10 ms·

Uber is charging drivers to work

185 points by hanspragt 9y ago

hanspragt 9y ago
Note that although I used the original title of the article, I do feel it is a little sensationalist.
- deleted 9y ago
  [deleted]
- iaw 9y ago
  I think the author is painting this in the worst possible light. The UX is a little misleading but I could see this being an effort by Uber to pre-commit drivers as a means of reducing surge pricing. What makes this potentially unethical (in my mind) is where the price is set. If it's set at a point where Uber's models predict the average benefit to a driver is $0 then this is essentially shifting the risk to their employees.
  - lightedman 9y ago
    "I think the author is painting this in the worst possible light." You should work for any sort of delivery or courier service. This 'worst possible light' is daily business for companies like Papa Johns and others that claim their drivers are merely 'contractors.' This is also quite illegal - you can not pay to work. It's literal extortion - you have to pay us in order to receive this amount of wage. No, the courts frown upon this.
    - PatientTrades 9y ago
      > This is also quite illegal - you can not pay to work You do know the offer is optional right? If a driver doesn't want to pay $115 for the 33% rate increase then they don't have to. Did you read that part? Also, many drivers could benefit from this especially if they drive full time in popular areas.
      - drewrv 9y ago
        There are all sorts of optional deals that are illegal.
      - lightedman 9y ago
        "You do know the offer is optional right?" You do know that such an offer is illegal, right? It is literally "If you pay us, we'll pay you more later on." It's the actual beginning of a Ponzi Scheme.
        AnthonyMouse 9y ago
        > You do know that such an offer is illegal, right? Which law does it violate? > It's the actual beginning of a Ponzi Scheme. Your argument is of the form "Romans build roads, therefore people who build roads are Romans." Ponzi schemes don't have actual customers, which inherently leaves the people at the bottom of the pyramid holding the bag. Uber pays drivers from fares. There is no pyramid.
        lightedman 9y ago
        Uber's been running at a consistent loss. Ponzi Schemes don't have customers? There have been plenty of "multi-level marketing' businesses selling things like perfumes, knives, even candle wax, and have been ruled as Ponzi/Pyramid Schemes. It's the exact same behavior - pay us to make money.
        AnthonyMouse 9y ago
        > Uber's been running at a consistent loss. So do a million other startups. That doesn't mean the drivers don't get their money. > Ponzi Schemes don't have customers? The majority of the scam's revenue comes from payments from workers rather than sales to customers. > It's the exact same behavior - pay us to make money. Pyramid schemes have pyramids.
        lightedman 9y ago
    - kingnothing 9y ago
      IANAL, but it's similar to how cabs, barbers, strippers, and other contractors operate.
      - dawnerd 9y ago
        They're renting space though. An uber/lyft driver isn't renting a medallion or a barber seat.
        sokoloff 9y ago
        Salespeople pay for leads. Businesses pay for online clicks. Advertisers pay for eyeballs. I don't see this as a bright-line case.
        hydrogen18 9y ago
        Would you agree that none of those people pay their employer in that case? I certainly agree salespeople pay for leads, but it is usually an outside party supplying them.
        sokoloff 9y ago
        To keep it close to Uber, many cab drivers rent their cabs/medallions from the cab company. In the taxi (and Uber) case, I believe most of those are contractor relationships, not employee relationships.
        hydrogen18 9y ago
        Correct, but I could go rent the cab for a flat fee and just drive it around for my own personal wishes if I wanted to. They might put some restrictions on it (don't drive outside the city, no interstate) but otherwise I'd be fine. As far as medallions go, that is just the result of government regulation. Plenty of industries wind up being populated with nothing more than a bunch of rent seekers. The government sets up an artificial scarcity where there is none to control negative externalities. The fix is easy: require the license holder to be the one that actually uses it. No leasing to others. As far as I know, no one has done that for commercial licensing. Ironically for private licenses (fishing license, etc.) this is already the case.
  - AnthonyMouse 9y ago
    > I think the author is painting this in the worst possible light. That happens with Uber consistently. The cab companies hate them with a white hot fire and there are plenty of media outlets who are happy to take a story from a PR flack, especially when it generates page views. When people complain about surge pricing and then complain about things that mitigate surge pricing, that is pretty good evidence that they just want to complain about something. > What makes this potentially unethical (in my mind) is where the price is set. If it's set at a point where Uber's models predict the average benefit to a driver is $0 then this is essentially shifting the risk to their employees. But in that case why would anyone take the deal? If they did that then the drivers would pay $115 to make back $116 (or $110) and then never do it again because it's not worth the risk.
