The hourly rated is based on the time that the app is active. So that hourly rated would include wasted time waiting for customer, driving to pick them up, etc.
When low paid workers coordinate their efforts to increase their pay it's called an "artificial price surge" and allegations of fraud are thrown around.
When highly paid executives, investors, and board members coordinate their efforts to increase their pay what does the media call it?
Price fixing, predatory pricing, bid rigging, collusion.
VC driven exit strategy
Indeed. I never understood how coordinated bargaining is "artificial" but the decisions about how much profit goes towards the workers versus executives is somehow... "natural"?
innovation
Neat trick that shareholders hate!
Growth
As Charles Munger said "Show me the incentive and I will show you the outcome".
As much as I would be displeased if my fare were manipulated, I can only blame Uber and Lyft for this. They created an incentive for drivers to act as a unit, and groups of drivers are figuring it out. Really makes you long for the transparent, posted pricing of municipal taxis
Uber/Lyft prices are totally transparent: they show you the fixed price before the ride.
Meanwhile, municipal taxis may not have been able to charge more per minute and/or unit of distance, but they could control how many of those units the ride took.
>> Really makes you long for the transparent, posted pricing of municipal taxis
...Absolutely not.
I live in Malta, where Uber does not exist, but similar services do + local regulated taxis.
It is extremely clear who gets a rating and who does not give a f### about reputation and repeat business.
The only ones who use the real taxis here are tourists. I don't know anybody local (expat or native), who would use the "real" taxi company.
Taxi's are not allowed to price gouge, they also cannot refuse you service, etc, etc. I don't see that as a bad thing.
Depends on the state. Also, the GP mentioned Malta, which isn’t the US.
They mentioned Malta but they were responding to a comment that was made in a general context. There are benefits to having a regulated taxi system. Saying that unless those benefits are realized at every single place on earth, they don't mean much.
The taxis are still available if you’d rather use them.
> Really makes you long for the transparent, posted pricing of municipal taxis
Did I miss a sarcasm tag?
In most cities I've been to, the local taxi service has fixed fares for trips to/from the airport.
In good cities, there's an inexpensive train or subway that goes straight to the airport.
I can think of a ton of technical ways Uber and Lyft can combat this. And they probably will. And they'll be short term happy and long term foolish. Because they're treating the symptoms, not the cause.
They just have to keep treating symptoms until they can sell their equity + options.
Their hands may be a bit tied on addressing this issue, because if they start rejecting drivers based on when they choose to work, it's hard to call them contractors.
Isn't that exactly what you get to do with contractors? One of your criteria in picking a contractor is showing up. Kind of a problem, I'm told, with housing contractors.
And as with housing contractors, the best way to get them to show up is to offer more money than their other offers.
There’s a subtle difference.
Contractors are supposed to be relatively independent. You give them the outcome (a new deck), a deadline (June 1st), and any stipulations (no work after 9pm) and they organize the work however they see fit. One guy could work steadily for two weeks, or a bunch of staff could show up and knock out the deck in two days.
Employees are supposed to take more direction. You can tell an employee that she must start at 8am each day. She will dig holes for the footings on the north and west sides first, then start cutting stringers while the other guy finishes the south and east sides.
Yea, the definition of contractor that often gets thrown around in these discussions seems to exclude most real world contractors. I’ve worked as a construction contractor and a software contractor, and I did not get to set my hours in either one. It seems like the legal system is out of touch with the world of business.
The real definition of a contractor may be “an employment relationship in which the worker does not want to assert employee rights”. In my case I did not want to be an employee because contractors got paid more for the same work, and I liked taking time off between gigs.
The ability to set hours isn’t the only distinction, but it’s an easy and obvious one to test. Using your own tools is another one: it’s a rare deck builder who shows up and asks to borrow your saw.
That said, there is a lot of grey area and it’s also true that a lot of jobs are misclassified. That doesn’t make the classification meaningless though, and I would thrilled if governments were more proactive about making sure people go the rights they’re entitled to.
You can't make those stipulations on contractors whose entire relationship with the company is built on on-demand providing of on-demand rides.
You can attempt to rewrite the contracts to change the allowed and encouraged behaviors, but the more restrictions added, the more it starts to smell like an employer-employee relationship--and that will kill Uber and Lyft stone dead.
