Pay Increase for Uber/Lyft drivers !!!
The question still remains: Will Uber/Lyft and other App hail companies ever increase pay for their drivers despite their increased fares? This is something to ponder on. In the mean time, American Taxi Cab of Augusta, GA will continue to safe the day for App hail companies' customers around Augusta, Waynesboro, Harlem, Wrens, Hephzibah, Grovetown, Evans, Thomson, Appling, in Georgia(GA), and when needed to be dropped off in North Augusta, Beech Island, Aiken County, Jackson, in South Carolina(SC). Just search Taxi, Cab, Cabs, near me and voila here we come. Thanks to Google algorithm, understanding its implementation has helped some Cab companies to stay alive during pandemic especially due to Uber and Lyft bashing of Taxis and promises to make rides as cheap as possible.
Interestingly, so many people have been shocked when their rides to the airport wind up costing more than their flight, and there's been general panic that in a "post-pandemic" society, everything will become unaffordable. It’s not just in our heads, either: The New York Times reported that, as of April, the cost of a ride had increased by 40%. But what does it all mean? Or is it something else?
Recently, American Taxi Cab of Augusta drivers have to make urgent pickups due to Uber/Lyft drivers not showing up for scheduled appointments to Augusta GA Airport. Demand for Cabs became last minute effort for customers not to miss their flights since beginning of existence of Uber, Lyft and many ride share companies. Unfortunately, most promises made by those companies have not been met or were truncated which makes it possible for comeback of Taxis. Some customers even complained of their appointments been cancelled automatically after waiting for almost an hour for ride hail company drivers.
Ok, for once let’s be fair to the ride hail companies (although they did everything in their power to kill Taxicab industry), one basic reason is supply and demand. "When the pandemic hit in 2020, many drivers stopped driving because they couldn’t count on getting enough trips to make it worth their time," an Uber spokesperson tells Refinery29. "In 2021, we’ve seen more riders requesting trips than there are drivers available to give them."
But an explanation that stops there doesn't quite cut it. There is a driver shortage, but supply and demand would then dictate that Uber would be doing everything to keep those drivers, including by paying them more. Yet, a Washington Post report revealed that drivers may not in fact be receiving their share of the much-higher fares. If that's true, where is the money going? Uber denies the Washington Post's findings, and tells Refinery29 that the "majority of the price a rider pays goes to the driver," according to a spokesperson.
Others have theorized that the fare hike may not be temporary pandemic scarcity pricing — it could be here to stay. A popular NYT piece by Kevin Roose from June argued that ride-hailing couldn't stay cheap forever, calling the formerly affordable rates for Uber and other similar services a "millennial lifestyle subsidy." Roose posted that these higher rates was the way it was always going to be, and that they more accurately represent the "true" cost of ride-hailing. As long as we've used Uber, Roose explained, it had been subsidized by its investors, and now they were no longer softening the blow for, you know, hedonistic millennials. Roose frames Uber’s current cost as being a narrative with a moral that doesn’t condemn price-gouging start-ups, but rather singles out young, oblivious people as being naive about the price of their standard of living.
This is, again, not the full story. How can it be? While I'm not really sure what a "millennial lifestyle" is, I do know that Taxis existed a long time before app-based ride-hailing did. And while Taxicabs were never as cheap as public transportation, it's not like they were exclusively used by socialites headed to brunch. In fact, people on the low and high end of income use Cabs more than those in the middle. Data from the 2009 National Household Transportation Survey says that 41% of taxi trips that year were taken by people in households making less than $25,000. The next highest share of taxi trips (33%) were taken by people in households with an income of over $100,000. If you don't live in a city with decent public transit, and you can't afford a car of your own, a taxi might be the best way you have of getting somewhere.
The concept of hiring a car service isn't an extravagance that Uber invented, nor something millennials, specifically, were spoiled by. According to Hubert Horan, a transportation industry expert who has published in-depth analyses of the company's financial outlook, the key to understanding the sudden fare increase is simply that Uber is pushing to reach profitability right now, which it hasn't been able to do since its founding in 2009. In his view, though, they will never actually reach it. "The claim that recent price spikes were due to the pandemic is nonsense," he tells Refinery29. "The price spikes reflect the fact that people fundamentally were never willing to pay the true cost of Uber service."
An Uber spokesperson told Refinery29 that the company is on track to reach "total company profitability on an adjusted EBITDA basis before the end of this year." EBITDA stands for "earnings before interest, taxes, depreciation, and amortization," a measure that some financial experts believe fails to provide an accurate picture of a company's earnings because it excludes so many expenses and losses. In other words, it could be said that Uber can only present a case for being close to making money if they ignore a bunch of the ways in which they're losing money.
