lyft
Wall Street Greed, Not Worker Pay, Is Making Your Uber Ride More Expensive
Falsely claiming that wage protections will drive up fares seems to be a tactic rideshare corporations use to pit drivers against passengers and obscure a massive transfer of wealth.
If you’ve taken an Uber ride recently, you’ve probably noticed it cost a lot more than a few years ago. Why is that? We conducted the largest-ever study of rideshare fares to find out, and discovered a story of gaslighting and corporate greed that squeezes rideshare drivers and riders alike, while funneling our money to banks and billionaires.
This month, Minneapolis passed an ordinance requiring rideshare corporations to pay drivers at least $1.40 per mile and 51 cents per minute. In a desperate attempt to block the pay floor, Uber and Lyft are threatening to leave the city, claiming that such a requirement would make rides too expensive for residents. This argument—that higher driver pay would force big fare hikes—is one of Uber and Lyft’s favorite scare tactics. As drivers across the country have protested poverty wages and organized for better pay, the rideshare giants have trotted out this line again and again—in Connecticut, Chicago, New York, and Seattle, to name just a few.
We decided to test that claim. Our team analyzed over a billion rideshare trips, comparing four years of data in Chicago and New York. These are two of the biggest rideshare markets in the U.S. and the only two American cities that make rideshare corporations report detailed trip data. In New York City, drivers overcame Uber’s fearmongering and won a minimum pay standard that took effect in February 2019. In Chicago, drivers are organizing but haven’t yet won pay protections.
Letting rideshare corporations bully and bamboozle to get their way harms all of us.
If Uber’s argument was true, fares should have gone up more in New York after the pay standard took effect. In fact, the opposite happened. Over the four years we studied, Uber and Lyft raised fares by 54% in Chicago, where drivers have no pay protections. In New York, they only increased fares by 36%. The reality just doesn’t match Uber’s scare tactics.
So if fares went up more in the city without a pay floor, what’s causing these big price hikes? We looked at many possible explanations, but only one fits the data: pressure from Wall Street.
For years, Uber used money from the likes of Goldman Sachs, BlackRock, and Jeff Bezos to subsidize cheap rides and decent pay. Now that Uber dominates the market, its investors are demanding their cut. As the corporation has faced increasing calls to turn a profit, it has jacked up fares and cut driver pay.
The strategy is working: just last month, Uber reported an annual profit for the first time ever—and promptly announced plans to give $7 billion to shareholders.
Letting rideshare corporations bully and bamboozle to get their way harms all of us. Riders are forced to pay more to get around, while drivers have to work long hours and still struggle to cover the bills. Falsely claiming that wage protections will drive up fares seems to be a tactic to pit drivers against passengers and obscure this massive transfer of wealth to Wall Street.
The good news is that communities are no longer falling for Uber’s scare tactics. In Minneapolis, the city council stood with the city’s mostly Black and immigrant drivers instead of giving in to Uber’s bullying. And in Chicago, drivers are organizing for an ordinance setting a living wage and protections against unfair deactivations—and have the support of a majority of the city council.
These fights are far from over (already Uber and Lyft are turning to the Minnesota state legislature, which could pass a law banning the Minneapolis ordinance from going into effect). But when drivers and communities stand together, these cities are showing we can say no to Uber’s bullying, ensure drivers are paid enough to provide for their families, and shape a transportation system that serves us instead of Wall Street.
Minnesota Dems Set Bar for State Legislatures, Passing Nearly Every Item on 'Transformational' Agenda
"The work we've done over the last five months will make a generational impact on our state—it will lower costs, improve lives, and cut child poverty," said Gov. Tim Walz.
Progressives are applauding what Minnesota House Speaker Melissa Hortman called the state's "transformational" legislative session, which ended on Tuesday after the Democratic-Farmer-Labor Party passed nearly every item on its agenda, securing economic justice, reproductive rights, and labor protections for Minnesotans.
With the DFL holding only a narrow majority in the state House and Senate—a six-vote and one-vote margin, respectively—policy researcher Will Stancil said on social media that "the scale of their achievement cannot be overstated."
"The Minnesota Legislature just completed what is probably the most productive session anywhere in the country since probably the New Deal," he said. "Sweeping bills and reforms across every area of life."
Stancil was among a number of progressives who highlighted nearly two dozen bills passed by the DFL and signed into law by Democratic Gov. Tim Walz, who posted an image of a whiteboard with party's legislative agenda on it along with the word, "Done."
\u201cDone \u2705\u201d— Governor Tim Walz (@Governor Tim Walz) 1684814396
The party's achievements over the past five months include a statewide paid family and medical leave program, which provides 20 weeks of leave; the legalization of recreational marijuana use; and a law providing free school meals to all public and charter school students—part of Walz's plan to "make Minnesota the best state in the country to raise a child."
\u201cAt Webster Elementary in Minneapolis, Gov. Walz signs School Meals bill, providing free breakfasts and lunches to all Minnesota public school students\u201d— John Croman (@John Croman) 1679079655
"The work we've done over the last five months will make a generational impact on our state—it will lower costs, improve lives, and cut child poverty," said Walz on Tuesday.