I assume you're proposing that the cause is 'low' wages. So let's say drivers earned an average of $50/hour. This would put them in an income bracket such that they earn more than 95% of Americans. Do you think that people would not then exploit a legal angle to bump their earn up to let's say $70/hour, if they found out a way to do so?
Once you account for self employment tax, gas, wear and tear on the car, and a total lack of job benefits, an Uber driving being paid $50/hour probably makes less than someone getting paid $25/hour in a steady job. For sure they would be making wayyy less than the top %5 of Americans.
Then a standard taxi would be cheaper.
I'm not a lawyer, nor do I agree with what I'm about to say, but the drivers need to be careful, because they might run afoul of collusion.
Since they are all independent contractors, they are "rivals" in the same industry, so with all of them cooperating to increase fares for their benefit (and based on my understanding of the law), they are technically colluding.
They should just form a union. Contractors can form one - they don't get all the privileges (for example, the employer isn't legally required to bargain with them, and can retaliate against strikes) but it'd probably permit this sort of short-term work stoppage.
Depends on the state, but federally, independent contractors are excluded from the right to form or participate in unions as defined by the National Labor Relations Act.
EDIT: independent contractors are excluded from the protections of their union actions.
https://cwa-union.org/about/rights-on-job/legal-toolkit/my-e...
> As an independent contractor, the terms and conditions of the work you perform are set out in a contract between you and the employer. Even though you are not considered an “employee” under federal labor law, you may still join a union. However, you should keep in mind that a unit of independent contractors is not subject to the same privileges and protections as a regular union bargaining unit. For example, an employer is not under the same obligation to bargain with a union regarding contract terms for an independent contractor that it is to bargain over issues affecting its regular employees. Also, an independent contractor who went on strike would not be protected from employer reprisals under the National Labor Relations Act.
Plenty of contract plumbers, electricians, etc. are members of unions.
But are they allowed to set a price? If the app doesn't allow them to do it then maybe it is slightly different story. Maybe it is Uber of Lyft who manipulates the prices by punishing those who doesn't want to accept low-cost rides.
Is that illegal? They can always claim it's not collusion because anyone can join uber and set another price - They are not stopping anyone from doing that. (also it seems almost trivial to fix this with a change in algorithm)
That's an interesting take. Someone else in the thread likened it to a strike for higher wages, happening multiple times in a night. I wonder where the line is between that and collusion?
I have no issue with them not being available and having rates go up. that is what they system should do. I know uber/lyft drivers that turn off the app after drops off in areas they like being so that they don't get prompted to take a nearby fare.
I do find it annoying that these drivers are upset at the fees. Look, before then all you could do is work for a taxi service and they make uber and lyft look like saints for the most part. you are free to work for whomever you want and you got into the deal knowing what it was.
> You are free to ride with whomever you want, and you got into the deal knowing what it was.
This cuts both ways, though. Taxis still exist! If you don't want to take Uber or Lyft, you are free to take a normal taxi, use public transportation, arrange your own ride, etc.
Or use one of the dozens of local competitors that are popping up.
“Over 75% drive less than 10 hours a week to supplement existing jobs. On average, Lyft drivers earn over $20 per hour.”
These statistics could be very misleading. For example let’s say one driver works 4 hours, another 6 hours, another 10 hours with all three making making $25/hr and the final one works 80 hours making $10/hour. In this scenario 75% of drivers are driving 10 or less hours a week and the mean driver hourly rate is over $20. However 80% of the hours driven are by one driver making $10/hour. This one driver is clearly the workhorse of the ride-sharing company making the bulk of the profit.
Oh man these guys think this is fraudulent? They should come to China. When rebates were all the rage, where the ride hailing companies would pay drivers subsidies, they developed software that could fake the GPS address on the phone and pick up fake rides without actually driving and get massive rebates
I don't like the word "manipulating". It is like a trade union negotiating better terms. If they do it voluntarily without intimidating the drivers then I don't see any problem. They should not feel guilty.
Also, in a Lyft's statement:
> Over 75% drive less than 10 hours a week to supplement existing jobs.
I wonder, are those 75% working part-time or full-time? It must be tiring driving 2 more hours after 9-hour working day.
