A rider picks up passengers at O’Hare Airport in Chicago, Illinois on April 10, 2019.
Scott Olson / Getty Images
After a dramatic decline in travel last year, people are moving again. Despite the offer of cash incentives, ridesharing giants Uber and Lyft are still struggling to get drivers back on track, resulting in longer waits for customers and soaring prices.
Uber and Lyft have poured millions into this effort, but some former drivers don’t even look at these stimulus packages or try not to participate in price hikes. A large percentage that is still holding out.
“Drivers are on a reluctant strike,” Nicole Moore, a volunteer organizer for Rideshare Drivers United, told CNBC.
“Right now it’s a mini debacle for Uber and Lyft over driver shortages and price increases in the US,” Wedbush’s Dan Ives said in an email. “Drivers are ~ 40% under capacity.”
Former passengers stay off the road for a variety of reasons.
For many, it is fear of the ongoing pandemic that has led them not to drive at all. Currently, less than 50% of the US population is fully vaccinated against Covid-19, according to the Centers for Disease Control and Prevention.
“This thing isn’t over yet, people can still get sick,” Louis Wu, a Texas resident and former passenger, told CNBC. According to Uber, 80% of drivers planned to come back after the vaccination. The company has also invested heavily in vaccinating people and is offering free trips to vaccination sites through early July to get people back on the streets.
Others who want to stay in the gig economy but fear transmission have switched to grocery or grocery deliveries. It also helps them wear out their cars less, especially when gasoline prices and auto parts prices go up.
“In times of Covid, there is much less customer interaction with food delivery than with transporting a passenger in the back seat,” said Harry Campbell, who runs the blog The Rideshare Guy, in an email. “As a delivery driver, you also put fewer miles on your car as people order from nearby restaurants, compared to a full-time hail driver who can easily cover 1,000 miles a week or more. Many ride-hail drivers are simply fed up with dealing with people. “
Some drivers continued to receive unemployment benefits, which are due to expire later this year. These former drivers could be brought back to offer services after the extended services expire in autumn.
“September will be the big tell-tale sign if drivers hold out because of unemployment,” said Chris Gerace, a driver and contributor to Campbell’s blog.
Uber and Lyft expect supply and demand issues to rebound in the third quarter, which began on July 1.
For example, Uber is considering funding education and career advancement programs, according to The Wall Street Journal. Lyft is also exploring ways to cut driver spending, according to the report released on Friday.
But many drivers got a taste of what it’s like to work outside the gig economy. Moore said she knows former drivers who have now got office jobs or have switched to tractor-trailer driving with no intention of returning.
Some gig workers have become increasingly frustrated with how the ridesharing pays off, especially as price increases continue.
The Washington Post reported last month that despite the high fees paid by passengers, drivers are not getting their share. And the drivers kept calling the companies saying it was getting harder and harder to make a living from the apps, especially compared to the early days of the companies.
“When I started driving, I was guaranteed 80% of the fare,” said Moore. “If we were there, you’d see a very different equation on the road. Drivers sometimes see 20, 30, 40% of the fare.”
But it’s a question of whether ridesharing companies are listening and open to fundamental change, Gerace said.
The scarcity also comes with Uber and Lyft promises to hit profitability on an adjusted EBITDA basis by the end of the year, and the pressure on the balance sheet could make that goal even more difficult.
“If these companies had a paradigm shift belief, you could have good pay for the drivers, you could have good competitive pricing, and you could become profitable and achieve this win-win-win, but you need to take that initiative and be open its trying new things, “said Gerace.
Uber declined to comment, referencing an April blog post about its $ 250 million stimulus. A Lyft spokesman pointed to statements made by President John Zimmer in late May that he said the company was “extremely confident” about the recovery in supply.