The sad demise of Uber and Lyft

Donald Steiny Blog, Politics Blog, Science and Society Blog Leave a Comment

I have limited vision and can’t drive, so Uber and Lyft were amazing for me. They made a huge difference in my life.  However, it has been several weeks now and it looks like they are a former mode of transportation for me. I am eagerly awaiting self-driving cars.

Some months ago Uber decides it would screw the drivers in the South San Francisco Bay Area. They jacked up the commissions that drivers had to pay to Uber and lowered the rates.  Their changes were so draconian that Uber drivers could not longer make any money. The only ones that could do it were doing it for a hobby.   It took a while before the majority of them realized that after they had paid for gas, maintenance, insurance, and so on they were making, at most, a few dollars an hour.  Many of the stopped driving for Uber and switched to Lyft and many more just said “to heck with it,” and stopped doing it.

Those that needed to stay came up with a brilliant scheme. They unofficially unionized.

Uber has a mechanism called “surge pricing.” When there are not enough drivers to respond to the requests, they increase the rates until it provides enough of an incentive for drivers to take calls. Using social media to coordinate they agreed that they all stop answering calls until the rates were high enough. The upshot of it is that, in general, if I want to take Uber now it is 2.5 to 3.5 times as much as it was a few months ago.

Many Uber drivers are Lyft drivers as well.  While Lyft pays better and riders can leave the drivers tips, it works out to a single pool of drivers so the Uber union affects Lyft as well.  While at one time I never saw surge rates on Lyft, now Lyft rides are generally 1.5 to 2 times as much as they were a few months ago.

Another consequence of this is that service has gone through the floor.  A few months ago I could count on getting an Uber in 5 minutes or less. Now it can take 15 minutes or more to get one. In essence, their service has deteriorated to the level of cab companies.

Six months ago, Uber drivers would tell me how much they loved the job and it was working out for everyone. Uber provided jobs, I got rides when I needed them, and Uber was making money hand over fist. However, the number crunchers at Uber figured they could make even more if they paid the drivers less and that started a downwards spiral.

It will be interesting to see how this works out over time.  They had a great idea and now there is room for someone to execute on it well.

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