    - jlarocco 9y ago
      > That happens with Uber consistently. The cab companies hate them with a white hot fire and there are plenty of media outlets who are happy to take a story from a PR flack, especially when it generates page views. > When people complain about surge pricing and then complain about things that mitigate surge pricing, that is pretty good evidence that they just want to complain about something. That's an ad-hominem. If you're going to claim people are complaining just to complain then you need to support your case that this sleazy pay-to-play scheme isn't a sleazy pay-to-play scheme. Just because Uber is trying to fix something bad (surge pricing) doesn't mean their solution (this ridiculous scheme) isn't also bad. > > What makes this potentially unethical (in my mind) is where the price is set. If it's set at a point where Uber's models predict the average benefit to a driver is $0 then this is essentially shifting the risk to their employees. > But in that case why would anyone take the deal? The first problem is that drivers have no way to know that until they've lost money on the deal. Uber has a team of accountants to figure out their expected returns while the average driver does not. Also, as others have pointed out, there's a conflict of interest for Uber because they control who gets called up, so they can avoid sending rides to drivers who are about to cross the threshold for a payout from this scheme. > If they did that then the drivers would pay $115 to make back $116 (or $110) and then never do it again because it's not worth the risk. It's not that simple, though. Since Uber controls who gets rides, they can make sure that some portion of drivers come out ahead using this scheme. When other drivers claim they lost money or just broke even, the "winning" drivers can chime in that the scheme worked great for them. The end result is confusion and uncertainty, so that nobody outside of Uber itself really knows one way or the other how it will turn out. With as many drivers as Uber has, they can probably fake it for quite a while.
  - fgonzag 9y ago
    Or if they start heavily throttling your rides as you approach break even.
- itronitron 9y ago
  If this is research with MIT, then it would be interesting to see the IRB (Institutional Review Board) sign-off on this (assuming that they did.) This would raise a lot of red flags at most credible research institutions.
floatingatoll 9y ago
This has eerie parallels to in-app purchase options in freemium games, wherein you pay X dollars to earn extra Y in-game. It’s extremely upsetting to see the same psychological hooks used by IAP applied to an already low-margin pool of drivers.
- sigmar 9y ago
  Also like in Duolingo, where you pay 2 "lingots" to place a double-or-nothing bet that you will practice every day for the next week. Most of the time I bet even though I know I'm likely to lose the bet, since it is slightly more likely I'll practice with a 'financial' incentive. Which is exactly what Uber wants to induce: early week optimism, then late week indentured servitude.
  - Splines 9y ago
    Ugh, that's a really disturbing strategy. Is this a common tactic for freemium games? I've seen "daily login rewards" type things which give you an incentive to play daily, but I've never before seen something that is an actual punishment for not playing. I suppose "lingots" don't really have a monetary value, but imagine this tactic done in a game where the currency is worth some amount of actual money. please drink a verification can
    - vacri 9y ago
      Duolingo is not a game, but a language learning app. One of the most important parts of learning a language is to stick at it. The payoff for taking Duolingo's bet is that you get better at the language that you're using Duolingo for in the first place. Whereas for games, the only real payoff for winning at them is bragging rights.
s73ver_ 9y ago
How in the world is this kind of thing legal?
- dhruvrrp 9y ago
  They are basically running an experiment to force supply. It’ll probably be a 0 sum game for the drivers, with profits (in comparison to normal driving) if they drive more than $350.
  - s73ver_ 9y ago
    So offer a bonus. Don't make them gamble for it.
PatientTrades 9y ago
Sensationalist title indeed, still interesting though. Based on the author's previous posts it seems he has a distaste for Uber. I am curious to know why views them so negatively?
- na85 9y ago
  I'm more curious about what a brand new account is doing in here defending uber so vociferously. Guerilla Pr, perhaps?
- glup 9y ago
  Because of evidence.
GreaterFool 9y ago
They're testing a scheme to ensure availability of drivers for Halloween. If enough people take the offer than Uber can be pretty sure they will work at the time.
- CydeWeys 9y ago
  I guess the problem with surge pricing is that it isn't guaranteed in advance, so drivers make other plans and then aren't around to pick up the extra rides? And they're taking advantage of loss aversion too, not just desire for higher income.
  - GreaterFool 9y ago
    How many times have I signed up for free events and tickets and didn't go even though there was free beer an pizza? Too many! I never missed an event when I paid the ticket. That said, it's a bit of a gamble. If the driver is available but there are no rides they should perhaps issue a refund.
