
Uber is charging drivers to work - hanspragt
https://medium.com/uber-screeds/uber-is-charging-drivers-to-work-b7bf357d9647
======
rflrob
Since Uber is in control of the dispatch, do drivers trust Uber not to
throttle the rate of their rides as they approach/pass the break-even point?
Given the shenanigans they've pulled with geofencing around regulatory
agencies, I don't think I would trust them, but perhaps if they do have a
history of letting people hit the driving incentives, I'd be more willing to
give it a shot...

~~~
msoad
checkout /r/uberdrivers

so many stories of not getting any rides when they get close to a promotional
number of rides. You can't prove it but they are very suspicious that Uber
does it

~~~
netsharc
Geez, it's like "buy 50 gold coins to complete this level!" but the game is
being able to afford food and rent.

~~~
applecrazy
Sounds like an episode of Black Mirror.

~~~
justinjlynn
Black Mirror was meant to be a warning, not a guide.

------
indubitable
I do not understand the sensationalism. I think there would be reason to be
upset if Uber decided to enforce a system where if you drive less than $x per
week then y% of your nominal rate is cut. However, this is a incentivizing
system, not a coercing system. In other words instead of punishing those that
do not drive as much, it's rewarding those that do.

It's effectively the equivalent of a loyalty card availability in industries
of all sorts. You pay $xxx for a card to get a y% reduction on transactions
through a certain time period. If you engage in a high volume of transactions,
it's +EV and you purchase it. If you don't then it's not +EV and so you don't
purchase it. The industry operator profits in either case since their margins
exceed the real value of your discount, and so it is win-win for them.

~~~
mathattack
I agree. This is just a way to encourage supply in a busy period by asking for
an early commitment. Drivers get paid more for committing to work, and people
get lower fares because of less need for peak surcharges. This is the market
working. Nobody is forced to accept it.

~~~
hamilyon2
How do you know people will not pay peak surcharges? This is pure conjecture.

~~~
mseebach
If Uber is successful in getting drivers on the road in anticipation of high
demand in a given area at a given time, they will not need to activate the
surge charge.

~~~
GrantSolar
They may not _need_ to, but that doesn't rule out it happening

------
dgacmu
I'm going to concur with the observations that the title is sensationalist,
though there _is_ some really interesting thought fodder in this. A key thing
that doesn't come through in the title is:

> After I tweeted out the pay-to-play screenshot (Fig 1), Uber wrote to me to
> explain that the screenshot refers to a study in Houston that is part of a
> research collaboration between Uber and two MIT economists. They added that,
> “Further, drivers have to opt-in to the offer and there is a disclaimer
> explaining that if they opt-in they will be part of an academic research
> project.”

In some ways, the questions that are raised are more about the underlying
research ethics (did the authors get IRB review? One presumes, but it's not
stated either way in tfa), than about Uber's actual behavior. Or perhaps the
question is whether Uber should be participating -- or what conditions Uber is
imposing on the study to ensure that the drivers that accept are _not_ going
to be harmed substantially.

~~~
malandrew
I talked to someone I know about this, and yes they got IRB review from MIT.
It was 100% opt-in with informed consent and all the normal things required to
do such a study ethically.

------
GreaterFool
They're testing a scheme to ensure availability of drivers for Halloween. If
enough people take the offer than Uber can be pretty sure they will work at
the time.

~~~
CydeWeys
I guess the problem with surge pricing is that it isn't guaranteed in advance,
so drivers make other plans and then aren't around to pick up the extra rides?

And they're taking advantage of loss aversion too, not just desire for higher
income.

~~~
droopyEyelids
That’s what makes this so tricky. Halloween and NYE are the two biggest days
of the year for uber.

Every driver will automatically make 133% their standard take because they are
Gauranteed to get strong surge fares all night. So this is like paying extra
to make the sun come up in the morning- that shit was going to happen anyway.

------
hanspragt
Note that although I used the original title of the article, I do feel it is a
little sensationalist.

~~~
iaw
I think the author is painting this in the worst possible light.

The UX is a little misleading but I could see this being an effort by Uber to
pre-commit drivers as a means of reducing surge pricing.

