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Inside Uber’s showdown at the Super Bowl
You may hate Uber’s surge pricing—but your driver probably hates it even more.
With Super Bowl 50 taking place Sunday night in Santa Clara, just an hour or so away from Uber’s headquarters in San Francisco, the chance to contribute hundreds of thousands of dollars to the Host Committee in exchange for exclusive ridesharing service to the game was too good to pass up. The deal makes Uber the first ridesharing company to get access to the Super Bowl, where they will have designated pick-up and drop-off points, and a lounge for riders to hang out in after the game.
The catch is that United Uber Drivers, a collective formed to redistribute the power that the ridesharing giant has over its employees, are urging drivers to boycott the event in protest of the company’s decision to slash fares during the month of January. But while the San Francisco boycott is organized around the Super Bowl, it’s hardly the only market where drivers have been upset about the company’s practice of lowering prices to accommodate for the dip in business after the holidays. In New York and beyond, drivers have felt the squeeze.
While the San Francisco boycott is organized around the Super Bowl, it’s hardly the only market where drivers have been upset about the company’s practice of lowering prices to accommodate for the dip in business after the holidays.
As the United Uber Drivers’ boycott gains traction on social media and the 300,000 visitors in town to see the game start pouring into the city, there’s a good chance that the Super Bowl will, at the very least, prove to be less than the celebratory moment that Uber hopes it will be. Yet the boycott is just the tip of the iceberg. Uber has long been criticized for their business practices, but no matter how you feel about them, it’s hard to deny that the company can’t continue to thrive if their employees are on the verge of rioting.
“The biggest thing I’ve seen is that drivers want a voice with these cuts,” says Harry Campbell, who runs the blog The Rideshare Guy. “Uber cutting prices and telling drivers it’s good for them—it just seems to be rubbing salt on the wound, because not a lot of drivers feel like that.”
But it’s not just a voice that Uber drivers need. What the Super Bowl boycott is emblematic of is Uber’s failure to reward their drivers amidst special circumstances, especially at times when they implement surge pricing.
The relationship between Uber and its employees has always been tenuous. And because of the ridesharing industry’s lack of regulations, they haven’t been treated like regular employees from the start. Instead, Uber has treated their drivers as contractors, something which a recent decision in California aims to reverse. Elsewhere around the country this mentality is changing too. Uber claimed victory over the taxi industry by getting around union regulations, but with drivers in Seattle now starting to unionize, and drivers in New York on the verge of doing the same thing, it’s possible that the laissez-faire attitude that helped Uber achieve such success may be on its way out. Ultimately, unionizing may be in the best interest of all their drivers.
Uber drivers are still struggling to figure out how to make a decent living in the ridesharing economy.
In the meantime, Uber drivers are still struggling to figure out how to make a decent living in the ridesharing economy. Although Uber has in the past claimed that employees can earn over $30 an hour, the reality is that pay grades for Uber drivers tend to be all over the place, with some barely earning minimum wage. This is where, in theory, surge pricing works to the drivers’ advantage; higher fares mean more money
But survey a wide range of Uber drivers and you’ll find that not everyone is so keen on surge pricing. That’s exactly what CNET did, and they found that opinions on the practice are all over the place:
“Some drivers appreciate surge pricing and say higher rates help them make ends meet — especially since Uber has instituted price cuts throughout the US over the last year… But many drivers say they don’t like the practice… Drivers like Suleman K. say a fixed pay rate, rather than relying on periods of demand, would make their earnings more reliable. Others say that when they get a low rating from a passenger, it’s likely during surge pricing. Some, like Ashlock, say surge pricing could also mean fewer rides.”
Fewer rides because less people want to use Uber during surge pricing. One study from Northeastern University found that drivers are so tired of Uber users canceling and forgoing rides during surge pricing, they will actually avoid areas where surge pricing is going on altogether. In reaction to this, Uber is updating their driver app to help drivers figure out where they can make the most money. “That updating implies that some drivers had complained about the “Lucy and the football” syndrome of rushing to surge areas, only to find out that they’d ended,” writes Carolyn Said at the San Francisco Gate.