  - droopyEyelids 9y ago
    That’s what makes this so tricky. Halloween and NYE are the two biggest days of the year for uber. Every driver will automatically make 133% their standard take because they are Gauranteed to get strong surge fares all night. So this is like paying extra to make the sun come up in the morning- that shit was going to happen anyway.
rflrob 9y ago
Since Uber is in control of the dispatch, do drivers trust Uber not to throttle the rate of their rides as they approach/pass the break-even point? Given the shenanigans they've pulled with geofencing around regulatory agencies, I don't think I would trust them, but perhaps if they do have a history of letting people hit the driving incentives, I'd be more willing to give it a shot...
- agitator 9y ago
  Or even in-general just prioritizing "non +33% rate" drivers that night to maximize their profits (which is what a company is all about). Whats guaranteeing that the high rate drivers won't just be an expensive worst case reserve pool of workers when demand climbs?
  - chrismcb 9y ago
    A company is NOT all about maximizing profits. But even if they were there is a difference between maximizing short term profits and long term profits
- msoad 9y ago
  checkout /r/uberdrivers so many stories of not getting any rides when they get close to a promotional number of rides. You can't prove it but they are very suspicious that Uber does it
  - netsharc 9y ago
    Geez, it's like "buy 50 gold coins to complete this level!" but the game is being able to afford food and rent.
    - Animats 9y ago
      It's like working as a stripper. Ask any stripper about "stage fees".
      - 9y ago
munk-a 9y ago
I wonder how this would work out legally if someone accepted this offer and then was sick and unable to work during the window it pertained to. Consider, maybe, that the worker has a migraine and feels like it'd be unsafe for them to be driving.
- golemotron 9y ago
  Probably the same as if you bought a concert ticket and then decided not to go. No one I know feels cheated then.
dgacmu 9y ago
I'm going to concur with the observations that the title is sensationalist, though there is some really interesting thought fodder in this. A key thing that doesn't come through in the title is: > After I tweeted out the pay-to-play screenshot (Fig 1), Uber wrote to me to explain that the screenshot refers to a study in Houston that is part of a research collaboration between Uber and two MIT economists. They added that, “Further, drivers have to opt-in to the offer and there is a disclaimer explaining that if they opt-in they will be part of an academic research project.” In some ways, the questions that are raised are more about the underlying research ethics (did the authors get IRB review? One presumes, but it's not stated either way in tfa), than about Uber's actual behavior. Or perhaps the question is whether Uber should be participating -- or what conditions Uber is imposing on the study to ensure that the drivers that accept are not going to be harmed substantially.
- malandrew 9y ago
  I talked to someone I know about this, and yes they got IRB review from MIT. It was 100% opt-in with informed consent and all the normal things required to do such a study ethically.
PatientTrades 9y ago
The author is not telling the whole story. Uber still gets their cut of each ride, the initial $115 is simply used as a hedge or insurance. If a driver doesn't make above the $349 for the week than the $115 is returned to the driver. Uber doesn't simply pocket it. If a driver makes over $349 for the week, they get the %33 surge, and Uber will keep the initial $115.
- munk-a 9y ago
  Due to the wording of "As long as your weekly earnings exceed $349 you'll come out ahead!" I believe you're incorrect or trying to mislead. That sentence implies that there's a strong possibility people can come out "not ahead" or, specifically, lose potential income on the arrangement.
  - lowglow 9y ago
    or break even?
- larkeith 9y ago
  Do you have a source? The screenshot from Uber itself indicates otherwise.
- batiudrami 9y ago
  Why would they offer this rather than just an "Hey! it's going to be a busy weekend and we want extra cars on the road. Earn $349 and get paid 33% extra" promo? There's no need to take the $115 if the driver can't lose. Let's not pretend that Uber needs the $115 for cashflow purposes.
  - mistercow 9y ago
    I think the previous commenter is incorrect based on the wording shown in the article. That said, since this is part of a study, it does seem somewhat plausible that they'd do an offer like that just to see what the psychological impact was.
  - 9y ago
charred_toast 9y ago
The most top-voted Hacker News comments are always just Astroturfed, regurgitated, circlejerk PR that always seem to slyly play the devil's advocate. Who are these educated and responsible citizens that come out of the woodwork to defend the huge and vulnerable billion-dollar companies, ultra-humanitarians, or just ambitious, above-average students studying for a reading comprehension exam? I'll take my downvote now, please.
randyrand 9y ago
Isn't this also true for anyone that has to pay money to commute to work?
- inerte 9y ago
  Or food to have energy to work, or clothes to not be ridiculed by your peers, or shelter to be well rested so you can maximize shareholder value?
- taneq 9y ago
