U.S. Uber experience highlights pay issues

Some drivers have quit over low wages

There will be a push by ride-hailing companies like Uber to get a pool of drivers signed up now that the provincial Liberal government has set a target of December for bringing their services to B.C.

There are some telling examples of what drivers in other cities have faced as would-be drivers in B.C. try to figure out what wages and conditions Uber will offer here.

Uber Canada says the number of drivers in B.C. who might be interested in working with them is in the tens of thousands, based on information sessions it has run over the last year in Kelowna, Victoria, Vancouver and Surrey.

In Houston, meanwhile, there are drivers commuting to Austin so they can avoid working with Uber. Instead, they are opting to drive for smaller ride-hailing companies that leave them with $100 or even $200 more at the end of each day than they would get with Uber, according to CNNMoney last week.

Uber and Lyft, another large ride-hailing company, decided to leave the Austin market last May because city officials there wanted their drivers to be fingerprinted. Their departure led to the flourishing of new and local apps such as Ride Austin and Fasten.

In Houston, Uber drivers get 87 cents a mile, a figure that has dropped in recent years, said CNNMoney, which profiled one woman who got into financial trouble when Uber lowered its prices and changed its commission split.

She discovered that making the three-hour trek from Houston to Austin was worth the trouble of sleeping in her car every night from Thursday to Sunday. She now splits an apartment in Houston with three other drivers who also travel to Austin because they can earn more there than driving for Uber in Houston.

It’s typical for a company like Uber to court drivers with generous rates until it is the dominant player, said Sumeet Gulati, a UBC professor of environmental and resource economics who has researched these ride-hailing companies.

After that, however, he worries that wages for drivers can fall to the point where they might not earn minimum wage.

Doing informal research, Gulati talked to some drivers in Atlanta making as little as US$10 an hour during off-peak hours, and they had yet to account for expenses such as insurance and wear and tear on their car.

He spoke to one woman who “lived in a nice neighbourhood and had a decent job and was trying to make some extra money to see a game” as well as a “programmer for Apple who was driving on his day off.”

Said Gulati of the potential pressure on wages: “There is a lot of underused capital in North American cities. People have cars and have time.”

At one point, Gulati paid an Uber driver in Atlanta a mere “$3 for a 40-minute ride. It was off-peak, but I started questioning if wages will fall to the point where people will stop driving or unionize.”

In Seattle, Uber is suing the city after it approved a law that allows drivers for Uber and Lyft to unionize and collectively bargain for better working conditions, earnings and other benefits.

Uber Canada official Susie Heath cited research by Princeton University professor Alan Krueger, who looked at the labour market for Uber drivers at the end of 2016, finding that hourly earnings (before expenses) remained stable even as prices fell and that hourly earnings aren’t related to how many hours a person drives per week.

There is a lot of underused capital in North American cities. People have cars and have time.