I’ve always been fascinated by the way Uber has implemented their market dynamics using surge pricing. Uber isn’t a market for rides in the way that, say, a stock exchange is a market for stocks. There aren’t drivers setting their asking price and riders making bids, nor is there an order book where matches are made at a clearing price, and understandably so - I can’t imagine how to build a comprehensible UX around a “true” bid-ask marketplace.
Instead, Uber presumably has historic estimates of the supply and demand curves at different locations, different times of the week, different passenger / rider populations (business travelers or tourists?) and then uses the measured “true” supply and demand to find a clearing price, and therefore decide whether or not a market is going to surge.
The UX of surge is important too - the raison d’être of surge pricing is to bring more drivers to an undersupplied market. That means that when you detect a supply or demand shock that would lead to surge pricing, you want to increase the surge as quickly as possible to send out the “we need more drivers” signal, because there’s a latency in getting more supply (drivers have to relocate). Conversely, Uber doesn’t want to drop the surge price too quickly - they want downward movement to be sticky - because you don’t want to tell drivers “there’s more money to be made over here” just to renege on that promise before the supply can even get there.
So if surge is sticky on the way down, these drivers may have found a way to exploit the pricing algorithm - simulate a price shock then reap the rewards. If surge were not sticky on the way down, this strategy might be much less effective - a few drivers would get better fares, but the market would return to equilibrium faster.
None of this is to say that you can’t have cartel behavior in a “bid-ask”-style market too, but I suspect this is a “hack” of Uber’s pricing UX as much as anything else.
That's one clever way to unionize...
This seems like a logical outcome considering the company and contractors have an increasingly disconnected and at times adversarial relationship.
The entire gig economy is based on shifting risk onto the contractor (demand changes, benefits, protections regarding injury / illness)... and to some extent onto the consumer too.
Both companies claim that drivers are independent contractors who can drive when and where they want, so how can they say that these drivers are in violation of anything?
Uber/Lyft probably knew this was going on already, but since it increases revenue, probably was looking the other way. It’s going to be hard to ignore this now that it’s getting media attention.
The only economic model that make Uber and Lyft make sense is if drivers are willing to take low pay (considering all their other costs). If they make more money than cab drivers, the whole model falls apart, because then cabs will be cheaper and the service won't be competitive. (Granted, the lack of having to pay for medallions saves them a bunch of money)
I think the only long-term business plan that makes sense for them is black cars, or people who don't want the hassle of Taxis.
Keep in mind that uber was successful early on not because of price, but because it was significantly more reliable then a cab. I was willing to pay a bit more then a cab to get to the airport because I knew I could count on that uber to arrive at my house on time.
Uber and Lyft are not trying to be cost competitive with cabs; they are trying to be cost competitive with public transit.
I'm still convinced that the only innovation that ever happened in this space by Uber was the guaranteed ride. They chose to fight (ok, ignore) the taxi regulations, but from a features perspective the taxi apps already did all this. The difference was that any random person off the street could still flag your cab so in practice you rarely got a taxi if you weren't in a "hot spot". Reliability matters.
I've definitely experienced this at DCA, and it's worth nothing as well that it sometimes take hours to get out of the airport due to the insane traffic jams right around the terminals and in the parking garages. DCA has gone from my favorite airport to literally my least favorite over the last year or so. I've been using Dulles instead even though it's way less convenient.
DCA is also one of the easiest airports in the US to access the metro(public transit) out of the terminal. Is there a reason you just don't hop on the yellow line and get off at a less congested stop closer to your final destination?
Metro's hours are usually the problem for me, usually getting to the airport after the last train has left.
Absolutely, but in that case, the issue about extreme traffic congestion is much less likely. Even though traffic in the area can be difficult at times, 1AM seems like an unlikely time to run into that.
I’m trying to figure out how to define “way less convenient” in a way that has you choosing to use it instead. :-)
It's many miles farther -- but I then don't get stuck at the airport for two hours Friday night. Also, DCA is great when you're inside while IAD is the usual huge-airport security nightmare.
Sounds like a cartel. Where parties mutually agree to cut supply to keep prices at a certain level.
You forgot the kicker to the definition of a cartel: "restricting competition".