  The difference is that your own workplace isn't charging you money. Imagine if your boss said "hey, there's a spot for some overtime work this weekend, the first person to pay me $100 gets it". Would that be OK?
justhackedme 9y ago
Uber is a scum company. Most "tech companies" are.
matt_the_bass 9y ago
It seems that Uber is frequently receiving bad press for practices that outrage a lot of people. The impression I get is most commenters on HN take issue with many of these practices. Yet at the same time, they seem to be one of the poster boys of the SV new economy. To me this seems at odds with the HN community. I'm curious if others find this as well.
- jerkstate 9y ago
  I think that Uber is now a case of throwing good money after bad. The company is clearly going to fail, but so much venture money is at risk they are treated as if they're successful, or going to be successful. The longer the charade continues, the worse it's going to be in the end.
  - askafriend 9y ago
    It is far from clear that the company is going to fail. In fact, there are more signals that point to the company's eventual success than it's failure. It's the quality of that success that is at stake, if anything. Not all successes are created equal. All internal metrics from what I've heard are rapidly increasing with no signs of stopping. The recent negative PR doesn't really affect their core business and their operations are so well oiled at this point that even not having a CEO for a while really had no major impact. Look, I get it. Uber is easy to rag on and they've bought themselves no favors through their past actions. But let's look at this objectively. There are many parts of their business that are unprecedented and to pretend we know how this is going to play out for sure is impossibly naive. For example, they even have a 20% stake in China's Didi and that's a huge piece of the puzzle internationally. Ride sharing is here to stay, and the market will only grow. That much is clear. What Uber’s position in a mature market looks like is what’s unclear.
  - matt_the_bass 9y ago
    That could be. Google (Alphabet) obviously has moved on after an early investment in Uber. Alphabet has announced leading a big round Lyft [1]. 1. http://www.latimes.com/business/technology/la-fi-tn-lyft-alphabet-google-20171019-story.html http://www.latimes.com/business/technology/la-fi-tn-lyft-alp...
quickthrower2 9y ago
Unethical because guess what people who drive for Uber probably care a lot about losing $115 and will work their ass off: i.e. drive fatigued, perhaps kill someone ... to make sure they don't.
- lucaspiller 9y ago
  It’s an interesting point. In my experience traditional taxis are just as bad as ride-sharing taxis, and their ability to use bus lanes means they usually end up driving 80km/h+ through the city rather than be stuck in traffic. I have noticed that drivers of car sharing schemes (where you pay per minute) are a bit eratic at times though. I’m not sure if that’s because they are inexperienced drivers, or just the mentality of “I need to rush, this is costing me money!”.
  - tomjakubowski 9y ago
    Where are traditional taxis allowed to drive in bus lanes? edit: Googling turned up that this seems to be a thing in at least San Francisco, London, Dublin, Wellington (NZ), Sydney, and a few smaller UK cities.
    - akaa 9y ago
      In vienna, austria taxis can use buslanes.
    - quickthrower2 9y ago
      Yes, it's that way in Sydney where I live. I remember loving it getting a taxi to a job interview. I always thought, if you are rich don't bother with a car & chauffeur just get a taxi everywhere, and get their faster.
- deleted 9y ago
  [deleted]
notliketherest 9y ago
I love it. They're literally trying things that have never been done before. Look, at the end of the day, these drivers can just as easily 1) go to lyft, or 2) get a "real" job. And Uber can't afford for either to happen. This is pure capitalism, pure economics, pure financial calculations. We'll see how it works out, and they'll probably drop it at some point, but hell, let's give it a shot. If it's as "terrible" as everyone is bitching about, it won't hold up. What's your problem?
- peatmoss 9y ago
  > What's your problem? My problem is that Uber has a bunch of venture capital that it can use to entice and entrap vulnerable populations into an exploitative relationship. It's only "pure capitalism" if one has a shockingly naive view of economics that ignores all of the preconditions that are required for a free market. For example, information symmetry, which is laughably not true given that Uber controls the dispatching with algorithms that are opaque to drivers. As time approaches infinity, yes, I believe the market will sort out many issues with Uber. In the meantime, I think they have the potential to grind up and spit out many people.
  - ryanmarsh 9y ago
    "Capitalism" and "free markets" are not the same thing, in fact they are in contention with each other. The natural end of pure capitalism is monopoly and exploitation of labor. I think you might have an idealistic view of what these words mean. Currently, both are on display in all their glory. You think Uber drivers don't know what the other apps pay?
  - notliketherest 9y ago
