The best ride-hailing app in the world is useless if it can’t connect you with a vehicle, something customers often discover after last call at an out-of-the-way bar or arrival at a sparsely populated vacation spot.
It’s a flaw that can be exploited, as drivers around the world frustrated by dwindling pay demonstrated when they disconnected from their apps on May 8, two days before ride-sharing pioneer Uber was scheduled to go public and only weeks after rival Lyft did so.
The strike, promoted on social media with #AppsOFF, left commuters in cities from New York to Boston, Los Angeles to London scrambling, and it underscored for executives and investors alike how heavily the services depend on drivers.
“There’s nothing magical about Uber and Lyft,” ride-share vehicle operator Alexandra Carbone said at a rally in Los Angeles. “Without drivers, they don’t have a company.”
[Related: Uber, Lyft drivers stage nationwide strike for higher pay]
San Francisco-based Uber said much the same in a regulatory filing before it began trading on the New York Stock Exchange, noting that vehicle operators typically favor the platform that pays the most and might shun the company because of its efforts to lower labor costs and develop self-driving cars.
Another challenge is political pressure from lawmakers such as Sen. Bernie Sanders, I-Vt., who is seeking the Democratic nomination to run against President Trump in 2020 and who has pointed out the downside of the rising gig economy, whose workers lack benefits such as sick leave, vacation, and insurance.
“People who work for multibillion-dollar companies should not have to work 70 or 80 hours a week to get by,” said Sanders, who posted a video on Twitter highlighting the struggles of ride-share workers.
Across the U.S., drivers earn an average of $9.21 an hour, after subtracting Uber’s booking fees and commissions, vehicle costs, taxes, and a modest benefits package, according to a report by Lawrence Mishel, a distinguished fellow at the Economic Policy Institute.
[Also read: But Bernie needs a Lyft: Campaign expensed $1000 in rides while Sanders protested driver wages]
It’s an amount less than the $15 minimum wage in some states. Full-time work at that rate would pay about $19,000 a year, a fraction of the $45 million total earned by CEO Dara Khosrowshahi in 2018.
“He made 1,500 times what I made as a driver, and that’s before expenses; I don’t really think that’s cool,” said Carbone. “They’ve been getting richer and richer, while we’ve been getting poorer and poorer.”
Her comments, along with the stories of other drivers, reflect a growing dissatisfaction with business models that rely on contract workers and hefty commissions for fares arranged through apps.
A Georgetown University study this year, titled “The Uber Workforce in D.C.,” showed 32% of drivers interviewed over a two-year period had run up debt working for Uber, and one, an Ethiopian immigrant, filed for bankruptcy when he was unable to make his car payments despite working 16 hours a day.
“When you think about jobs, you think of earnings; you don’t think about losing,” said Katie Wells, the postdoctoral fellow who authored the Georgetown study, part of a broader examination by three schools of gig economy working conditions. “You don’t think about the workplace as a casino where you don’t know if you’re going to make money.”
[Also read: Deadly Uber mix-up prompts safety push from ride-share users]
Uber, which began operating in 2010, said it has been working to address the concerns of its workers and will keep doing so.
“Drivers are the heart of our service,” a company representative said. “We can’t succeed without them.”
Uber has promised a one-time cash bonus to 1.1 million qualifying drivers, with a total value of about $300 million, and noted in a regulatory filing that operators have earned $78.2 billion on its worldwide platform since 2015. That includes $1.2 billion in tips since that option was introduced in 2017.
“At first, Uber was something great,” said Natanael De La Cruz, a driver featured in Sanders’ video. “It was so good that people thought they could make a career out of this.”
As recently as four years ago, he said, it was easy to make $250 to $300 in eight hours or less.
“The money at the time was great,” he added. “You wear the clothes that you want, you are driving your vehicle, and I’m someone that loves driving, meeting new people, and going to new places.”
Earnings have dropped so much since, however, that drivers can’t afford healthcare and are spending 50 to 60 hours a week behind the wheel to match their previous income.
“A ride of $25 might leave the driver with just $12 or less” after expenses, said De La Cruz, who has taken on extra work as a roofer.
Strike organizers have high hopes their actions will change such situations. The Independent Drivers Guild, which gathered 300 members for rallies outside the New York offices of Uber and Lyft, previously led a two-year campaign that boosted minimum pay after expenses for the city’s operators to $17.22 an hour, a change estimated to increase paychecks by an average $10,000 a year.
“Uber and Lyft are more than a little nervous today that their days of paying poverty wages are numbered,” driver Tina Raveneau said in a statement from the organization. “Together we are raising our voices, and today we are being heard.”
Lyft, which began selling shares to the public in late March and is now valued at $17.3 billion, said its drivers earn an average of $20 an hour, and most work fewer than 10 hours a week. The company has also added driver centers that offer discounted maintenance, repairs, and car washes.
“This is part of our broader strategy to go above and beyond to take care of our drivers,” CEO Logan Green told investors on an earnings call.
“Vehicle operating expenses are our drivers’ top cost, and service is a big component of that,” he added. “As a driver on the platform, if your car’s in the shop for a number of days, that can be very tough financially because you use and depend on that car to make money, so we’ve focused on helping high-quality service with record speeds.”
Despite such benefits, drivers in the Los Angeles area have faced significant challenges, according to Rideshare Drivers United, which has 4,400 members and organized a 24-hour strike, significantly longer than the two-hour work stoppages in East Coast cities.
In May, Uber cut driver compensation in the city to 60 cents a mile from 80 cents, and Lyft dropped multipliers that had allowed drivers to bring more than the 80 cents a mile base rate, the organization said. Its members want the same base pay guarantee approved in New York.
“We need a minimum per-hour rate to compensate for the fact that we sometimes miss out on the bonuses,” said Sinakhone Keodara, a Lyft driver in Los Angeles. “Driving for Lyft pays below minimum wage.”
