Ride-hailing drivers

In some US cities, Uber drivers are making at least $40 per hour, the company’s CEO said.
Ride-hailing apps have been trying to get drivers back on the road amid rising demand.
Some drivers told Insider they’re holding out for higher pay or for more people to get vaccinated for COVID-19.
See more stories on Insider’s business page.

Uber drivers in some cities are making at least $40 an hour, the ride-hailing company said in its first-quarter earnings call.

Median earnings for drivers in New York City and Philadelphia is $37 per hour, before tips, Uber Chief Executive Officer Dara Khosrowshahi said on Wednesday’s call. In Chicago, it’s $36, and in Austin, it’s $33, he said.

“We know that drivers often work simultaneously on other apps, so their total earnings are likely even higher,” he said. “In other words, looking at the more appropriate measure of active time on Uber, median earnings are at or above $40 an hour in several US cities.”

Uber listed its median earnings per hour by city on April 7, but those earnings don’t include tips or incentives.

The company has spent hundreds of millions of dollars trying to incentivize drivers to come back or start driving for the ride-hailing app after about half of them left during the COVID-19 pandemic.

An Uber spokesperson told Insider that drivers’ “top two concerns about returning to the platform are COVID safety and the level of earnings. That’s why our driver stimulus announcement included info on how high earnings are before any money is spent on incentives and reiterated our commitment to safety, including the rider mask mandate.”

For the month of March, Uber reported its highest-ever bookings in its history. But even amid a ride-hailing rebound, Uber and its competitor Lyft are still struggling to get drivers back on the road amid a worker shortage.

Some drivers told Insider’s Tyler Sonnemaker they’re holding out for higher pay or for more Americans to get vaccinated.

Lyft said yesterday pay for its drivers is soaring amid high demand for rides and a low number of workers. The company has also incentivized workers by enhancing its app so that drivers can find more opportunities to maximize their earnings.

On the Uber earnings call, one analyst noted drivers have to spend money to rent a car or buy a used car. The CEO said the company has programs to help drivers get on the road, adding right now the biggest issue for workers is safety.

“We think that issue is being dealt with as it relates to vaccines,” Khosrowshahi said.

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Uber and DoorDash are raising prices on customers in California in order to pay for new driver benefits guaranteed under Proposition 22.
Uber will introduce a flat fee between $0.30 and $2, while DoorDash will slightly increase its service fees.
Drivers will still receive substantially fewer benefits under Prop 22 — a law written and bankrolled by Uber, DoorDash, and other gig companies — than they would have been under the state’s gig work law, AB-5.
As a result, the companies’ labor costs won’t increase as much, meaning they likely won’t increase prices as much for consumers, at least initially.
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Uber and DoorDash are raising prices for customers in California in order to pay for new benefits guaranteed to rideshare drivers and food delivery couriers under a new statewide law that’s set to go into effect this week.

Uber said Monday it’s introducing a flat fee per purchase that will vary based on customers’ location and the service – between $0.30 to $1.50 for rides and between $0.99 and $2 for Uber Eats deliveries.

DoorDash, rather than a flat fee, will roll out slightly higher service fees starting Wednesday, and may adjust certain promotions, such as DashPass, that could also lead to higher prices, a spokesperson told Business Insider.

The surcharges are intended to help cover the costs of minimum earnings, per-mile expenses, healthcare stipends, accident insurance, and other benefits that rideshare and food delivery companies will soon be required to pay workers.

Those perks became enshrined in California law after voters in November passed Proposition 22 – a controversial law that Uber, DoorDash, Lyft, Instacart, GrubHub, and Postmates authored and spent more than $200 million trying to pass.

The law exempts companies from having to provide rideshare and food delivery drivers with basic employment benefits guaranteed to other Californians under the state’s gig work law, AB-5, and denies certain labor protections to those workers.

That’s a major victory for rideshare and food delivery companies, which were facing substantially higher labor costs under AB-5 – Uber and Lyft gained a combined $13 billion in market value following Prop 22’s passage. Under Prop 22, those companies are required to provide a smaller array of benefits and often at a lower cost than what they would have had to under existing laws.

For example, drivers will soon be guaranteed 120% of the minimum hourly wage, but they are only paid for “engaged” hours when they have an active ride or delivery, not the hours they spend returning from long trips or waiting for Uber or DoorDash to match them with a job. According to one study, that could result in drivers not being paid for up to a third of their day.

Drivers will also be compensated $0.30 per-mile for vehicle expenses during engaged time, just half of the $0.58 that the IRS estimates it costs to operate a vehicle per mile. Healthcare subsidies are similarly tied to engaged time and lack significant benefits that come with typical employer-based healthcare.

After AB-5 went into effect this year, Uber, Lyft, and other companies refused to reclassify drivers as employees as required by the law, meaning they never provided the benefits it guaranteed.

As a result, while the partial benefits guaranteed by Prop 22 will cost companies less than those guaranteed under AB-5, they are nonetheless new costs the companies hadn’t previously incorporated into their pricing – thus, the new surcharges from Uber and DoorDash.

Uber has yet to turn a profit in its more than 10-year history, and while DoorDash turned a surprise $23 million profit during the second quarter of 2020, the company said that it expected costs to increase and that it “may not be able to maintain or increase profitability in the future,” which may help explain why the companies are passing off part of these new costs to customers.

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Category: Ride-hailing drivers

Uber drivers in some US cities are making more than $40 per hour, the company said

Uber and DoorDash are hiking food delivery and rideshare prices for Californians to pay for new driver benefits