    "it can use to entice and entrap vulnerable populations into an exploitative relationship" And here's the root of the matter - the belief that individuals shouldn't be expected to stand on their own two feet, to critically think, to judge with reason, and be held accountable for their actions. Indeed, the belief that these people are UNABLE to take care of themselves, and to use reason to make personal, individual decisions. Well, I believe that freedom means the ability to voluntarily engage in transactions, with the full weight of responsibility on the individual not to be an idiot. I voted Republican - let me guess what party you voted for.
yalogin 9y ago
No matter what the motive for this, it does not look good for the future. Uber kind of showed its hand here. What is the guarantee that they will not ask for a fee to get rides in the future? Or may be ask for a recurring fee of some sort as a privilege to drive for them? I know I am extrapolating too much here may be, but the path is there.
- isostatic 9y ago
  A recurring fee to drive for them sounds just like the charge to hire a radio in legacy minicab firms.
Invictus0 9y ago
I don't have any issue with this; it's basically just opt-in A/B testing. Better than other companies that force their A/B testing on you randomly. The conditions of the deal are pretty obvious, it's not like they're hidden in some abstruse legalese. The only potential issue with this is that Uber could manipulate the driver/passenger matching so that the driver doesn't come out ahead.
indubitable 9y ago
I do not understand the sensationalism. I think there would be reason to be upset if Uber decided to enforce a system where if you drive less than $x per week then y% of your nominal rate is cut. However, this is a incentivizing system, not a coercing system. In other words instead of punishing those that do not drive as much, it's rewarding those that do. It's effectively the equivalent of a loyalty card availability in industries of all sorts. You pay $xxx for a card to get a y% reduction on transactions through a certain time period. If you engage in a high volume of transactions, it's +EV and you purchase it. If you don't then it's not +EV and so you don't purchase it. The industry operator profits in either case since their margins exceed the real value of your discount, and so it is win-win for them.
- mathattack 9y ago
  I agree. This is just a way to encourage supply in a busy period by asking for an early commitment. Drivers get paid more for committing to work, and people get lower fares because of less need for peak surcharges. This is the market working. Nobody is forced to accept it.
  - hamilyon2 9y ago
    How do you know people will not pay peak surcharges? This is pure conjecture.
    - mseebach 9y ago
      If Uber is successful in getting drivers on the road in anticipation of high demand in a given area at a given time, they will not need to activate the surge charge.
      - GrantSolar 9y ago
        They may not need to, but that doesn't rule out it happening
  - alex_hitchins 9y ago
sitkack 9y ago
How is this not a Pay to Work Scam? [0] [0] https://www.consumer.ftc.gov/articles/0243-job-scams https://www.consumer.ftc.gov/articles/0243-job-scams
- mseebach 9y ago
  By virtue of the fact that it's optional and if you don't accept it, you can still drive under the originally agreed terms?
  - sitkack 9y ago
    So A/B test employees ability to pay, but also control how many jobs they will get with your scheduling algorithm. You have just given the employee an opportunity to make less, but at a guaranteed rate. What kind of dystopian future is this?
deleted 9y ago
[deleted]
miguelpais 9y ago
Is Uber trying to be another real world enactment of Animal Farm? The resemblance doesn't seem to be a coincidence.
Rainymood 9y ago
I have studied behavioral economics. I think that not many people will take this offer for a number of reasons. The most important one is that losing 115 now and then having to earn it back feels significantly worse than losing 0 now and earning 115. At least that is what prospect theory predicts. That aside, if Uber is a profit maximizing entity why would Uber offer this promotion if it isn't worth it for them? I'd be very very sceptical on Uber's attitude towards consumers .. uhmm I mean drivers/"employees".
- sologoub 9y ago
  I’m guessing they are trying to get more drivers on the road during Halloween and by giving them this promotion they essentially lock people in to drive during that time to make up the earnings they prepaid, and potentially make a bonus.
vermontdevil 9y ago
This is a part of an academic study. So I wonder if Uber went to the researchers with this proposal or the other way around. And what would the researchers be studying?
occultist_throw 9y ago
And this is only the facet of the real story here. https://www.youtube.com/watch?v=JGwZcR0q6VE https://www.youtube.com/watch?v=JGwZcR0q6VE Uber is an old scan. - By Richard D Wolff We legislated and regulated the old Taxi Cab industry when there was no insurance, bad employees, criminal activities, badly maintained vehicles. And someone can move in and laugh at the laws, and offer it for cheaper (Uber). Its only time until they die, or are regulated themselves.
vgrocha 9y ago
I think there's another side to this: Uber is hedging the supply of drivers in a period of high demand. By asking them to pay, the drivers are effectively committing to drive in that period. Sounds like an interesting idea given all the outrage with price surges.