The events in the article do not indicate that they are somehow prohibiting other drivers from accessing the platform. While it's certainly possible they're strong arming the drivers at the airport, overall they're not restricting someone from signing up to become a Lyft or Uber driver.
> They can’t afford to pickup people at Reagan for $4 in rush hour traffic.
Are they really getting paid $4 to give someone a ride? That seems so low that drivers would be incentivized to find another job.
I'm not sure if the number is accurate but I do know how amazingly stubborn humans can be in finding a new job. I've had people refuse to quit a job that they groan about every day when I've offered them almost double the salary to work elsewhere with far better terms.
Humans are risk averse and those who live paycheck to paycheck are especially so. It defies logic until you consider that their fear of the unknown + small chance they end up with no job has a massive adjustment weight applied to it in their minds.
It has a massive cost if it doesn't work out too. We're talking about an income bracket that could miss, say, one credit card payment minimum then due to a raise in the minimum for missing, probably miss the next. Situations like this are posted on reddit.com/r/personalfinance all of the time.
It's the same reason municipalities are dropping jail time for unpaid fines, etc, as hourly workers that miss one day of work unexpectedly are often fired and then end up in even more financial misfortune.
I've never met a lyft/uber driver who did it full time. Most of the people doing it need the work but can't manage committing to adding a full third shift to their life on top of their other job because they have kids/a dependent/class or just got laid off and are trying to stretch their savings while looking for work, and need the flexibility.
Maybe that’s all true, but it doesn’t really make sense for Uber/Lyft. They could go back to their job driving whenever they wanted.
You're applying a healthy dose of rationalism to this. I don't have the answer but I think there's a possibility that you can't expect rationalism when you're asking people to walk away from the major pattern in their life which puts food in their kids mouths.
I think that’s the airport pickup fee that gets added on top of the standard time/mileage fare.
I don't quite understand this:
"The lot fills with 120 to 150 drivers sometimes for hours, waiting for the busy evening rush. "
Are they saying drivers site and wait for hours to do this?
Some people actually do not want to be at home (I once had a taxi driver who drove us from Manhattan to Brooklyn, then waited for us to go home, hours later, all the while texting his family that he had to keep working).
Also, leaving the car turned off and waiting in a lucrative parking lot saves gas, wear and tear on the car, and drastically decreases the opportunities to get into an accident. All in all, it is not a bad plan. Taxi drivers have done this for years (which is, ironically, probably one of reasons Uber got started in the first place -- in SF it was almost impossible to get a cab, because so many cabbies just wanted to get airport fares).
The driver could be doing elance and mechanical turk work while waiting for your ride home!
That's what happens at airports. The drivers are there anyway. While they wait, they coordinate to increase pricing just before an airplane drops off a bunch of passengers.
Experienced this at LAX - another driver called my driver, commenting "It's at 3.5!!" - well played, I don't fault them for this at all.
https://callaride.com is launching next month (local to the Tampa Bay, FL area only for now), and one of their key differentiators is giving drivers the ability to set their rate. There will be minimums and maximums in-place, but they will have more control than with Uber or Lyft.
Note: I am a third-party PM working with the web and mobile application teams.
I think many people are missing some facts from the article. They aren’t so much going on “strike” as they are just turning off their apps on masse 5 minutes before plane lands to trigger surge pricing, and then turning back on to catch the passengers at surge pricing. Obviously customers are still choosing to accept such fares, but may not know that the real price (if they wait a bit) would be much lower.
Seems like a small software tweak is all it would take to obliterate this tactic, like updating surge pricing every time a driver logged in.
The whole point of surge pricing is to get more drivers on the street. If they decrease it that quickly, then there is zero incentive for a driver to leave their house and get in their car and get out on the street, because by the time they do that, the prices are back down.
I'm fine with it. Airports are the worst sort of fares a driver could take, people could get dropped off deep in the suburbs and the driver has to take 20 mins to get back to the city where people are actually calling rides. Occasionally these distant drivers will try to snipe me too while they are out there, probably hoping I'm too drunk to notice that they will take 20 mins to arrive. It's fickle work.
In fact I am surprised it reacts as fast as the article describes.
I assume it's a combination of that and the sudden demand of a plane full of people all opening up their apps to look for a ride simultaneously.
Uber can predict that the drivers are at the airport -- they were logged in when they dropped off a fare, possibly when they were already in line at the cab stand, and also Uber can use a bit of common sense.
