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.
It’s a great illustration of how supply and demand work to determine prices.
Someone has to check it to make sure it is working.
If so then yeah, but I'm not sure they're always 1:1.
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.
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.
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.
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.
(edited s/elastic/inelastic - I dun goofed. Thanks, Erik!)
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.
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.)
Great point - they could be loosing a lot of passengers to taxis
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).
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.
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.
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.
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.
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.
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.
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.
Edit: Whether this is a "regulated market" is a red herring and irrelevant.
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.
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.
Personally I think they should be considered employees, but a pro-management federal prosecutor could make some trouble for them.
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...
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.
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.
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.
The part of parent comment that you quoted is just about how the take-it-or-leave-it nature leaves no middle ground (bidding).
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.
Breaking the law is exactly what Uber and Lyft did and now that they're on the other side they're whining about it.
Aren’t you begging the question? How do you know this is the case?
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.
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.
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.
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.
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?
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?
This isn't how it works? Rates of pay are mutually agreed upon between an employer and employee regardless of classification.
>Uber sees itself as an “agent” acting to connect the actual “merchant,” the driver, and the customer. 
Under the theory Uber is operating on, it's weird that drivers can't directly set rates with riders.
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
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
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.
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.
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".
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.
EDIT: Actually Uber/Lyft beat the cab system and lost money, but that's another kettle of fish.
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.
I never said they agreed to an hourly rate, I said they agreed to a rate, and they did.
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.
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?
"ride for hire"
"car for hire"
"fee for service"
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.
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.
What taxi companies have drivers as actual employees and not independent contractors?
Never mind, read that backwards...
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...
Except world wide (or us wide).
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.
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.
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!
I still use Uber/Lyft at my destination (paying close attention to rate), but at home, never again.
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 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.
When you are self employed then you pay both sides.
It’s pretty fair.
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.
When highly paid executives, investors, and board members coordinate their efforts to increase their pay what does the media call it?
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.
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.
Did I miss a sarcasm tag?
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.
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.
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 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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
Uber and Lyft are not trying to be cost competitive with cabs; they are trying to be cost competitive with public transit.
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.
Are they really getting paid $4 to give someone a ride? That seems so low that drivers would be incentivized to find another job.
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'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.
"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?
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).
Note: I am a third-party PM working with the web and mobile application teams.
Uber/Lyft make more money this way. The passengers are getting screwed.
Also keep in mind that even at these fee levels, Uber and Lyft are somehow not profitable.
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.
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.