185 points by hanspragt 9y ago

hanspragt 9y ago

Note that although I used the original title of the article, I do feel it is a little sensationalist.

deleted 9y ago
[deleted]
iaw 9y ago
I think the author is painting this in the worst possible light. The UX is a little misleading but I could see this being an effort by Uber to pre-commit drivers as a means of reducing surge pricing. What makes this potentially unethical (in my mind) is where the price is set. If it's set at a point where Uber's models predict the average benefit to a driver is $0 then this is essentially shifting the risk to their employees.
- lightedman 9y ago
  "I think the author is painting this in the worst possible light." You should work for any sort of delivery or courier service. This 'worst possible light' is daily business for companies like Papa Johns and others that claim their drivers are merely 'contractors.' This is also quite illegal - you can not pay to work. It's literal extortion - you have to pay us in order to receive this amount of wage. No, the courts frown upon this.
  - PatientTrades 9y ago
    > This is also quite illegal - you can not pay to work You do know the offer is optional right? If a driver doesn't want to pay $115 for the 33% rate increase then they don't have to. Did you read that part? Also, many drivers could benefit from this especially if they drive full time in popular areas.
    - drewrv 9y ago
      There are all sorts of optional deals that are illegal.
    - lightedman 9y ago
      "You do know the offer is optional right?" You do know that such an offer is illegal, right? It is literally "If you pay us, we'll pay you more later on." It's the actual beginning of a Ponzi Scheme.
      - AnthonyMouse 9y ago
        > You do know that such an offer is illegal, right? Which law does it violate? > It's the actual beginning of a Ponzi Scheme. Your argument is of the form "Romans build roads, therefore people who build roads are Romans." Ponzi schemes don't have actual customers, which inherently leaves the people at the bottom of the pyramid holding the bag. Uber pays drivers from fares. There is no pyramid.
        lightedman 9y ago
        Uber's been running at a consistent loss. Ponzi Schemes don't have customers? There have been plenty of "multi-level marketing' businesses selling things like perfumes, knives, even candle wax, and have been ruled as Ponzi/Pyramid Schemes. It's the exact same behavior - pay us to make money.
        AnthonyMouse 9y ago
        > Uber's been running at a consistent loss. So do a million other startups. That doesn't mean the drivers don't get their money. > Ponzi Schemes don't have customers? The majority of the scam's revenue comes from payments from workers rather than sales to customers. > It's the exact same behavior - pay us to make money. Pyramid schemes have pyramids.
        lightedman 9y ago
  - kingnothing 9y ago
    IANAL, but it's similar to how cabs, barbers, strippers, and other contractors operate.
    - dawnerd 9y ago
      They're renting space though. An uber/lyft driver isn't renting a medallion or a barber seat.
      - sokoloff 9y ago
        Salespeople pay for leads. Businesses pay for online clicks. Advertisers pay for eyeballs. I don't see this as a bright-line case.
        hydrogen18 9y ago
        Would you agree that none of those people pay their employer in that case? I certainly agree salespeople pay for leads, but it is usually an outside party supplying them.
        sokoloff 9y ago
        To keep it close to Uber, many cab drivers rent their cabs/medallions from the cab company. In the taxi (and Uber) case, I believe most of those are contractor relationships, not employee relationships.
        hydrogen18 9y ago
        Correct, but I could go rent the cab for a flat fee and just drive it around for my own personal wishes if I wanted to. They might put some restrictions on it (don't drive outside the city, no interstate) but otherwise I'd be fine. As far as medallions go, that is just the result of government regulation. Plenty of industries wind up being populated with nothing more than a bunch of rent seekers. The government sets up an artificial scarcity where there is none to control negative externalities. The fix is easy: require the license holder to be the one that actually uses it. No leasing to others. As far as I know, no one has done that for commercial licensing. Ironically for private licenses (fishing license, etc.) this is already the case.
- AnthonyMouse 9y ago
  > I think the author is painting this in the worst possible light. That happens with Uber consistently. The cab companies hate them with a white hot fire and there are plenty of media outlets who are happy to take a story from a PR flack, especially when it generates page views. When people complain about surge pricing and then complain about things that mitigate surge pricing, that is pretty good evidence that they just want to complain about something. > What makes this potentially unethical (in my mind) is where the price is set. If it's set at a point where Uber's models predict the average benefit to a driver is $0 then this is essentially shifting the risk to their employees. But in that case why would anyone take the deal? If they did that then the drivers would pay $115 to make back $116 (or $110) and then never do it again because it's not worth the risk.
  - jlarocco 9y ago
    > That happens with Uber consistently. The cab companies hate them with a white hot fire and there are plenty of media outlets who are happy to take a story from a PR flack, especially when it generates page views. > When people complain about surge pricing and then complain about things that mitigate surge pricing, that is pretty good evidence that they just want to complain about something. That's an ad-hominem. If you're going to claim people are complaining just to complain then you need to support your case that this sleazy pay-to-play scheme isn't a sleazy pay-to-play scheme. Just because Uber is trying to fix something bad (surge pricing) doesn't mean their solution (this ridiculous scheme) isn't also bad. > > What makes this potentially unethical (in my mind) is where the price is set. If it's set at a point where Uber's models predict the average benefit to a driver is $0 then this is essentially shifting the risk to their employees. > But in that case why would anyone take the deal? The first problem is that drivers have no way to know that until they've lost money on the deal. Uber has a team of accountants to figure out their expected returns while the average driver does not. Also, as others have pointed out, there's a conflict of interest for Uber because they control who gets called up, so they can avoid sending rides to drivers who are about to cross the threshold for a payout from this scheme. > If they did that then the drivers would pay $115 to make back $116 (or $110) and then never do it again because it's not worth the risk. It's not that simple, though. Since Uber controls who gets rides, they can make sure that some portion of drivers come out ahead using this scheme. When other drivers claim they lost money or just broke even, the "winning" drivers can chime in that the scheme worked great for them. The end result is confusion and uncertainty, so that nobody outside of Uber itself really knows one way or the other how it will turn out. With as many drivers as Uber has, they can probably fake it for quite a while.
- fgonzag 9y ago
  Or if they start heavily throttling your rides as you approach break even.
itronitron 9y ago
If this is research with MIT, then it would be interesting to see the IRB (Institutional Review Board) sign-off on this (assuming that they did.) This would raise a lot of red flags at most credible research institutions.