Why does everyone assume the workers are screwing Uber/Lyft?
Uber/Lyft make more money this way. The passengers are getting screwed.
What's the rational for percentage based fees? The technology cost for a 4 mile ride is the same for a 50 mile ride.
An imbalance of power between a a $70 billion dollar company like Uber and folks who need an extra $200/week to make rent.
Also keep in mind that even at these fee levels, Uber and Lyft are somehow not profitable.
"Because they can."
That's really all they (and, to be honest, most "marketplace" tech companies) need to say. They have the customers; here are our terms. It kinda really sucks, because the quality incentive goes out the window.
> The technology cost for a 4 mile ride is the same for a 50 mile ride.
Technically no, the real-time tracking requires constant data streaming to and from their servers, proportional to the duration of the ride.
But a more likely answer is that a fixed amount per ride makes short rides prohibitive or at least less appealing.
And if you think about it, much of the costs are probably fixed (across all rides), so you could say they should charge $millions to the first ride, then just charge marginal costs for the others. Dilution of costs across purchases is an indispensable part of doing business.
It's not just percentage based. There is a fixed booking fee sometimes as well.
Some cities seem to get far better rates too. In Boston most of my trips were around $4-5, maybe closer to $15 to get to logan. When I was in Columbus it was like the trips were arbitrarily twice as much, hovering $7-10 for similar distances. Miami probably had the highest rates I've experienced (Like $25+ to get to the other side of the biscayne bay), traffic was terrible as well so I wasn't as shocked, but it seemed much higher than going a similar distance in LA. I was still able to get rides in 10 minutes in most cases everywhere, so it wasn't for lack of free drivers, it seemed.
They can just counteract this by refusing to turn on surge pricing if they detect a large number of drivers disappearing if they predict that they'll come back shortly. Should be easy to predict that pattern and counteract it, unless the drivers are willing to skip work for an extended period of time.
But why should they?
Both Uber and Lyft also profit from this because in the end it's the customers who pay the difference.
So I don't really see either of these companies wasting time and effort on fixing this "problem".
I’ve heard about this tactic from people working at Uber years ago. I think they’re aware that it happens. The way it was described to me is the Ubers are in a line at the airport and each car signs off except the very first. That way rides keep coming and the first person in line gets surge pricing
This seems easy to fix on Uber/Lyft's side --- to recognize that they don't need to maintain book depth. At the airport, since passengers are effectively queued up.
This is an age old hack. I'm not sure why this is being reported as new.
They did this since the early days of Surge Pricing.
Don't Uber and Lyft lose on every ride? I wonder if the increased fair caused by this cooperation makes the average ride profitable. Perhaps the price of a ride is more elastic than Uber and Lyft think? Especially at airports.
Unionization and striking for the gig economy. You love to see it!
This is hilarious. Props to the drivers. Capitalism at it's finest: assumption of information imbalance.
If uber and lyft do nothing, this behavior will autocorrect itself: expect a few drivers to rebel/revolt after the news of the behavior spreads. Keeping the secret will get harder and harder.
But it doesn't have to be secret, ad defectors only hurt themselves by accepting lower pay for the same fare. That seems like a strong incentive to play along.
Exactly, but at some price point, for a certain individual, the acceptance of the lower fair is a better deal to bc of a guaranteed outcome.
I've seen something like this predictably happen with Grab in my office area in Singapore. At 5 you suddenly can't get cabs. You can at 4:55.
All this discussion about employee/contractor situation or possible collusion won't matter after Uber/Lyft close this loophole and this can be done easily. It makes no sense that the drivers would allow the reporter to publicize this trick.
Human dis-ingenuity has to be admired, beautiful!
Ahh, the qualities of competitive markets. If theres antitrust laws, there should be similar policies from the workers' side as well.
So we should go after strikers because they’re depriving their employer of money?
Seems to me that if they're contractors they should have the ability to set their own rates. What's unfortunate is that they have to trick the app.
If Uber was a true platform with sellers able to ask for a price the wouldn't need this indirect means of influencing it.
That's not true. The cabbies would still need a way to pressure each other to not accept lower fares.
“You guys aren’t allowed to manipulate fares... we get to do that!”
