Driv­ers rebel against Uber’s price cut­ting

Austin American-Statesman - - MONEY & MARKETS -

The face-off DETROIT — be­tween Uber CEO Travis Kalan­ick and driver Fawzi Kamel il­lus­trated a con­flict be­tween Uber, with its ef­fort to grow by cut­ting prices to beat com­peti­tors, and driv­ers who have seen their pay re­duced.

The video of the ar­gu­ment — caught on dash­cam and now viewed more than 3 mil­lion times on YouTube — in­cludes yelling and pro­fan­ity, and ends with a com­bat­ive Kalan­ick dis­miss­ing an ag­i­tated Fawzi’s claims that sharp re­duc­tions in fares forced the driver into bank­ruptcy.

Harry Camp­bell, who drives for Uber in Cal­i­for­nia, says driver pay has gone down while Uber’s cor­po­rate val­u­a­tion has grown to over $60 bil­lion. “I think a lot of driv­ers feel that Uber al­ways looked out for them­selves first and fore­most and rel­e­gated driv­ers to a sec­ond tier,” he says.

“What we’re look­ing at in that video is 21st-cen­tury mo­bil­ity tech­nol­ogy and 19th-cen­tury la­bor re­la­tions,” said Har­ley Shaiken, a la­bor ex­pert and pro­fes­sor at the Univer­sity of Cal­i­for­nia, Berke­ley.

The video ex­change comes af­ter a month of trou­ble for the ride-hail­ing be­he­moth in­clud­ing sex­ual ha­rass­ment al­le­ga­tions from a fe­male en­gi­neer, a law­suit al­leg­ing tech­nol­ogy theft and a so­cial me­dia cam­paign en­cour­ag­ing rid­ers to delete Uber’s app over claims that the com­pany tried to cap­i­tal­ize when New York taxi driv­ers protested against Pres­i­dent Trump’s im­mi­gra­tion or­der.

Uber’s ri­vals claim that driv­ers have been de­fect­ing since Uber’s prob­lems started pil­ing up. Busi­ness ex­perts ex­pect more de­fec­tions among Uber’s 400,000 driv­ers, and even some rid­ers, af­ter the Kalan­ick video, de­spite his pub­lic apol­ogy. Some ri­vals boast of bet­ter pay for driv­ers, and some al­low tips through their apps, un­like Uber. Still, driv­ers say they get more busi­ness with Uber be­cause of its greater size and reach.

Shaiken, the Univer­sity of Cal­i­for­nia pro­fes­sor, says Uber is squeez­ing its driv­ers on prices, re­fus­ing to rec­og­nize them as em­ploy­ees and dic­tat­ing terms such as pric­ing with­out their in­put.

Uber de­clined com­ment on the con­tro­ver­sies but points to a sur­vey show­ing that 73 per­cent of its driv­ers don’t want to be em­ploy­ees. More than 60 per­cent drive fewer than 10 hours per week, the com­pany says.

Uber says on its web­site that driv­ers are paid based on dis­tance and time it takes to trans­port some­one. In Los An­ge­les, for in­stance, that’s 15 cents per minute and 90 cents per mile dur­ing off­peak times. There’s also a $1.65 book­ing fee. A 9-mile trip from West Hol­ly­wood to Downtown would cost $15. Uber says it takes roughly one-quar­ter of a fare.

Lyft would not an­swer spe­cific ques­tions about the same Los An­ge­les trip. The com­pany says it takes 20 to 25 per­cent of the fare. Each com­pany also has in­cen­tives for driv­ers to carry more pas­sen­gers.

Uber says driv­ers make around $19 per hour in the top 20 U.S. mar­kets. But ex­perts say the take is much lower when gaso­line, in­sur­ance and the cost of a car in­clud­ing in­ter­est on loans are fig­ured in.

Fas­ten CEO Kir­ill Ev­dakov says Fas­ten charges driv­ers a 99-cent flat fee per ride.

Lyft pays bet­ter in Chicago and al­lows tipping through its app, but Uber gets a driver more busi­ness, Ser­afine said. Most driv­ers will pick Lyft over Uber given the choice, she says. Uber re­cently al­lowed tipping, but it has to be done in cash.

ERIC RISBERG / AP

Uber, based in San Fran­cisco, has had an ar­ray of re­cent trou­ble in­clud­ing sex­ual ha­rass­ment al­le­ga­tions and a so­cial me­dia cam­paign against the firm.

Uber CEO Travis Kalan­ick apol­o­gized for be­rat­ing a driver.

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