What makes this potentially unethical (in my mind) is where the price is set.
If it's set at a point where Uber's models predict the average benefit to a
driver is $0 then this is essentially shifting the risk to their employees.

~~~
lightedman
"I think the author is painting this in the worst possible light."

You should work for any sort of delivery or courier service. This 'worst
possible light' is daily business for companies like Papa Johns and others
that claim their drivers are merely 'contractors.'

This is also quite illegal - you can not pay to work. It's literal extortion -
you have to pay us in order to receive this amount of wage. No, the courts
frown upon this.

~~~
PatientTrades
> This is also quite illegal - you can not pay to work

You do know the offer is optional right? If a driver doesn't want to pay $115
for the 33% rate increase then they don't have to. Did you read that part?
Also, many drivers could benefit from this especially if they drive full time
in popular areas.

~~~
lightedman
"You do know the offer is optional right?"

You do know that such an offer is illegal, right? It is literally "If you pay
us, we'll pay you more later on." It's the actual beginning of a Ponzi Scheme.

~~~
AnthonyMouse
> You do know that such an offer is illegal, right?

Which law does it violate?

> It's the actual beginning of a Ponzi Scheme.

Your argument is of the form "Romans build roads, therefore people who build
roads are Romans."

Ponzi schemes don't have actual customers, which inherently leaves the people
at the bottom of the pyramid holding the bag.

Uber pays drivers from fares. There is no pyramid.

~~~
lightedman
Uber's been running at a consistent loss.

Ponzi Schemes don't have customers? There have been plenty of "multi-level
marketing' businesses selling things like perfumes, knives, even candle wax,
and have been ruled as Ponzi/Pyramid Schemes. It's the exact same behavior -
pay us to make money.

~~~
AnthonyMouse
> Uber's been running at a consistent loss.

So do a million other startups. That doesn't mean the drivers don't get their
money.

> Ponzi Schemes don't have customers?

The majority of the scam's revenue comes from payments from workers rather
than sales to customers.

> It's the exact same behavior - pay us to make money.

Pyramid schemes have pyramids.

~~~
lightedman
"Pyramid schemes have pyramids."

Almost every business has a pyramid structure - that's literally basic
business management for all but the most n00b of startups. It's the behavior
that defines a Pyramid Scheme and this behavior matches it almost 100% to the
definition.

In fact there's a nice database of plenty of other companies acting EXACTLY
like this and subsequently getting their butts handed to them in court -
[http://www.mlmlegal.com/legal-
cases/Illinois_v_Unimax.php](http://www.mlmlegal.com/legal-
cases/Illinois_v_Unimax.php) is one of my favorite cases to read because it
very clearly demonstrates what Uber is doing here is illegal - just because
you aren't required to do it or buy into it doesn't mean it isn't illegal in
the first place.

~~~
AnthonyMouse
> Almost every business has a pyramid structure

So do Egyptian Pyramids but that isn't the _relevant_ structure.

Do you really not understand how a multi-level marketing scam works? You pay
to sign up, then you get paid for signing people up. The obvious problem is
that this is recursive and exponential, which quickly exhausts the available
supply of suckers so that the people at the bottom lose money because there is
no one for them to sign up.

That dynamic is not at play here. There is no recursion. You don't pay to sign
up and then get paid for signing people up, you pay to sign up and then get
paid for driving people around. The people who get driven around don't have to
sign people up.

There are lots of professions where you have to pay to work. Many trades
require the tradesman to buy their own tools. A proprietor who wants to work
in a booth at a fair has to pay for the booth. That doesn't make them Ponzi
schemes.

~~~
lightedman
"Do you really not understand how a multi-level marketing scam works? You pay
to sign up, then you get paid for signing people up."

There are dozens more MLM scams than the one you describe, and in fact they're
more prolific.

"That dynamic is not at play here. There is no recursion."

'Give us money and we'll give you a chance at making more money.' That's quite
recursive, and in some states, it's in fact a form of illegal gambling.

"There are lots of professions where you have to pay to work"

No, you don't. If you want to use ANOTHER BUSINESS and their facilities to do
your work, then yes. Cosmetologists can work right out of their own home as
long as they have the relevant license. They don't have to rent a spot at a
barber shop. Strippers don't have to work at a strip club - they can advertise
on Craigslist and do private parties instead.

"Many trades require the tradesman to buy their own tools."

Some states require that if you require a specific tool or item for an
employee or user of your services for the purposes of conducting business, you
the employer or service provider are required to provide it. Here in CA, where
Uber is HQ'd, we have that codified in law.

