Uber Raising Prices – But Drivers Won’t Benefit

After Dara Khosrowshahi was appointed the new CEO of Uber, it did seem that things might improve for drivers. Positive announcements seemed abundant and from what I could tell, drivers were pretty happy with the changes as a whole.

But that hope was dashed this week as Ridester has learned that Uber has sent a message to drivers in Louisiana and Florida notifying them that they have increased rates for passengers but informing them that none of the price increase will be shared with drivers. 

To say the least, drivers are outraged by this.  And many drivers in other cities are afraid.  Because they know Uber often tests out their new (bad) ideas in smaller markets before they roll them out nationwide.

In the driver notice sent to Baton Rouge drivers Uber said:

Price Changes:  What you should know

Starting on March 9, we’re increasing rider rates in Baton Rouge.  This will not impact your per-trip earnings.  You can see your rates in the Fares section of your partner dashboard.  Raising rider rates lets us continue to improve the app, provide better support, and develop features that help you make the most of your time on the road.

When they say, “This will not impact your per-trip earnings” what they mean is, ‘We will not share any of this increase with you. You’ll make exactly the same as you’re making now.’

Drivers who have been with Uber for three or four years have suffered through massive price cuts during that time.  These drivers now make about half of what they used to make per minute and per mile.  But they’ve stuck with Uber all these years in the hopes that Uber would eventually raise prices back up to sustainable levels.

That hope stemmed from the original promise Uber made to drivers when they signed up.  That promise was that drivers would be paid a percentage of the rider’s final fare.  The original percentage was 80%.

Now, we’ve seen the standard percentage lowered officially to 75% in most of the country.  But many drivers report only making anywhere from 50% to 60%.  A few drivers report seeing their cut as low as 40% on some trips.

Related: Uber Fees: How Much Does Uber ACTUALLY Take From Drivers?

“Uber Man”, Randy Shear, calls this a real slap in the face to drivers and urges drivers to find better work.  We agree wholeheartedly with that advice.

Uber’s Huge Pay Increase – at the Driver’s Expense

According to The Rideshare Guy, Uber’s increase for riders in Tampa Bay takes it from $0.86 per mile to $0.96, which represents an almost 12% increase.  In Baton Rouge though, the increase is even greater.  Uber is giving themselves a $0.23 per mile pay raise, which is an increase of 25%.  In Baton Rouge Uber raised the rates on passengers from $0.90 per mile to $1.13.

Miami is also being hit with a 14-cent per mile increase, taking it from $0.91 per mile to $1.05.  This is about 15% higher.

Will Drivers Strike?

Drivers feel like this is a real slap in the face.  Their deal with Uber was always based on being given a percentage of the fare.  They had always expected that when Uber raised fares, they would get their fair cut of any increase.  But now that they’re seeing Uber finally raise prices but then learning that Uber will keep 100% of the increase, many drivers are talking more seriously than I’ve ever seen them about some kind of protest.

Drivers can’t technically strike, because they’re not legally employees.  But they’re becoming more creative in their ideas

In online forums, drivers are completely deflated by this news.  For many, it has robbed them of their motivation to continue driving.  There has always been an underlying, even if unspoken, hope that Uber would some day raise prices and drivers would benefit from higher pay.  With this move, Uber has removed that hope.

I spend a lot of time reading the driver forums and groups and it’s true that there are always complaints about earnings.  But the drivers in the affected cities now seem seriously angry.  They’re talking more seriously about organizing some kind of protest than I’ve seen them talk in the past.  And their ideas are more creative than they’ve been in the past.

They seem to have learned that a long work stoppage isn’t going to work.  Most drivers desperately need the money they earn from driving so they’re not in a financial position to stop working for long periods of time.  But even that problem is being lessened by the fact that Lyft is in many more cities now so they do have an alternative.  If they’re going to shut off the Uber app for several hours or even a day, they can drive with Lyft and probably keep pretty busy.

This would hurt Uber far more than just a few hours of lost income.  If most Uber drivers in a city boycotted at the same time, riders would be forced to turn to Lyft.  This would be devastating to Uber, to have millions of their customers suddenly forced to use Lyft!

You don’t want to do anything that pushes your customers into your competitor’s hands.  And it would also give drivers a way keep to keep earning so they wouldn’t lose much money during a work stoppage.

Even the simplest action drivers could take could easily damage Uber’s reputation. One suggestion that drivers in the affected areas have agreed on is that they will post a copy of the notice they received from Uber in the backseats of their cars so passengers can see exactly what kind of company Uber still is.

A lot of riders will see Uber’s act as unethical and it could solidify that reputation in their minds.  And more damaging still, it would show that Uber has not really changed its ways even under its new CEO.

The same message was received by drivers in Tampa Bay

So, while drivers can’t technically strike, nothing is stopping them from taking a break all at the same time!  And nothing is stopping them from using Uber’s own words to hurt Uber’s reputation.  Uber wouldn’t want to see any of these things happen.

Uber’s Other Hidden Price Increase

Uber has also implemented a price increase recently.  Their “upfront pricing” policy has allowed them to increase passenger rates without really telling passengers their rates have increased.

When you order an Uber, Uber quotes you the total price of the trip – up front.  They no longer tell passengers they’ll pay a certain amount per mile and per minute.  They simply give them a total price.  The passenger has no idea what it’s based on and that gives Uber the ability to effectively charge much higher rates without anyone really knowing.

They forced drivers to sign a new contract recently that stated drivers would be paid a fixed amount per mile and per minute.  This agreement effectively negated their long-standing practice of paying drivers a percentage of the total fare.  Once they detached driver pay from the fare, they were then free to charge riders whatever they wanted – without having to pay drivers a penny more.  So, that is the other fare increase.  They have now effectively raised rates twice without once having to share those increases with their drivers.

Coming to a City Near You!

Don’t think because this hasn’t happened in your city yet that it won’t.  It will.  Uber always rolls out new plans this way.  They test them in a few cities and then roll them out nationally once they’ve seen how they work.  If drivers in the test cities don’t put up a big fight, then we will see this nationwide soon.