Back in March,I wrote abouthow Ubers ride-hailing business was having an absolute downer.
40% off TNW Conference!
Going from up to $400 per day to less than half that.
Most found other jobs, or have moved on.
Uber is playing with the economics of its own market, and it doesnt seem to be working.
Unfortunately, this leads to a bad experience for both riders and drivers at some point.
Whats worse, those that stayed and showed some loyalty, didnt see any reward.
Those incentives wont last, either.
Perhaps improving working conditions, benefits, and long-term average earnings would be a more rewarding strategy.
Despite these bonuses, drivers still are refusing to pick up rides.
Right now Uber is charging an extra $80 for a ride from the airport to my house.
Research suggestedthat rides in March cost 37% more than they did a year earlier.
In April, costs were up 40%.
In economics, this is known as price elasticity.
Historically, Ubers pricing has been relatively elastic.
The same thing happens when Uber offers incentives and bonuses to new and returning drivers.
They return, for a while.
But its a great situation for riders.
When there are too many riders and not enough drivers, prices go up.
Good for drivers, bad for riders.
Its aneconomists dreamexample of how a market can work.
Ultimately, they dont.
The notion that drivers have total control over when they work, is a misnomer.
Free will doesnt exist.
The reality is that this economic perspective assumes that supply is infinite.
That if drivers are incentivized, they will return to satisfy the increasing demand.
Except, this doesnt consider the situation for drivers and whether they actuallywantto return.
All things being equal, drivers would return.
Though it seems not enough drivers are taking the bait.
Ubers conventional driver pay structure is waning.
Whats more,most Uber drivers quit after 12 monthsin a normal year.
Given the profound stress and uncertainty surrounding coronavirus, its understandable that theyre in no hurry to return.
Im starting to wonder how many humans that could possibly work for Uber remain in existence.
Uber is well and truly between a hard rock, and an even harder place right now.
Do EVs excite your electrons?
Do ebikes get your wheels spinning?
Do self-driving cars get you all charged up?
Story byMatthew Beedham
Matthew is the editor of SHIFT.
He likes electric cars, and other things with wheels, wings, or hulls.
