Rideshare requests are increasing, but there aren’t enough drivers to meet them.
There have been anecdotes for months, many of which have been conveyed with frustration. Hour-long waits for a pickup; rides to the airport that cost as much as a one-way airline ticket. As the lockdowns lifted and people started making plans for the spring and summer, many dusted off their favourite ridesharing applications, only to find themselves in circumstances like these while trying to summon a car.
According to statistics examined by CNBC from Rakuten Intelligence, the cost of trips on platforms like Uber and Lyft increased by 92 percent in July compared to January 2018. According to NPR, the majority of the rise occurred in the last year and a half, citing statistics from GridWise, Inc., which revealed that costs in certain cities are up 79 percent from pre-pandemic levels.
The shortage of available gig workers to satisfy this increased passenger demand is one important cause of this trend, as ridesharing apps have struggled to rebuild their ranks following a large decrease in drivers last spring. This difference was particularly evident in the United States, according to an economic analysis commissioned by Uber earlier this year, where the number of active drivers was still down more than 50% by the end of 2020 compared to 2019. According to Insider, Uber’s reservations reached an all-time high in March 2021, only a few months later.
While Uber has yet to reply to a request for comment, a Lyft spokesman tells Popular Science that the company’s demand for trips has outpaced the amount of drivers available, despite adding “thousands” more employees to the platform. Despite the fact that Lyft would not provide numbers, CNBC calculated that both firms were approximately 40% under capacity for drivers this summer.
According to economist Peter C. Earle of Yahoo Finance, a variety of variables, including the opportunity to earn more from unemployment benefits and the present high price of gasoline, are likely to be driving drivers’ reluctance to return to their previous jobs. He also mentioned a rental vehicle scarcity, which he believes is exacerbating the problem by restricting prospective drivers while simultaneously attracting more passengers.
Better trip costs aren’t always enticing to drivers since they don’t always correlate to higher income for their time on the road. One driver posted screenshots of available Lyft trips as both a driver and a client on the UberPeople.net forum to demonstrate how surge prices had no effect on their pay rate. According to the Washington Post, Uber and Lyft’s “decoupled” approach rewards drivers based on time and distance rather on client cost, but both platforms provide incentives at peak hours.
Dara Khosrowshahi, Uber’s CEO, replied to the Post article with a Twitter thread recognising the realities of the model but claiming that driver pay is increasing. According to a Lyft spokesman, drivers in “leading markets” are making “much more” than they were before the epidemic.
Bonuses, according to NPR, are to blame for this year’s surge in earnings. As city activity picks up, both Uber and Lyft have put out additional cash incentives in an attempt to attract new drivers and keep existing ones. In April, Uber launched a $250 million “driver stimulus,” promising to raise median hourly wages. Despite these efforts, several analysts doubt that Uber and Lyft will be able to resume their pre-pandemic operations and pricing. Even in their most prosperous years, Uber and Lyft were losing money, and both companies are still working to become profitable.
To return to the days of easier, more cheap trips, Earle told Yahoo Finance that “a lot of barriers would have to be surmounted.” Some are beyond the rideshare firms’ control, like as how they recruit and reward employees, which has long been a source of dispute among those who have used the platform. Others discuss external concerns, such as the ongoing fight against Covid-19.
In the meanwhile, some of their consumers are returning to their roots: This year, Insider reported that a surge of individuals in New York City are opting for cabs rather than rideshares, with the average cost of a cab being roughly half that of its app counterparts.