A few weeks after receiving the second dose of a coronavirus vaccine, Debora Lima reverted to an old routine: she pulled out her cell phone and asked for an Uber ride so she could meet friends for dinner.
But instead of riding within five minutes as expected, Uber surprised Ms. Lima with a waiting time of 19 minutes and an expensive fare. It wasn’t a one-time mishap. Ms. Lima, a 28-year-old Miami resident, previously planned to spend $ 100 a month on frequent Uber trips. Only two recent trips have cost half of their monthly budget.
As the coronavirus pandemic in the US seems to be receding and more and more people are traveling, socializing and using apps, they find that these cheap and fast trips are more expensive and no longer available as quickly. Customers across the country are surprised by the price hikes. In some cases, they say, their Uber trips from airports cost as much as their plane tickets.
Uber and its main competitor Lyft acknowledge that prices have gone up and wait times are longer, but they won’t provide details. A recent analysis by research company Rakuten Intelligence found that the cost of a trip in March was 37 percent higher than a year ago. In April, costs rose 40 percent.
Like many other industries, the ride-hail outfits say prices have gone up because they can’t find enough workers. But more than most other types of businesses, Uber and Lyft can quickly pass the cost of finding these workers – in their case, drivers treated as contractors – on to their customers.
When there aren’t enough drivers to meet demand, companies pay more for them and sometimes resort to surge pricing to lure drivers into areas where demand is high. Some recent spikes have caused prices to rise 50 percent or more, said Daniel Ives, chief executive officer of equity research at Wedbush Securities. Price hikes can be a boon to drivers, but they can sometimes create outrage among drivers, especially during vacations and at major events when demand can drive prices up.
“By organizing with the drivers as contractors, Uber and Lyft have, in a sense, enabled the drivers to employ those contractors,” said Wendy Edelberg, director of the Hamilton Project and a senior fellow at the Brookings Institution. “Every time we open our Uber app, we may feel a bit like a small business that can’t fill the vacancy after putting the ‘Help Wanted’ sign up.”
Uber and Lyft have put money into additional driver incentives, such as: B. Cash rewards for completing a certain number of trips. However, the incentives don’t seem to be as effective as they were before the pandemic. Some drivers said they are not driving again because they are still afraid of getting sick.
Other financial incentives could also discourage drivers. Although they would not normally get unemployment insurance because they are classified as independent contractors, Uber and Lyft drivers are entitled to pandemic unemployment benefits funds under the CARES Act, which eases the financial pressures that would otherwise have forced them back behind the wheel to put.
“We gave the people a lot of financial support,” said Ms. Edelberg. “We have allowed people not to make these transitions in desperation, to prioritize their health, to prioritize their families. So this will take a little time. “
In an earnings report released in early May, Uber said it had 3.5 million active drivers and couriers in the first three months of the year, a 22 percent year-over-year decrease. “We haven’t seen driver supply keep pace with growing demand in the US,” said Dara Khosrowshahi, Uber’s executive director, at the JP Morgan technology, media and communications conference last week.
However, more than 100,000 more drivers have returned to the platform in the past four weeks, an Uber spokesman said. Uber has aggressively increased its incentive spending, pouring $ 250 million into driver recruitment and branding it as an “incentive.”
Lyft also said it doesn’t have enough drivers and is spending a lot of money to recruit them. In the first quarter of the year, the company spent $ 100 million on driver incentives, according to an earnings report.
“It is something that we take very seriously, but something that we are very confident and that I have already seen significant movement of,” said John Zimmer, President of Lyft, at the JP Morgan conference. Lyft saw its so-called driver leads rise 25 percent – drivers interested in working for the platform – between late February and May, Zimmer said.
The incentives are starting to take effect, according to Gridwise, a service that helps gig staff keep track of their earnings. Ride-hail revenue has grown steadily this year, rising from $ 18 an hour in January to $ 25 an hour in May, Gridwise said.
The higher pay seems enough to entice some drivers to return. While the number of drivers is still below prepandemic levels, Gridwise estimates it’s only down 11 percent, an improvement from the 25 percent deficit in January. Uber also said the total number of trips declined as prices rose after a peak in March.
“Whenever employers say they can’t find the workers they need, always add the phrase” to the wages I want to pay, “” said Heidi Shierholz, director of policy at the Economic Policy Institute. “We know how to attract workers – give them better jobs, better pay and better working conditions. This is not rocket science; That’s how you do it.”
But customers are impatient to return to the quick, cheap rides. In Miami, Ms. Lima said she was hoping the company would keep prices low as it tried to get more drivers back on the road. “Keep your customers happy,” said Ms. Lima. “At least with the price.”
At the moment it is impractical to use Uber as it used to be because of the price jump. Instead of an everyday utility, she said, Uber is likely to become a luxury item.
Cristine Sanchez, a hotel clerk in New York, used to pay around $ 20 for Uber trips from Queens to Brooklyn. Now the fare is $ 38, and a trip to the Bronx is nearly $ 45.
Ms. Sanchez recently found that airfares were almost the same price as her Uber trips. When she found $ 30 round-trip flights to Miami this month, she booked an impromptu trip with friends.
“If the choice is to go to the Bronx or Miami, I’ll go to Miami,” said Ms. Sanchez. “It’s like come on, Uber, come on Lyft, let’s bring it together.”