Uber dangles higher pay to lure US drivers back, but warns it will not last

Uber dangles higher pay to lure US drivers back, but warns it will not last

FILE PHOTO: A sign marks a rendezvous location for Lyft and Uber users at San Diego State Universit
A sign marks a rendezvous location for Lyft and Uber users at San Diego State University in San Diego, California, US, on May 13, 2020. (Photo: REUTERS/Mike Blake)

WASHINGTON: Uber said US drivers on their ride-hail platforms should take advantage of pay hikes as trip demand temporarily outstrips driver supply, but warned the windfall will not last.

Uber's Vice President of US & Canada Mobility, Dennis Cinelli, in a blog post told drivers to take advantage of higher earnings before pay returns to pre-COVID-19 levels as more drivers return to the platform.

Uber said it would invest an additional US$250 million to boost driver earnings and offer payment guarantees in an effort to incentivize new and existing drivers.

Lyft Inc on Tuesday also said drivers in the company's top-25 markets were earning an average of US$36 per hour compared to US$20 per hour pre-pandemic. Those numbers include tips, but Lyft did not disclose the share of tips in earnings. Lyft is also offering additional incentives and promotions in select markets.

Uber on Wednesday said drivers spending 20 hours online per week in many cities were seeing median hourly earnings around 25 per cent to 75 per cent higher than pre-pandemic, making around US$31 in Philadelphia and close to US$29 in Chicago. Those earnings are after Uber's fee but before customer tips and expenses, which drivers are responsible for as independent contractors.

The uptick in demand comes as more US states lift lockdown restrictions implemented in response to the COVID-19 pandemic, vaccination rates increase and a growing number of Americans start moving again.

But ride-hail drivers, many of whom stopped driving during the height of the pandemic over safety concerns and amid sluggish demand, have been slow to return to the road.

Uber and Lyft executives have told investors driver supply was a concern as demand is expected to ramp up further. Lyft said investments to boost driver supply will create first-quarter revenue headwind of US$10 million to US$20 million.

Both companies have been criticised by city officials and worker advocacy groups in the past for paying too little by oversaturating markets with drivers, pushing down prices. Uber and Lyft reject those claims.

In Seattle, which in January implemented the city's minimum wage of US$16.39 per hour for ride-hail drivers, a city-commissioned study found drivers net only about US$9.70 an hour, while a study of data provided by Uber and Lyft showed most drivers' earnings are roughly in line with the city's median.

Source: Reuters

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