It’s not as if it looks like Uber is going away. Despite some notable losses, they’re still a profitable company. But if that profit comes at the expense of their drivers, then unions will be the least of their worries.
Updates aside, other ways have been proposed for drivers to maximize their earning potential too. As mentioned above, many drivers would prefer a fixed rate, although Uber is sure to argue that this would prevent them from staying competitive. Some have also suggested that a tip option would be a better alternative to surge pricing, letting riders decide if they want to give a little extra, and possibly luring back those who avoid the app when surge pricing is in effect. But this seems unlikely, given Uber’s determination to stand apart from the taxi industry, and the fact that their main competitor, Lyft, does have a tip option, and they’ve been steadily lagging behind Uber for years.
Then there’s the possibility of putting a cap on surge pricing, like Uber and Lyft did during the East Coast’s major storm last January. This would at least let drivers know that even if they’re going to pay more than usual, there will be a limit to the exorbitant prices. Then again, Uber refused to put a cap on prices during the East Coast’s storm this year, saying they wouldn’t budge unless a state of emergency was declared.
Taking all these possibilities off the table for a second, the biggest problem as things currently stand is that drivers are forced to fork over what many consider to be an unreasonably high commission during surge pricing. Forbes’ Ellen Hunt talked about this all the way back in 2014, after Uber announced that San Francisco drivers would have to surrender 25 percent of their earnings to the company during times when surge pricing was implemented.
“Whenever Uber cuts into driver pay, the company says that its complex price manipulations — some surge pricing here, increased demand from lower fares there — mean drivers take home higher hourly pay than before.
But, as always, drivers disagree. With new costs (phone fees, the $1-a-ride loss, and a 15 percent cut) plus the old ones (insurance, gas, and car wear-and-tear), they say they’re significantly worse off than before.
And new UberX drivers may suffer even more, especially if the 25 percent commission spreads to other markets.”
And it did. On top of which, Uber also began taking a 30 percent commission from new drivers in San Francisco and San Diego last year. Lyft was able to do a little bit better by their drivers after they began taking a 20 percent commission, by letting them earn some of that money back later. But so far, Uber has yet to introduce any sort of similar plan.
The truth of the matter is that if Uber wants to stick with surge pricing, they’re going to have to take a smaller commission from their drivers. Because if they’re not going to create a tip option or start paying drivers a flat rate or create opportunities for drivers to earn commissions back, then at the very least they have to stop gouging drivers’ earnings during the times when drivers stand to make the most. It’s not even like they would have to cut their commission that much. As little as 5 or 10 percent would be a good start, and it would help to increase driver loyalty a lot. It would probably also help if Uber stopped running so many discounts. Riders love them, but they would probably be content with paying a standard fare if it meant that driver consistency were to improve. Otherwise, the company could try to find a trade-off where they get to keep offering discounted rides, in exchange for putting a cap on surge pricing. This would help to endear both drivers and riders to the company in the future.
It’s not as if it looks like Uber is going away. Despite some notable losses, they’re still a profitable company. But if that profit comes at the expense of their drivers, then unions will be the least of their worries. As the Super Bowl strike shows, anything Uber can do to create a better relationship with their employees (or contractors, or whatever they want to call them) so that they don’t have a full-on revolt on their hands, is a step in the right direction.
Remember, next time you take an Uber during surge pricing, as much as you hate it, your driver might hate it even more.
Chris Osterndorf is a freelance journalist whose work has appeared on Mic, Salon, xoJane, the Week, and more. When he’s not writing, he enjoys making movies with friends. He lives in Los Angeles.
Photo via Jason Tester Guerrilla Futures/Flickr (CC BY ND 2.0)
Chris Osterndorf is an entertainment reporter and movie critic based in Los Angeles. He holds a degree in cinema from Chicago’s DePaul University. His work has appeared on the Daily Dot, Mic, the Script Lab, Salon, the Week, xoJane, and more.