Uber has jumped the shark. It is now painfully apparent that it doesn’t care for its drivers and it doesn’t pay them well
- Uber had cut pay to drivers in Detroit to 24 a mile and 24 cents a minute. That is crazy low.
- Uber is paying some of their workforce less than minimum wages for their shifts. This is a big issue because 45% of drivers have familes and 48% of all driving work is done by full time drivers.
- Hundreds of thousands have been offered an Uber car loan that now is up to 2x as difficult to pay off
- Uber has increased their take of the pie by up to 130% while cutting rates to drivers by up to 45%. There have been no reported cuts in the amount of income Uber continues to bring in.
There is a startling new trend that is happening in the ridesharing world. Many ridesharing companies like Uber now have some of their workforce receiving less than minimum wage for numerous shifts. Here are a few examples below of drivers who have reported working less than minimum wage.
Posted: There has been no end of controversy over how much money UberX drivers make. Uber itself has said its New York…www.huffingtonpost.ca
The city's Uber drivers stay behind the wheel up to 19 hours a day to make ends meet, and say the company's new fare…nypost.com
(CBS SF) - As San Francisco-based Uber is set to become the most valuable tech startup since Facebook, a reporter goes…sanfrancisco.cbslocal.com
Additionally, we are hearing early reports of drivers making no money at all from some of their shifts. Here is a driver reporting that he made a $81 in revenue however had over $100 in expenses. Ending him up with negative $19 for the day.
Why Can’t They Just Leave?
Many of the people I talk to ask why the drivers don’t simply get up and leave. What we are finding through our continued research is that some people literally can’t just walk out. It isn’t that easy for some. Here is an example from Seth and also a story I heard from two drivers that I spoke to:
Drivers Bought Uber Cars and Their Rates Were Cut
We are beginning to compile information regarding the fact that Uber has offered loans to 100,000 drivers. We are having trouble understanding the morality of giving out an expensive loan one month only to cut their wages by up to 45% the next month.
Many Drivers Have Familes. 45% in Fact
I think the average person riding in an Uber might not realize that nearly half of all drivers have families according to Uber’s own statistical analysis. This is very important to the discussion since companies should take steps to care for their workforce and their dependents.
Rate Cuts Directly Hurt families
I have been speaking to numerous families and I keep hearing that there is a tremendous amount of additional pain that these additional cuts cause on the families. Here is a quote from a woman driver with a family:
We are beginning to see news of different protests going on around the United States in different markets.
Some More Facts and Information
- Uber just emailed out rate cuts to over 80 cities.
- Uber pays their drivers less than minimum wage for many shifts
- Uber has announced that they are setting rates in Detroit to 30 cents /mile and 30 cents a minute. This is crazy low. It costs .54 cents a mile to run a normal car.
- In fact I can’t even explain how incredibly low this is. For a point of reference in 1970 taxi drivers made $1 an mile
- Drivers in Tampa are getting paid 65 cents /mile, which is also super low
- Lyft is different. Lyft offers 100% of the fare if you are a full time driver and drive over 50 hours a week. Uber does not offer this to their full time drivers.
- Uber drivers are not given health insurance. Not even the drivers who are driving full time.
- Uber has officially gone too far. They have been cutting drivers paychecks for years (This is the third year in a row of January cuts). They have pushed this issue too much.
My hypothesis: Uber is now officially underpaying drivers and everyone should know about it and have an honest discussion about the #FutureOfWork.
The Proof — Detroit
As of January 9th, 2016 Detroit drivers have had their rates cut to abysmally low levels. In this screenshot below you will see that drivers are paid only 30 cents a mile. Additionally, Uber is raising the amount of money they take from the drivers. Uber used to take 20% of the fare. Now Uber takes 30% of fare for some new drivers. Their take “safe ride fee” increases used to be $1. Now it is $2.30.
Where is the bottom?
So I have an important question for Uber. Where the hell is the bottom? If today you are paying drivers in Detroit 30 cents a mile, what is stopping you from paying them 15 cents a mile next January? How many markets in 2017 will be ruthlessly cut?
Will this race to the bottom ever stop? Where is Uber’s standards for the dignity of their drivers? Do they care at all for families? Where will they set the line?
Drivers get less money Uber gets more
I find it disingenuous how Uber has cut the drivers’ payment while increasing their cut of the profit. They call this the “safe riders fee” and has increased from $1 to $2.30
If Uber wanted to be honest about the need for cutting costs then why haven’t they cut their % of the take? Wouldn’t that send a clear message that they are willing to stand with the drivers and work towards a mutually beneficial goal of a profitable, long standing company. Instead what they have chosen to do is shift a lions share all the responsibility to the drivers and take even more money for themselves.
We have reached out to many of the leaders in the tech world. We wanted to learn what some of these smart thinkers think about this important issue:
What is happening here?
