Uber’s preparing to spend $250 million to increase drivers’ pay, including offering payment guarantees and other incentives to lure new drivers to the service and entice the existing ones to work more often.
The effort comes as Uber and rival Lyft report their drivers are enjoying higher than average earnings due to a sharp jump in demand as states begin rolling back COVID-mandated restrictions. People are getting more and more freedom to return to “normal” and drivers are seeing a significant spike in rates due to the demand.
One Uber executive says drivers need to take advantage of the situation while they can because it’s likely to fade.
“In 2021, there are more riders requesting trips than there are drivers available to give them—making it a great time to be a driver,” wrote Dennis Cinelli, Uber vice president, U.S. & Canada Mobility in a blog post.
“We want drivers to take advantage of higher earnings now because this is likely a temporary situation. As the recovery continues, we expect more drivers will be hitting the road, which means that over time earnings will come back to pre-Covid levels.”
What are drivers making?
Cinelli noted that in the company’s larger markets, the median earnings per hour were above $25 an hour. Philadelphia was leading the way at $31.03 with Chicago, Austin, Miami and Phoenix rounding out the top five with rates between $25.94 and $28.73 per hour.
Lyft Inc. said Tuesday drivers in the company’s top-25 markets were earning an average of $36 per hour, which includes tips. This compares to the $20 per hour average before the pandemic. Lyft is also offering additional incentives and promotions in select markets, according to Reuters.
The company’s seen its demand ramp up quickly as well, reporting that its ride volume set a new record for 2021 the week of March 8. It was the biggest total the company has seen since March 2020. The company expected a 100% increase the following week.
“(W)e continue to expect positive weekly rideshare growth measured on a year-over-year basis beginning this week — and every subsequent week through the end of 2021 (barring a significant worsening of COVID-19 conditions,” the company posted in its blog.
Driver pay problems
The move to secure additional drivers with big salaries being the draw is a remarkable change for the two ride-hailing giants. It wasn’t long ago they were in a pitched legal and public relations battle about how drivers will be compensated. In California, the courts ruled in favor of drivers becoming classified as employees with regular pay and benefits.
That victory was short lived as voters in the Golden State overruled the courts, voting in favor of a measure that would make them independent contractors. The issue is still being litigated. In the U.K., the courts recently ruled in favor of classifying the drivers as employees.
The organizations are looking to add new drivers or lure the existing ones to return is because many of them stopped driving because they no longer felt safe despite guidelines offered by the two companies. More money — like the $250 million from Uber — will turn heads, but safety concerns are a big issue.
“We’re working hard to support communities as the world reopens and people get to visit their loved ones,” Lyft posted in its blog. “
We will continue to focus on providing access to safe and reliable rides to those who need them, whether that’s going to a vaccination appointment or dining out again. We’re here to help you reconnect with each other.”
Uber’s Cinelli offered up the same type of assurances, noting that a third of U.S. adults have already received at least one vaccine dose, “but we’re continuing to recommend that all riders wear face masks.” He noted the company is working with drivers to help them secure appointments to get vaccinated.