~~~
AnthonyMouse
> There are dozens more MLM scams than the one you describe, and in fact
> they're more prolific.

"You pay to sign up, then you get paid for signing people up" is basically the
definition of a multi-level marketing scam.

> 'Give us money and we'll give you a chance at making more money.'

You have just described investing, lending at a variable interest rate, all
forms of commodity and currency speculation, universities, craft fairs,
conference booths, commercial real estate, manufacturers paying retailers for
shelf space, salesmen buying leads, the entire marketing industry, etc. etc.

> That's quite recursive, and in some states, it's in fact a form of illegal
> gambling.

The fact that you can do something more than once in a row doesn't make it
recursive. The problem with multi-level marketing is that A has to sign up B
in order to make money, but that requires B to sign up C and so on
recursively, which necessarily means there is someone at the end who pays but
doesn't get paid.

> If you want to use ANOTHER BUSINESS and their facilities to do your work,
> then yes.

A landlord who hires a plumber to fix a burst pipe will claim they're a
contractor. So will Uber. So will the perpetrators of the MLM scam. You can't
use something to distinguish cases when it's the same in all of them.

> Cosmetologists can work right out of their own home as long as they have the
> relevant license. They don't have to rent a spot at a barber shop.

Their house doesn't come from the house fairy. The fact that they also live in
it doesn't mean they didn't pay for it. Moreover, finding one person who got a
house from the house fairy wouldn't get rid of all the other people paying
money for space.

> Strippers don't have to work at a strip club - they can advertise on
> Craigslist and do private parties instead.

Drivers don't have to pay to get extra money, they can just take the normal
rate.

> Some states require that if you require a specific tool or item for an
> employee or user of your services for the purposes of conducting business,
> you the employer or service provider are required to provide it. Here in CA,
> where Uber is HQ'd, we have that codified in law.

Even in that case, you will still have people working on commission who buy
items themselves which aren't "required" but increase their effectiveness and
therefore their commissions.

Also, my employer requires me to wear pants at work, but they have never
provided any. Are they in violation of California law?

~~~
lightedman
You're attemting to make a very disingenuous deflection, so I'm not going to
answer anything but this:

"Also, my employer requires me to wear pants at work, but they have never
provided any. Are they in violation of California law?"

Apparently you don't read the law - the answer is yes they do if there is a
specific company-identifying uniform that must be worn (like in the case of
fast food restaurants) and they are not legally allowed to charge you for it -
they must provide it free of charge.

Go read the law. Everything you've asked me is answered in it.

------
sitkack
How is this not a Pay to Work Scam? [0]

[0] [https://www.consumer.ftc.gov/articles/0243-job-
scams](https://www.consumer.ftc.gov/articles/0243-job-scams)

~~~
mseebach
By virtue of the fact that it's optional and if you don't accept it, you can
still drive under the originally agreed terms?

~~~
sitkack
So A/B test employees ability to pay, but also control how many jobs they will
get with your scheduling algorithm. You have just given the employee an
opportunity to make less, but at a guaranteed rate. What kind of dystopian
future is this?

------
floatingatoll
This has eerie parallels to in-app purchase options in freemium games, wherein
you pay X dollars to earn extra Y in-game. It’s extremely upsetting to see the
same psychological hooks used by IAP applied to an already low-margin pool of
drivers.

~~~
sigmar
Also like in Duolingo, where you pay 2 "lingots" to place a double-or-nothing
bet that you will practice every day for the next week. Most of the time I bet
even though I know I'm likely to lose the bet, since it is slightly more
likely I'll practice with a 'financial' incentive. Which is exactly what Uber
wants to induce: early week optimism, then late week indentured servitude.

~~~
Splines
Ugh, that's a really disturbing strategy. Is this a common tactic for freemium
games? I've seen "daily login rewards" type things which give you an incentive
to play daily, but I've never before seen something that is an actual
punishment for not playing.

I suppose "lingots" don't really have a monetary value, but imagine this
tactic done in a game where the currency is worth some amount of actual money.

 _please drink a verification can_

~~~
vacri
Duolingo is not a game, but a language learning app. One of the most important
parts of learning a language is to stick at it. The payoff for taking
Duolingo's bet is that you get better at the language that you're using
Duolingo for in the first place. Whereas for games, the only real payoff for
winning at them is bragging rights.

