The impact of ride-hailing has been swift and sweeping. Uber, which was founded less than a decade ago in 2009, has become a multibillion dollar transportation startup with worldwide ambitions, and the technical ability to pursue autonomous vehicle technology and even experiment with Blade Runner-esque flying cars.
But as Uber and Lyft continue to expand, it’s important to remember that for all the high-tech advances, an equally important part of their legacies has been institutionalizing the gig economy. With more than two million employees in the United States combined, these two companies helped make these new working arrangements an everyday part of many people’s lives.
And their continued reckoning with labor issues, costs, and recruitment suggest they haven’t figured out the right formula.
Harry Campbell understands the evolution of Uber and Lyft better than most. Known as the Rideshare Guy, after his popular blog and podcast about working in the industry, Campbell created an important forum and resource for the industry, inspired by his time as a driver.
His new book, The Rideshare Guide, offers advice on getting started and getting established as a driver, but also offers insight into how ridehailing has evolved, and the issues that drivers face.
“People take Uber or Lyft as a passenger, and they often don’t understand how many people these companies are employing,” Campbell told Curbed. “Lyft has more than 700,000 drivers, and Uber has 2 to 3 million worldwide, with 1.5 million in the U.S. It’s becoming a more traditional option for work, whereas in the past, it was something sort of cool and different.”
Curbed spoke to Campbell about making it in the gig economy, the frustrations of drivers, and the future of Uber, Lyft, and their competitors.
Is Uber actually making moves to treat its drivers better, with the recent change in leadership, and are they making a difference?
“Uber is still facing an uphill battle because they’ve done so little for so long. They deserve some credit, but probably not as much as if they had been supporting the drivers all along. The new CEO Dara Khosrowshahi seems like he cares more about drivers.
But drivers care more about raising their rates, and the ever-growing commission Uber takes. It looks like the company is addressing everything else but those issues.”
Turnover is still incredible massive for these companies. Is that strictly a matter of pay?
“Pay is a big factor. A lot of drivers come in with the expectation that they’re going to make good money. Look at the marketing campaigns they’re running, when they talk about “the ultimate side hustle.”
When you measure messaging and expectations— remember that the average driver is making between $16 and $18 a hour before taxes, close to minimum wage—it hurts retention. Factor in services like UberPOOL [Uber’s shared ride service] and the ever-growing commission Uber and Lyft are taking, and that doesn’t help.”
Uber gets billions from venture capital investors and can’t pay their drivers a full-time wage, is bleeding money, and still telling people to come and work for them. How do drivers view these contradictions?
“Retention is poor, and a lot of drivers are quitting, but there are also lots of drivers who are able to figure it out in the bigger cities. In cities such as LA and San Francisco, for example, they’re able to make $7 more an hour than the average. Drivers with experience are making more than newbie drivers.
There’s a ton of variability, and subsidies and bonuses have become such a huge part of income for drivers now.”
So for Uber and Lyft, retention and expanding the workforce is clearly a big challenge. What can they do to make a difference?
“It’s really not the sexiest thing, but they just need to pay drivers more. Uber and Lyft are trying to do everything they can do around the edges right now. They’re investing in customer support and try to improve pickups and drop offs for UberPOOL.
But pay and flexibility are the main things that drivers care about, and everything else isn’t that important. Uber made a big announcement in April, and had the CEO speak. Drivers were expecting a lot. And it was all for a new driver’s app.
The feedback we got from drivers was that the app was cool, but that’s not even on the list of the top five issues I actually care about.”
Does the recent California case about independent contracting impact Uber and Lyft, and will this case and others cases like it make a big difference?
“There’s a lot of hype around that case, and it is a big ruling. If you look at the test they talk about in the case to determine the difference between an employee and independent contractor, Uber and Lyft drivers are clearly employees.
But their whole model is predicated on independent business contractors. Uber and Lyft will do anything to protect that, so if that means giving drivers a little more freedom so they meet the independent contractor test, they’ll do it.”
Do you see the work you’re doing as a first step in setting the boundaries for gig economy jobs in the future, and future labor issues?
“The book is ultimately a how-to guide for driving for Uber and Lyft, but there’s a lot of advice that’ll be applicable to anybody working in the gig economy.
When you start, the companies are all shiny and new. But once you get into it and start peeling back the layers, at the end of the day, you’re running a business. There’s all sorts of tough business choices you have to make in terms of liability and taxes.”
Are these companies sustainable?
“I think the model is sustainable because on the consumer side, there is huge demand for Uber and Lyft. And on the driver side, despite the massive turnover, millions of people are driving for these companies.
If you can earn the same amount working 40 hours a week at Uber or McDonald’s, well, I’d rather work for Uber. With other jobs, you have no flexibility. So I think this mode is here to stay.”
“But for Uber and Lyft, there’s a lot of venture capital money subsidizing the pay side of things. The amount that riders pay and drivers get paid is still in flux. But I think they’re going to have to pay drivers more.
This is Silicon Valley 101: Lower prices to generate demand and subsidize until eventually you find that balance. Uber and Lyft have been really resistant to raising prices. That’s why I call this the Golden Era of Rideshare, it’s cheaper than ever to take an Uber and Lyft, especially with Lyft Line and all of these budget-friendly options for the average rider.
I was surprised when reading the book at just how much drivers hate services like UberPOOL. Is there anything they can do to turn that around?
“When Uber first launched UberPOOL, they charged less even though it was more challenging for drivers to make all the pickups and dropoffs, and they would get paid less. You can imagine it wasn’t well-received. Now, drivers use these rides to make their bonuses quicker. Going forward, drivers will need to be rewarded better for their effort.”
“One of the things I enjoy highlighting is that Uber’s narrative to the public and media varies with the story they’re telling their actual drivers. ‘UberPOOL is the future for us, it allows us to improve congestion and do more rides and improve utilization.’ But 65 percent of drivers are dissatisfied with their UberPOOL experience, and almost everybody hates it. UberPOOL may have benefits for the company, but it’s still a work in progress.
So is there a huge disconnect between the pay issues of everyday drivers, and news that Uber is sinking money into a flying car summit?
“Drivers aren’t dumb. There’s a disconnect between what it’s like being a driver, day in and day out, and the employees working at Uber and Lyft. It’s hard for them to put themselves in the drivers’ shoes. But the drivers are thinking short-term.
You look at the retention numbers, and they probably won’t be around when self-driving cars are here. They ask, ‘Why are you spending money on flying cars? Pay me now, I need to pay bills now.’”