There are many skeptics of the claim that Uber will soon become a profitable company, let alone by the end of 2021. Uber isn’t just falling a little short of profit. It typically loses billions of dollars every year. In 2019 alone, it posted a loss of $8.5 billion. Between 2013 to 2018, its losses totaled about $14 billion.
While other analyses have concluded that Uber's path to profitability is a steeply uphill climb, Horan goes further. "Not only can I not imagine any remotely plausible explanation as to how Uber could suddenly become profitable after eleven years of massive losses," he tells Refinery29, "but absolutely no one has attempted to lay out a financial analysis making such a case. Not the company, not Wall Street analysts, not academics — no one."
A business eventually needs to make more money than it spends if it wants to survive. It doesn't get any more basic than that. When entrepreneurs appear on the reality show Shark Tank to pitch their business ideas, they're grilled by a panel of potential investors — the "sharks" — on exactly how their business model will work, how much revenue they've already generated or how much growth they've achieved, and what makes their company different from competitors. All of these factors (and more) are used to determine whether the business is overvalued, undervalued, or just right, and whether a shark will invest in it. A business idea that can't prove it has a sustainable way of turning a profit is understandably unattractive.
Yet Uber has never struggled to attract investors. In 2019, the company went public. In its initial public offering (IPO), the price of a share was set at $45, and the company was valued at about $82.4 billion. This valuation was already much lower than the $120 billion that some on Wall Street had proposed, and the stock price and valuation fell further after its IPO. Still, by this point Uber was broadly seen as an enormous win for investors. Its valuation was proof that Uber had started out as a scrappy start-up but had now achieved undeniable success, even as it continued to lose unfathomable amounts of money — and even though in its S-1, a document that every company must file with the SEC if it wants to go public, Uber acknowledged and warned that it was possible it would never become profitable.
What would Uber's valuation have been on Shark Tank? On what basis would it have claimed to be worth over $80 billion? Could it have withstood even a few minutes of scrutiny on a reality TV show? In a 2019 article published in the journal American Affairs, Horan writes, "This is not a case of a company with a reasonably sound operating business that has managed to inflate stock market expectations a bit. This is a case of a massive valuation that has no relationship to any economic fundamentals."
The typical explanation of the Uber model is that its focus has been on growth, not profit. A seemingly never-ending glut of capital allowed Uber to keep scaling up until it was everywhere, in some areas more ubiquitous than taxis and ensuring that the populace relied on its service. If taking an Uber is decadent, as the NYT piece suggested, it's an excess that Uber and its investors obviously intended everyone to get hooked on. According to Horan, its plan was to "eliminate all meaningful competition and then profit from this quasi-monopoly power" in the exact same way that Amazon has managed to do for e-commerce. Except that it hasn't worked.
The reason for that, says Horan, is that operating this kind of transportation service is expensive, and Uber doesn't have an edge over its competitors. It hasn't figured out how to provide transportation-for-hire far more efficiently than "traditional operators" such as taxis. It's not like it invented some patented super-fuel. A smartphone app that matches passengers with drivers can be — and has been — replicated by countless other companies. "Nothing in Uber’s business model has actually solved any of the problems that plagued traditional taxis," Horan says. "Uber never had the type of scale or network economies that had allowed other Silicon Valley-funded companies to 'grow into profitability.'"
Horan argues in his American Affairs article that although Uber markets itself as a tech platform, using an app to dispatch drivers to passengers doesn't magically cut down on the costs of operating a Taxi company. "The only meaningful economic distinction between 'Taxis' and 'ridesharing' is that the latter avoids regulations that traditional taxis must still obey and depends on billions in predatory investor subsidies," he writes. And in fact, he observes that Uber's costs are higher than the taxi industry's costs "in every category other than fuel."
Uber-optimists would point out that even if the company hasn't achieved sustained profitability yet, at least it's losing less money over time. As of September 2015, Uber's profit margin for the year was at negative 143%. In 2018, its profit margin was negative 35%. Progress, right? But Horan points out that this margin has narrowed almost entirely due to driver pay cuts. "If Uber drivers still received their 2015 share of each passenger dollar," he writes, "Uber’s negative margins would still be in the triple digits."
The main operational "efficiency" the company seems to have honed is paying less and less for labor. Before New York City set a wage-floor for drivers in 2018, their median hourly pay was below the city's $15/hr minimum wage. Rideshare drivers weren't protected by the minimum wage law because they're misclassified as independent contractors instead of as employees.