------
quickthrower2
Unethical because guess what people who drive for Uber probably care a lot
about losing $115 and will work their ass off: i.e. drive fatigued, perhaps
kill someone ... to make sure they don't.

~~~
lucaspiller
It’s an interesting point. In my experience traditional taxis are just as bad
as ride-sharing taxis, and their ability to use bus lanes means they usually
end up driving 80km/h+ through the city rather than be stuck in traffic.

I have noticed that drivers of car sharing schemes (where you pay per minute)
are a bit eratic at times though. I’m not sure if that’s because they are
inexperienced drivers, or just the mentality of “I need to rush, this is
costing me money!”.

~~~
tomjakubowski
Where are traditional taxis allowed to drive in bus lanes?

edit: Googling turned up that this seems to be a thing in at least San
Francisco, London, Dublin, Wellington (NZ), Sydney, and a few smaller UK
cities.

~~~
quickthrower2
Yes, it's that way in Sydney where I live. I remember loving it getting a taxi
to a job interview.

I always thought, if you are rich don't bother with a car & chauffeur just get
a taxi everywhere, and get their faster.

------
Rainymood
I have studied behavioral economics. I think that not many people will take
this offer for a number of reasons. The most important one is that losing 115
now and then having to earn it back feels significantly worse than losing 0
now and earning 115. At least that is what prospect theory predicts.

That aside, if Uber is a profit maximizing entity why would Uber offer this
promotion if it isn't worth it for them? I'd be very very sceptical on Uber's
attitude towards consumers .. uhmm I mean drivers/"employees".

~~~
sologoub
I’m guessing they are trying to get more drivers on the road during Halloween
and by giving them this promotion they essentially lock people in to drive
during that time to make up the earnings they prepaid, and potentially make a
bonus.

------
PatientTrades
The author is not telling the whole story. Uber still gets their cut of each
ride, the initial $115 is simply used as a hedge or insurance. If a driver
doesn't make above the $349 for the week than the $115 is returned to the
driver. Uber doesn't simply pocket it. If a driver makes over $349 for the
week, they get the %33 surge, and Uber will keep the initial $115.

~~~
batiudrami
Why would they offer this rather than just an "Hey! it's going to be a busy
weekend and we want extra cars on the road. Earn $349 and get paid 33% extra"
promo? There's no need to take the $115 if the driver can't lose. Let's not
pretend that Uber needs the $115 for cashflow purposes.

~~~
quickthrower2
Maybe they do need the cash.

~~~
skywhopper
That’s even scarier.

------
notliketherest
I love it. They're literally trying things that have never been done before.
Look, at the end of the day, these drivers can just as easily 1) go to lyft,
or 2) get a "real" job. And Uber can't afford for either to happen. This is
pure capitalism, pure economics, pure financial calculations. We'll see how it
works out, and they'll probably drop it at some point, but hell, let's give it
a shot. If it's as "terrible" as everyone is bitching about, it won't hold up.
What's your problem?

~~~
peatmoss
> What's your problem?

My problem is that Uber has a bunch of venture capital that it can use to
entice and entrap vulnerable populations into an exploitative relationship.

It's only "pure capitalism" if one has a shockingly naive view of economics
that ignores all of the preconditions that are required for a free market. For
example, information symmetry, which is laughably not true given that Uber
controls the dispatching with algorithms that are opaque to drivers.

As time approaches infinity, yes, I believe the market will sort out many
issues with Uber. In the meantime, I think they have the potential to grind up
and spit out many people.

~~~
vixen99
Patronizing! Don't we produce adults who can make their own rational choices
anymore? On second thoughts, perhaps not and I'm wrong. [ In 2010, a UK
government study concluded that 1 in 5 people between the ages of 16 and 19
(some of the voters of today), were functionally illiterate and innumerate.
This in one of the richest countries in the world. I doubt the figures look
any better now ]

~~~
alex_hitchins
What choices do these people really have though?