floatingatoll 9y ago

This has eerie parallels to in-app purchase options in freemium games, wherein you pay X dollars to earn extra Y in-game. It’s extremely upsetting to see the same psychological hooks used by IAP applied to an already low-margin pool of drivers.

sigmar 9y ago
Also like in Duolingo, where you pay 2 "lingots" to place a double-or-nothing bet that you will practice every day for the next week. Most of the time I bet even though I know I'm likely to lose the bet, since it is slightly more likely I'll practice with a 'financial' incentive. Which is exactly what Uber wants to induce: early week optimism, then late week indentured servitude.
- Splines 9y ago
  Ugh, that's a really disturbing strategy. Is this a common tactic for freemium games? I've seen "daily login rewards" type things which give you an incentive to play daily, but I've never before seen something that is an actual punishment for not playing. I suppose "lingots" don't really have a monetary value, but imagine this tactic done in a game where the currency is worth some amount of actual money. please drink a verification can
  - vacri 9y ago
    Duolingo is not a game, but a language learning app. One of the most important parts of learning a language is to stick at it. The payoff for taking Duolingo's bet is that you get better at the language that you're using Duolingo for in the first place. Whereas for games, the only real payoff for winning at them is bragging rights.

s73ver_ 9y ago

How in the world is this kind of thing legal?

dhruvrrp 9y ago
They are basically running an experiment to force supply. It’ll probably be a 0 sum game for the drivers, with profits (in comparison to normal driving) if they drive more than $350.
- s73ver_ 9y ago
  So offer a bonus. Don't make them gamble for it.

PatientTrades 9y ago

Sensationalist title indeed, still interesting though. Based on the author's previous posts it seems he has a distaste for Uber. I am curious to know why views them so negatively?

na85 9y ago
I'm more curious about what a brand new account is doing in here defending uber so vociferously. Guerilla Pr, perhaps?
glup 9y ago
Because of evidence.