I wonder if this is legal?
With the drivers classified as independent contractors rather than employees would cooperation between drivers to manipulate prices run afoul of antitrust law?
Is not a ridesharing company the one who sets and manipulates the prices?
I personally believe that driver's compensation is a valid discussion, but defrauding the system is not the way to do it. Uber/Lyft should just carefully identify and ban the cheaters and the lesson should spread as efficiently as the planning to cheat.
They're not cheating. They're on-demand service providers providing services on-demand to on-demand consumers and they're acting according to the spirit of their agreement with Lyft and Uber--"I don't want to drive for less than $X, so I won't, and I'll wait for you to offer the money I do want."
So, with that more correct understanding of the world, your post amounts to this: "I believe that driver's compensation is a valid discussion, but only on the terms of the people holding capital and the majority of the power."
It's not a good take, dude.
How is it fraud?
I would imagine he sees it as fraud because these are drivers who are ready and willing to drive and are waiting on fares but are not indicated on the app as so.
So when someone uses the app to find out about nearby rides, it shows no one, then it ups the rate to try and lure further drivers. Or the few drivers that are on the app currently. Then when the price is "right", all the waiting cars turn on the app at once to get the "surge" price.
These people are exploiting the rules of the system to violate the spirit of the system. The more available cars, the lower the price.
The more people find out that drivers are doing this, the more likely some form of retaliation will follow.
Either users will just start using cabs again because the price is no different or they'll do something else. Like give default bad reviews to any airport trip that they suspect of manipulating surge pricing.
Drivers are not ready and willing to drive. They are ready and willing to drive for a higher rate. Lyft and Uber provide that higher rate when there is sufficient demand and insufficient supply. Working as designed, yo.
Multi-billion-dollar companies do not need you to cape up for them. Somehow, somehow, they will survive against those mendacious poor people who have found a way to represent their requirements to the company.
Where did I say this was a good or bad thing? Nowhere.
I described things that could happen if the practice becomes too exploitative.
Also, I can see the argument that it violates the TOS for the drivers. The drivers agree to drive for the price determined by the service. They are then using exploits to manipulate that price.
If they don't want to drive for X fare, then they shouldn't be in their car.
And this is an incredibly complicated situation because there are at least three different principles involved. The driver, the company, and the passenger.
In some way, the passenger is being taken advantage of. The passenger _also_ has a contract with the company. And that part assumes that the price is determined fairly and not being manipulated by outside forces.
> Where did I say this was a good or bad thing? Nowhere.
You didn't. But nobody perturbs that many electrons if they don't have an opinion on the topic (and I'll be real, I've got one too but I'm not trying to cloak it in neutrality). And then we get this:
> In some way, the passenger is being taken advantage of.
This is nonsensical. It also proves out the hunch I expressed from my last post, so thank you for doing the legwork for me.
As to why it is nonsensical: the passenger is in no way being "taken advantage of", except insofar as Lyft and Uber already commit obvious fuckery on the regular. The prices are "being manipulated" all over the place--I get different prices on Uber than my girlfriend does when we're standing next to one another!--and there is no expectation that "outside forces" (oooooh) are somehow kept out of it.
The passenger is being given a price at which they will be transported. That's it. The driver is being given a rate at which they will do the transporting. That's it. If they both agree, the ride happens and Lyft/Uber take their cut. This is how a two-sided market maker is supposed to work.
I don't know why it would be okay for Uber and Lyft to fiddle-fart with prices but it's not okay for drivers to say "I won't drive for less than $X". Why are you choosing to shade, to preferentially "see the argument" against poor people when it means that they might make a little money using a market the way a market is supposed to work?
> This is nonsensical. It also proves out the hunch I expressed from my last post, so thank you for doing the legwork for me.
How is it nonsensical? Is the end-consumer just supposed to sit and watch drivers and the company fight to see how much money they can extract from their wallet?
Stop trying to make outside forces seem like some sort of sinister scare tactic. It betrays _your_ bias.
The agreement is that Uber/Lyft set the prices based on the number of drivers in the area. It's ok by the very nature of the agreement both the drivers and the passengers agree to for using the app.
