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Nationwide, surge pricing for Uber and Lyft rides, along with a driver shortage, has made it more difficult than before for the consumer to request the ridehailing companies’ services. As seen in New York, this has reportedly led to the return of the good old taxi cab.
According to Bloomberg, The number of daily taxi rides surged 800% year-over-year in Apr. In contrast, the surge was much smaller for app-based platforms — just 220%, according to New York’s Taxi & Limousine Commission (TLC). For taxi drivers, this has been a blessing. A TLC commissioner reportedly told the New York Times that drivers see “15-22 rides a shift” compared to 11 rides a shift before the pandemic due to oversaturation.
On the other hand, because of the pandemic and how the companies failed to properly handle service, many Uber and Lyft drivers left, and others declined to return yet due to low pay or safety concerns. Even as prices for ridehail have gone up, driver pay has remained low — especially in California. Per the New York Times, ride-hailing prices are up by 50% or more over pre-pandemic rates. Adding insult to injury, Uber recently rolled back some California driver privileges it had introduced last year claiming too many drivers took advantage of this, which ultimately hurt their business. Drivers used to be allowed to set their own price multipliers for much of the year.
For taxi drivers, however, the take-home pay remains coupled to passenger fares, which are based on time and distance. Moreover, they don’t have surge pricing. Uber customers pay upfront per trip fare. California Uber drivers’ pay changed recently, and among those alterations, the company uncoupled driver earnings from passenger fares. Drivers used to receive a proportionate percentage of what customers paid, meaning they would see an earnings bonus aligned with the customer surge. But now, instead of receiving a portion of the true value of what customers pay, drivers will now be paid for their time and distance on the trip and a predetermined bonus, say $3, $5 or $10, for any price surges.
“The customer may be seeing this huge price but that doesn’t mean the driver is being compensated accordingly,” a former Uber engineer told the Washington Post.
Both Uber and Lyft said more drivers came back to the platform in May as a result of incentives. Uber announced it would distribute a $250 million “stimulus” fund over the next few months to both new and returning drivers in the form of temporary incentives and guarantees. Lyft offered bonuses of up to $800 for referring former drivers back to the app. “With the economy bouncing back, drivers are returning to Uber in force to take advantage of higher earnings opportunities from our driver stimulus while they are still available,” an Uber spokeswoman told Bloomberg, adding that wait times in key markets like Los Angeles and New York have “significantly decreased.”