I think what is happening here is a modern day version of Boiling the Frogs. Uber is a revolving door business. Uber recruits hundreds of thousands of drivers with enticing Craigslist ads. “Make $40 an hour” they say when Uber comes to a new city. Then Uber keep cutting rates so much so that only the newest most desperate of drivers who need the money are required to stay in the system. They have a constant flow of new drivers that enter the system because they overpromise on their Craigslist ads.
As it turns out, the data shows that 65% of drivers have been driving for 6 months or less.
That is pretty crazy.
They cut rates to dangerously low levels and see how much of their workforce remains. Honestly it is just shitty. It is just a bad way to hire people. It is not a way to build a truly great company. This is not the right way to do hiring. I belive Uber has a really messed up Give/ Take score. They try to leech money out of the transportation industry and they take basically no responsibility for their workforce. It is messed up.
Another point-the IRS Line
Another point to consider is that the IRS sets the standard mileage rates for businesses at 54 cents a mile. This is the normal deduction that the IRS allows for people to be able to understand how much it really costs to run their car. This accounts for gas/ depreciation/ maintenence.
Tampa Uber drivers are now being paid 65 cents a mile. That is just simply too low for drivers to earn a living wage.
Uber drivers rates have been cut by 45% in Knoxville. Here are the new rates.
What should we do about this?
This is a serious issue. We need to begin a discussion about this. I hope that smart and well connected people take the time to look at this much more closely. I am just trying to open the converstaion up to the public.
A conversation that I want to have
- Is it right to pay drivers just 30 cents a mile in Detroit?
- What do you think about drivers who make less than minimum wage?
- What should be done about drivers with families?
- Where is the line for rate cuts?
I think that this is something that is going to be a very big deal over the course of the next 10 years. I fear that this is just the canary in the coal mine and that we will see more problems around this issue going forward.
What am I doing about it
- I’m drawing a line in the sand. This is not ok.
- I’m writing this post up. (Thanks @Ev and Medium for the platform!)
- I’m also going to switch to Lyft (note: NOT a referral link). I can tip my drivers there and I really hope they treat their workforce with more respect.
- I am committing to #TipEveryTime when I take a Taxi, Lyft or an Uber.
- I’m sharing this on social media quite a bit. This essay you are reading has 32,000 views already. Our twitter account has over 1.1 million views this month alone. Please follow me on Twitter
After keeping our heads down and working diligently on this. We have decided to write up another essay on what we are doing about it. Read about it after you read this whole thing: “ I’m not cool with Uber if my driver is only making $2.89 an hour.”
A worldwide call for dignity & freedom in our on demand world.medium.com
When do self driving cars get here?
Honestly, they are pretty much here. Tesla is doing truly amazing things and their cars basically drive themselves. We don’t expect #HumanFree self driving cars to make it to roads for another 8 or 10 years though. There is a lot of legislation that will need to be passed to ensure safety.
The Onslaught of the Self Driving Car Creates an Moral Conundrum:
Yea, self driving cars are coming. They are going to radically change the $3 trillion transportation industry. We call this conundrum the “Parking ticket problem”. What would you do if you walked next to a car whose meter was about to expire. Would you put the quarter that you had in your pockets in the meter?
What happens when you walk past a meter that is about to expire?medium.com
FAQ- Frequently Asked Questions
Do you have all the answers?
No, definitely not. But I do feel like this is an essential issue to talk about. I have a lot of questions about capitalism and the future of work:
What is the crux of the issue
I believe the #UberCrux is this:
Imagine a small town, Uber would prefer there to be 1,000 drivers making minimum wage vs 500 drivers making $15 an hour
Here is a link where we request Uber to show total number of trips in 2015
Tell me about this document:
This is a living document and will updated frequently. We invite everyone to help. In fact we first invited Uber to help us factcheck it. We would love the Silicon Valley community to join us in opening up the discussion on this essential startup issue. We offfer every word of this document in a uncopyright format and we challenge everyone and anyone to help us closely factcheck it. We simply want to find the truth.
The goal of this project is simple: to open the discussion about this important issue
Why did you write this Dave?
I am a driver and I care for my other drivers. I have been driving since 2013. I dont like seeing how Uber treats their drivers. I believe in the fundamental dignity of every human person. I’m no rocket scientist but I think a company valued at $63 billion dollars could get a couple of people in a room together and figure out a way to be more respectful to its workers and pay them a bit better.
Are all people nice and care about people other than themselves
Nope. Some people don’t care.
What are your thoughts on hiring people?
I’ve been blessed to run a small design and marketing studio and hire 54 people. I would like to hire many more. I believe that a CEO actually has the ability to pay their employees badly. But they shouldn’t. Especially not when the company in mention is worth billions of dollars. Why not share the love a bit?
I find it disingenous for Uber to continally try to shirk responsibility to the people that are doing hard work for them.They have a workforce of over 400,000 drivers in the US and 1.1 million worldwide. They should treat each driver with respect.
Are you a driver?
Yes I am! I drove for Uber for about 2 years. Over 1,000 passengers. And I still am a driver with Lyft (drove yesterday) and plan on continuing to drive from time to time. It’s fun meeting people but I wouldn’t recommend doing it full time. Too much risk is transferred onto the drivers.