------
matt_the_bass
It seems that Uber is frequently receiving bad press for practices that
outrage a lot of people. The impression I get is most commenters on HN take
issue with many of these practices. Yet at the same time, they seem to be one
of the poster boys of the SV new economy. To me this seems at odds with the HN
community. I'm curious if others find this as well.

~~~
jerkstate
I think that Uber is now a case of throwing good money after bad. The company
is clearly going to fail, but so much venture money is at risk they are
treated as if they're successful, or going to be successful. The longer the
charade continues, the worse it's going to be in the end.

~~~
matt_the_bass
That could be. Google (Alphabet) obviously has moved on after an early
investment in Uber. Alphabet has announced leading a big round Lyft [1].

1\. [http://www.latimes.com/business/technology/la-fi-tn-lyft-
alp...](http://www.latimes.com/business/technology/la-fi-tn-lyft-alphabet-
google-20171019-story.html)

~~~
malandrew
Google still has $3.5 billion in Uber. Like Softbank, they are hedging their
bets and creating a market condition where they have more leverage to
negotiate in Waymo's favor.

------
munk-a
I wonder how this would work out legally if someone accepted this offer and
then was sick and unable to work during the window it pertained to.

Consider, maybe, that the worker has a migraine and feels like it'd be unsafe
for them to be driving.

~~~
golemotron
Probably the same as if you bought a concert ticket and then decided not to
go. No one I know feels cheated then.

------
occultist_throw
And this is only the facet of the real story here.

[https://www.youtube.com/watch?v=JGwZcR0q6VE](https://www.youtube.com/watch?v=JGwZcR0q6VE)

Uber is an old scan. - By Richard D Wolff

We legislated and regulated the old Taxi Cab industry when there was no
insurance, bad employees, criminal activities, badly maintained vehicles. And
someone can move in and laugh at the laws, and offer it for cheaper (Uber).
Its only time until they die, or are regulated themselves.

------
vgrocha
I think there's another side to this: Uber is hedging the supply of drivers in
a period of high demand. By asking them to pay, the drivers are effectively
committing to drive in that period.

Sounds like an interesting idea given all the outrage with price surges.

------
vermontdevil
This is a part of an academic study. So I wonder if Uber went to the
researchers with this proposal or the other way around.

And what would the researchers be studying?

------
s73ver_
How in the world is this kind of thing legal?

~~~
dhruvrrp
They are basically running an experiment to force supply. It’ll probably be a
0 sum game for the drivers, with profits (in comparison to normal driving) if
they drive more than $350.

~~~
s73ver_
So offer a bonus. Don't make them gamble for it.

------
miguelpais
Is Uber trying to be another real world enactment of Animal Farm?

The resemblance doesn't seem to be a coincidence.

------
yalogin
No matter what the motive for this, it does not look good for the future. Uber
kind of showed its hand here. What is the guarantee that they will not ask for
a fee to get rides in the future? Or may be ask for a recurring fee of some
sort as a privilege to drive for them? I know I am extrapolating too much here
may be, but the path is there.

~~~
isostatic
A recurring fee to drive for them sounds just like the charge to hire a radio
in legacy minicab firms.

------
randyrand
Isn't this also true for anyone that has to pay money to commute to work?

~~~
taneq
The difference is that your own workplace isn't charging you money. Imagine if
your boss said "hey, there's a spot for some overtime work this weekend, the
first person to pay me $100 gets it". Would that be OK?

------
PatientTrades
Sensationalist title indeed, still interesting though. Based on the author's
previous posts it seems he has a distaste for Uber. I am curious to know why
views them so negatively?

~~~
glup
Because of evidence.

------
Invictus0
I don't have any issue with this; it's basically just opt-in A/B testing.
Better than other companies that force their A/B testing on you randomly. The
conditions of the deal are pretty obvious, it's not like they're hidden in
some abstruse legalese. The only potential issue with this is that Uber could
manipulate the driver/passenger matching so that the driver doesn't come out
ahead.