The party also passed a bill codifying Roe v. Wadeamid a nationwide assault on abortion rights, legal protections for transgender youths who receive gender-affirming healthcare in the state, and a bill setting a minimum wage for Uber and Lyft drivers, leading a crowd of drivers to give the legislation's sponsor, state Sen. Omar Fateh (D-62), a "hero's welcome" after it passed on Sunday.
\u201cSenator @OmarFatehMN gets the hero\u2019s welcome after his Transportation Drivers, aka Uber/Lyft bill, passes Senate\u201d— John Croman (@John Croman) 1684707459
"Rather than looking at the November numbers result and imposing some kind of self-limiting narrative about the scope of their mandate, Minnesota Democrats looked at their priorities and said, 'How much of the list can we get done?'" said Stancil. "Turns out the answer was 'Almost everything.'"
\u201cBut the key here is that the DFL clearly figured, no matter how small their majorities were, it was better, politically and morally, to choose doing good things over doing nothing. And it did, again and again.\u201d— Will Stancil (@Will Stancil) 1684811682
The party's achievements in Minnesota, said pro-workers' rights media organization More Perfect Union, should "set the precedent for state governments across the country."
"On the balance," said the organization, "Minnesota progressives took narrow House and Senate majorities following years of gridlock—and in their first session in power, managed to set the bar for Democratic legislatures."
'Our System Is Broken,' Say Labor Leaders as California Court Upholds Prop 22
But "the oligarchs are dancing in the streets tonight," said one law professor as talk among worker advocates turned to a likely appeal before the state Supreme Court.
Labor advocates on Tuesday decried the California appellate court largely upholding Proposition 22, the industry-backed 2020 state ballot measure allowing app-based ride and delivery companies to classify their drivers as independent contractors—which is serving as a template for legislation to deny basic worker rights, benefits, and protections in other states.
The 1st District Court of Appeals on Monday rejected Alameda County Superior Court Judge Frank Roesch's 2021 ruling that Prop 22 was unconstitutional, a decision viewed at the time as a major blow to gig economy companies such as Uber, Lyft, DoorDash, and Instacart whose business models rely upon minimizing frontline worker compensation by categorizing drivers as independent contractors instead of employees. Independent contractors are not entitled to unemployment insurance, health insurance, or recompensation for business expenses.
"The oligarchs are dancing in the streets tonight," tweeted Veena Dubal, a professor at the University of California College of the Law, San Francisco.
David Huerta, president of the California branch of the Service Employees International Union (SEIU)—which led a 2021 lawsuit challenging Prop 22 and is expected to appeal Monday's decision to the California Supreme Court—said in a statement that "when gig companies can spend over $200 million to pass a law that violates our state's constitution instead of investing in workers, it's clear that California needs better safeguards for our democracy."
"And now, the fast food industry and oil industry are copying the gig industry's playbook—attempting to boost their profits by hijacking the ballot referendum process and overturning laws that give workers a voice on the job and protect the health of our communities," he added.
Meanwhile, Uber chief legal officer Tony West called the ruling "a victory for app-based workers and the millions of Californians who voted for Prop 22" and claimed that the law gives drivers and couriers "new benefits while preserving the unique flexibility of app-based work."
Prop 22's passage in November 2020 with nearly 59% of the vote was the culmination of what was by far the most expensive ballot measure in California history. App-based companies and their backers outspent labor and progressive groups by more than 10 to 1, with proponents pouring a staggering $204.5 million into the "yes" campaign's coffers against just $19 million for the "no" side.
Had voters rejected Prop 22, gig companies would have been compelled to pay drivers the state minimum wage, and provide healthcare, paid sick leave, overtime pay, and reimbursement for some of the work-related expenses that claim a significant share of drivers' income.
Instead, app-based companies are required to pay frontline workers 120% of the state minimum wage—currently $15.50 per hour—but only while driving and not during the waiting that constitutes a significant amount of their workday. The companies must also offer a health stipend to drivers who work more than 15 hours a week—again, only actual driving hours count—and cover the cost of workplace injuries.
The experience of Daryush Khodadadi-Mobarakeh—who drives 35-40 hours a week for Uber, Lyft, and DoorDash—is typical of many app-based drivers.
According to CalMatters labor reporter Grace Gedye:
Khodadadi-Mobarakeh, who is a leader with the California Gig Workers Union, said his pay has consistently decreased since he began working in 2014, including after Prop 22 went into effect. Now it takes him about 12 hours to make the same amount he used to earn in eight hours before Prop 22, he said. And he doesn't receive the health stipend; he didn't bother trying to sign up, he said, because he gets insurance through his wife and his understanding is that you need to be on your own insurance to get the reimbursement.
A May 2021 Instacart survey found that just 12% of its shoppers—the workers who fill and deliver customer orders—said they worked enough weekly hours to qualify for the health stipend, and of those people, only a quarter applied for and received the benefit.
Prop 22's passage inspired the introduction of similar legislation in other states. In Massachusetts, Lyft gave a record $14.4 million to a coalition established to fund a prospective 2022 state ballot measure to keep ride-hailing and delivery app drivers classified as independent contractors.
The Massachusetts Supreme Judiciary Court ultimately blocked the measure from appearing on the 2022 ballot, arguing that app-based companies went too far by including language meant to protect them from liability when their drivers get in accidents by classifying them as "not an employee or agent."