It's ok for the drivers to say "I won't drive for less than $X". What's not ok is saying "I'll sit here and not drive and force a surge so I can then take advantage of a situation I caused." If they weren't at the airport, that's one thing. But they sit at the airport and pretend to not be waiting for fares so they can force a surge. Then they turn on the app so they can both be readily available and get the surge.
Uber/Lyft get their cut either way. The people getting the brunt of the higher fares are the passengers. So dismissing them as a concerned party is only a tactic to defend the drivers.
Are the passengers also not part of the "poor people"?
> How is it nonsensical? Is the end-consumer just supposed to sit and watch drivers and the company fight to see how much money they can extract from their wallet?
Who says the consumer has to take an Uber or a Lyft at all? They have exactly the same right as the driver to not take a ride. The demand curve is elastic; demand goes down as price goes up. Consumers are not locked into Uber or Lyft. Taxis exist. DCA is connected to two train lines.
> Stop trying to make outside forces seem like some sort of sinister scare tactic. It betrays _your_ bias.
Betrays? You get that I'm totally owning my bias, yes? And that I am not the one who is coloring driver action while ignoring Uber and Lyft's internal price fuckery?
Price fluctuations because Uber's internal model knows that I'll pay more for a ride than my girlfriend will are no more legitimate than this, and yet you just let those slide and focus, for some reason, on those "outside forces".
> But they sit at the airport and pretend to not be waiting for fares so they can force a surge. Then they turn on the app so they can both be readily available and get the surge.
So?
That is their only lever for expressing their willingness to work at a given price. If Uber and Lyft provided mechanisms for declaring price levels--"I am only willing to take rides at $X or more"--then this wouldn't happen. But that would reduce the cheap, high-volume rides that make Uber and Lyft their money, so of course they are uninterested in doing it. So drivers have their lever, and they are using it.
I'm gonna be real for a sec: what you're saying amounts to "they need to work for the rich people at the rich people's price because only rich people get to make decisions."
> Are the passengers also not part of the "poor people"?
Compared to Uber and Lyft: sure! Compared to drivers: generally not; of course, there are exceptions...but probably relatively few exceptions leaving DCA via Uber or Lyft).
But they don't have to use Uber and Lyft to leave DCA. Consumers have other options that they can leverage. If nothing else, taxis are a nearly hard upper bound on pricing.
When these services first introduced surge pricing, they told us that it was a good thing because it encourages more drivers to get on the road and take care of demand. It’s working exactly as designed.
The drivers are already there though. They've already committed to taking these passengers.
Imagine walking up to a taxi and having them say "wait 5 minutes until I can charge you more".
They’re not in any way committed.
Imagine waking up to a taxi and offering $10 to go somewhere, and they tell you no thanks but they’ll do it for $15.
These drivers are just negotiating the price. The platform tries to block negotiation but it does not quite succeed.
You think that's why taxis maybe have the regulations they do?
You get in a taxi and you know the base rate and the metered rate.
And taxis can't adjust the rate either.
They don't get to argue and neither do you.
The problem I have with this isn't that negotiation is happening, is that it's happening between the wrong parties.
Taxi prices are regulated because negotiation was too difficult in the pre-smartphone era and taxi drivers would take advantage of information asymmetry to screw people. None of that applies here.
The negotiation is happening between the drivers and passengers, which is how it should be. Uber and Lyft are acting as intermediaries, and are trying and failing to stop this negotiation.
Can you explain where you see a "negotiation" in this? (Don't get me wrong, I like the cut of your jib, it just seems to map better to a dysfunctional spread-based market.)
The drivers are offered a certain rate. They refuse, implicitly asking for a higher rate. This repeats until the drivers get a rate they can accept, or they give up and go home.
On the other side, passengers are offered a certain rate. They can accept it, or they can refuse and implicitly ask for a lower rate.
That seems less like a negotiation to me than a double-dealing bookmaker. ;)
There's no negotiation happening, though. You don't negotiate in a bid-ask market. "I want X for $Y." "I will give X for $Y." "Done."
(And it functionally is a bid-ask market, though I'll acknowledge that it's made a bit messier by Uber and Lyft fiddling in internal-and-undocumented ways with the prices and offers that they quote.)
Yeah, but as Uber and Lyft will tell you, they are not taxis.
... If that was how their pay structure worked, how could you expect them NOT to ask you to wait 5 minutes?