Uber and Lyft take a lot more from drivers than they say
In July, an Uber driver picked up a fare in a trendy neighborhood of a major U.S. metropolitan area. It was rush hour and surge pricing was in effect due to increased demand, meaning that Dave would be paid almost twice the regular fare. Even though the trip was only five miles, it lasted for more than half an hour because his passengers scheduled a stop at Taco Bell for dinner. Dave knew sitting at the restaurant waiting for his fares would cost him money; he was earning only 21 cents a minute when the meter was running, compared to 60 cents per mile. With surge pricing in effect, it would be far more lucrative to keep moving and picking up new fares than sitting in a parking lot. But Dave had no real choice but to wait. The passenger had requested the stop through the app, so refusing to make it would have been contentious both with the customer and with Uber. There’s widespread belief among drivers that the Uber algorithm punishes drivers for cancelling trips. Ultimately, the rider paid $65 for the half-hour trip. But Dave made only $15. Uber kept the rest, more than 75 percent of the fare, more than triple the average so-called “take-rate” it claims in financial reports with the Securities and Exchange Commission. This, according to Wayne State University law professor Sanjuka Paul, who has written extensively on the ride-hailing industry, is a new wrinkle in the independent contractor debate, because it doesn’t align with the arguments the companies make that they merely facilitate interactions between two independent actors in a market. “The economic reality is they, Uber and Lyft, are collecting the fare from the consumer and then making a capital firm decision which, in this case, doesn’t sound like a very bad decision— actually making quite a sensible decision,” she said. “But it shows that they are a firm that is charging consumers and then making decisions with that money, including how to pay a labor force.”