When did you start driving?
November 10th, 2013. I was one of the original Uber and Lyft drivers in Denver. I would keep in touch with all the well known drivers like @Batlyft @DiscoLyft and @HipHopLyft. Here is my first tweet I sent out:
What do you have to gain with this post?
Not much really. I’ll be honest, it is a bit scary standing up for stuff sometimes. But I think this is the right thing to do. Sometimes you just gotta call a spade a spade.
Did you really want to spend 8 hours on a Saturday doing this research and writing this post?
No, not at all actually. I was going to do some robotics research today. So this is kind of wasting my time, but it needs to be said.
What do you think of the Uber CEO Travis?
I don’t mind him as a fellow person. I actually met him in Denver a few years back. I bought him a drink and talked about the story of how he moved his team to Thailand for a previous company.
As a CEO I am very disappointed in him. He doesn’t seem to know how to make win win decisions for his workforce.
I don’t believe he is building a truly great transportation company.
I do hope he takes a good look at this Detroit issue though.
What about John Zimmer, CEO of Lyft?
I was just asking him about this stuff as well earlier today actually. I think he is an important part of this discussion.
UPDATE: Nope !
Why write all this, will it change anybody’s mind?
Well you are reading this right now aren’t you :)
Can you prove it.
Has Uber responded yet?
Not yet, still waiting to hear back!
UPDATE: They have responded in corporate speak here:
That seemed weak to me though. Either you are paying Detroit drivers 30 cents a mile or you aren’t. Step up to the plate.
Here is my response. Waiting to hear back.
Tell me about Lyft and tips
I like Lyft because you can tip your drivers. I think Uber should add tips. I bet they could grab a couple of engineers and push a working version of their app within a few days.
I am committing to #TipEveryTime. I know the driver is working hard and is probably making like $11 an hour with no health insurance. Here is an example of what this looks like:
Show me a screenshot where it shows Uber offering a good amount of money when they first enter a market and then cutting payments ruthlessly.
Show me where you challenged Uber to cut THEIR fees?
Is Uber in trouble?
Well, that was one of the theories from the Uber drivers community.
Here is an article from at Recode that seems to indicate they are burning tons of money: http://recode.net/2015/08/05/yes-uber-lost-a-lot-of-money-and-it-will-lose-more/
Should customers come first or should a CEO’s workers come first?
Let’s see what Richard B has to say:
Should we look at this more as a per/minute discussion rather than a per/mile discussion?
Yes, great question! We are looking into this.
We are sending out a call for research? We would love to find the average number of Detroit trips and miles per Uber driver in Detroit.
The bottom line is that these fares seem incredibly low. There is concerns that some drivers will be taking shifts and may even make below minimum wage.
Do Leaders Of Companies Often Have to Have a Fake Veneer of Confidence
Yes, as a startup CEO you are required to be an eternal optimist and try to keep morale high. Here is a great essay about this:
A startup is hemorrhaging cash, and the VCs have yet to agree on terms for a capital infusion. The clock is ticking…techcrunch.com
What about the free market? Shouldn’t we just let the market decide? If the prices go too low people just won’t drive.
This is another excellent question. But I would counter with what about the drivers that have bought a car and got trapped into multi year loans . What about the fact that about 95% of Uber drivers don’t know their real net earnings since Uber obfuscates that info and it requires some decently complex accounting work with multiple variables:
What about the 45% of drivers with families?
What about the drivers with medical conditions?
Here is an Uber earnings calculator that drivers can use to understand their actual net income and takes into account:
- wear and tear and maintenance
Uber could easily install this calculator directly in the app and clearly tell their 1.1 million drivers the correct rates. This doesn’t seem to serve their interests and so they make it even more challenging for the drivers.
UPDATE: We are currently using the standards IRS deduction of .54 cents a mile to calculate the true costs of operating a vehicle.
Can you show me a screenshot or something of how Uber uses technology to control its driver workforce
Sure, here is a screenshot of drivers that are reporting getting “timeouts” if they don’t do what Uber wants them to do.
Does Uber view it’s full time workers in the same way it views it’s drivers?
We’ve also been Pando’d. We have been covered by the Observer.
There’s a post on Medium that’s a) going viral and b) is incredibly infuriating. How’s that for an unshocking lede? The…pando.com
Uber recently cut fares in over 100 cities, and while users are enjoying cheaper rides, drivers are scrambling to make…observer.com
What Are You Gonna Do About It?
After crazy weeks of working 14 hour days working on this. We have decided to do a bunch of things about it. Please read Nope, I’m Not Cool with Uber If My Driver Is Only Making $2.89 An Hour. Screw That.
A worldwide call for dignity & freedom in our on demand world.medium.com
Ok, you made it to the bottom. Thanks for reading this! My one request is to take a close eye on this essential issue of dignity and work and then get back to just #BuildingGreatThings together. Thanks! — Dave Craige