If I were Uber, or any ridesharing service, I'd be optimizing to pay driver's as much as possible. But that's just me.
Apparently they already lose money (counting marketing costs and incentives) per ride, how can they expect to operate a going concern by striving to increase expenses?
If you take care of your drivers, they will want to drive for you more frequently, and your rides will have more drivers available. Sure, the price of rides will be a bit higher, maybe a lot higher, but it'll be sustainable.
And here's me speculating... there's only one case where lowering driver pay makes sense, and that's lowering your prices to drive someone else out of business. If Uber is facing so much competition from Lyft & others, they won't be around once people get sick of giving them money. And by pissing off their drivers, they're creating a spot in the market for a higher end competitor to come in. Once a socially responsible, fair trade competitor gets established, it'll be hard for Uber to raise their rates again, because they have a bottom of the barrel reputation.
Of course I'm not in charge of running a ride sharing company, and there are plenty of people who have good intentions at suck at business. Maybe I'm one of the people that naturally walks the path of good intentions that leads straight to hell. Who knows.
My guess is Uber has actually done enough legwork and figured out that contrary to these sob stories in the press, there are more than enough drivers that 1) have efficient vehicles that are cheaper to operate and 2) are willing to work for that profit in quantities to cover demand.
If the rates Uber is providing drivers are so dismal they're protesting in the street, frankly, they should quit. No one is forcing drivers into a money-losing proposition. I'm especially unsympathetic given that they're paid on a per-transaction basis and there are alternative ridesharing companies out there.
Those drivers can go work for a company that charges more for rides, and passengers who care about that can choose that option. The fact that passengers currently seem unwilling to pay for that (somehow we never consider it "socially responsible" that passengers are provided cheaper service...) makes me think that will be unlikely in the short term.
Source: white middle class male in San Francisco couldn't get a job for most if 2009, eventually ended up homeless.
Keep in mind that Uber currently operates at a loss.
Someone should explore doing it.
I like the services, and many drivers like the work, but almost all of them hate the pay and overall relationship.
Seeking alternatives in tandem with regulation?
Yeah. Us all saying these over exploitative companies are OK?
No way.
Fact is, these companies, and many others, simply do not have to be as toxic to people as they are, and because of that, I am perfectly fine with attempts to clean things up.
Or, they can do it.
I do not care which, only that improvement happens.
I think I will be right, long term.
Which would cause drivers to leave, but everything would eventually equilibrate.
But if you also lower the per-mile rate (and total take home pay), then drivers won’t have much left over to “invest” in their independent businesses (their cars). So, the fleet will start to skew to older cars, which might start to drive away riders.
So, if you wanted to keep a steady supply of drivers, a player like Uber should want to maximize the total take-home pay for a driver, but not necessarily the per-mile rate (eventhough the two are obviously confounded).
But by and large, I completely agree with you. I can’t understand the logic behind lowering the per-mile rate for drivers. Given their inherent competition with Lyft for both drivers and riders, they should be working to keep both groups as happy as possible. Maybe they aren’t doing well and are trying to get their books in order before their IPO?
That's probably what it is. They're still not profitable. They might be hoping that this will tip them over the edge into profitability just before the IPO. This is a 25% cut. That's likely to piss off many drivers and make them want to do something else, but they might be counting on the fact that they have a steady supply of new drivers. The new drivers will never have experienced the higher rate.
The sustainable equilibrium approach is the summation of profit margin x ride numbers.
How so? Uber can and does control the number of drivers on their service at any given time.