Picking up some “extra” cash by doing a little driving around, picking up and dropping people off, didn’t sound bad at first. The gig economy has always seemed too good to be true. Odd-job work facilitated by apps and online connectivity has very quickly become a cheap labor source for burgeoning tech start ups to make lots of money. The two biggest names in the ride-hailing scene are Uber and Lyft. Both companies have dealt with pushback from local taxi cab services for undercutting those businesses, and both have been lambasted for exploiting their drivers in order to increase their valuations. Now those valuations are being put to the test as big companies like Lyft and Uber go public.
Lyft recently went public and Uber is planning on going public any day now. Thousands of employees are projected to become millionaires over the next few months. But the drivers for these companies? Not so much. Recent weeks have seen a considerable increase in gas prices across the country. For the first time in five years, Californians are seeing $4 a gallon costs at the pumps. The San Francisco Chronicle reports that these costs are shouldered by the drivers themselves, as companies like Uber and Lyft refuse to raise the costs of rides for fear of losing out on consumers and deflating their newly published stock prices.
The companies recently implemented complicated rate changes in San Francisco, Los Angeles and some other cities. Drivers, who held protests about the changes last month, say the net result was less money in their pockets.
Uber and Lyft drivers are not as excited about owners’ dreams of being millionaires. They want a living wage and they are going to show Uber and Lyft—and future shareholders—what disrespecting your workforce might cost. On Wednesday,
May 8, from 7 AM to 9 PM, ride-hailing drivers are planning a strike. The action has been organized by the New York Taxi Workers Association and will include drivers in major cities like Los Angeles, San Francisco, Washington, D.C., San Diego, Philadelphia, and New York.
CBS News reports that one of the reasons 4,500 drivers in Los Angeles are planning to strike is that Uber cut drivers’ compensation from
$.80 a mile to $.60 last month, while Lyft got rid of a surcharge that helped boost wages. Drivers want the cuts to be reversed and a guarantee put in place, like the minimum wage rule recently enacted for drivers New York. Uber told CBS News that they have not contested a similar rule in New York City that stipulates similar wages, while Lyft had attempted, and failed, to block the same rule in New York City.
Neither company wants to take the hit on profits by paying their drivers better wages—at least not while still trying to get rising market shares, as the next six months of share prices will dictate how much executives can cash in. So Uber has announced it will give out $300 million in one-time bonuses as a “driver appreciation award” to select drivers.
The reasoning is simple: they need to keep strikes at bay as they attempt to make their $90 billion valuation seem reasonable and they begin showing “financial improvements” over the next few months.