GreaterFool 9y ago

They're testing a scheme to ensure availability of drivers for Halloween. If enough people take the offer than Uber can be pretty sure they will work at the time.

CydeWeys 9y ago
I guess the problem with surge pricing is that it isn't guaranteed in advance, so drivers make other plans and then aren't around to pick up the extra rides? And they're taking advantage of loss aversion too, not just desire for higher income.
- GreaterFool 9y ago
  How many times have I signed up for free events and tickets and didn't go even though there was free beer an pizza? Too many! I never missed an event when I paid the ticket. That said, it's a bit of a gamble. If the driver is available but there are no rides they should perhaps issue a refund.
- droopyEyelids 9y ago
  That’s what makes this so tricky. Halloween and NYE are the two biggest days of the year for uber. Every driver will automatically make 133% their standard take because they are Gauranteed to get strong surge fares all night. So this is like paying extra to make the sun come up in the morning- that shit was going to happen anyway.

rflrob 9y ago

Since Uber is in control of the dispatch, do drivers trust Uber not to throttle the rate of their rides as they approach/pass the break-even point? Given the shenanigans they've pulled with geofencing around regulatory agencies, I don't think I would trust them, but perhaps if they do have a history of letting people hit the driving incentives, I'd be more willing to give it a shot...

agitator 9y ago
Or even in-general just prioritizing "non +33% rate" drivers that night to maximize their profits (which is what a company is all about). Whats guaranteeing that the high rate drivers won't just be an expensive worst case reserve pool of workers when demand climbs?
- chrismcb 9y ago
  A company is NOT all about maximizing profits. But even if they were there is a difference between maximizing short term profits and long term profits
msoad 9y ago
checkout /r/uberdrivers so many stories of not getting any rides when they get close to a promotional number of rides. You can't prove it but they are very suspicious that Uber does it
- netsharc 9y ago
  Geez, it's like "buy 50 gold coins to complete this level!" but the game is being able to afford food and rent.
  - Animats 9y ago
    It's like working as a stripper. Ask any stripper about "stage fees".
    - 9y ago

munk-a 9y ago

I wonder how this would work out legally if someone accepted this offer and then was sick and unable to work during the window it pertained to. Consider, maybe, that the worker has a migraine and feels like it'd be unsafe for them to be driving.

golemotron 9y ago
Probably the same as if you bought a concert ticket and then decided not to go. No one I know feels cheated then.

dgacmu 9y ago

I'm going to concur with the observations that the title is sensationalist, though there is some really interesting thought fodder in this. A key thing that doesn't come through in the title is: > After I tweeted out the pay-to-play screenshot (Fig 1), Uber wrote to me to explain that the screenshot refers to a study in Houston that is part of a research collaboration between Uber and two MIT economists. They added that, “Further, drivers have to opt-in to the offer and there is a disclaimer explaining that if they opt-in they will be part of an academic research project.” In some ways, the questions that are raised are more about the underlying research ethics (did the authors get IRB review? One presumes, but it's not stated either way in tfa), than about Uber's actual behavior. Or perhaps the question is whether Uber should be participating -- or what conditions Uber is imposing on the study to ensure that the drivers that accept are not going to be harmed substantially.

malandrew 9y ago
I talked to someone I know about this, and yes they got IRB review from MIT. It was 100% opt-in with informed consent and all the normal things required to do such a study ethically.

PatientTrades 9y ago

The author is not telling the whole story. Uber still gets their cut of each ride, the initial $115 is simply used as a hedge or insurance. If a driver doesn't make above the $349 for the week than the $115 is returned to the driver. Uber doesn't simply pocket it. If a driver makes over $349 for the week, they get the %33 surge, and Uber will keep the initial $115.

munk-a 9y ago
Due to the wording of "As long as your weekly earnings exceed $349 you'll come out ahead!" I believe you're incorrect or trying to mislead. That sentence implies that there's a strong possibility people can come out "not ahead" or, specifically, lose potential income on the arrangement.
- lowglow 9y ago
  or break even?
larkeith 9y ago
Do you have a source? The screenshot from Uber itself indicates otherwise.
batiudrami 9y ago
Why would they offer this rather than just an "Hey! it's going to be a busy weekend and we want extra cars on the road. Earn $349 and get paid 33% extra" promo? There's no need to take the $115 if the driver can't lose. Let's not pretend that Uber needs the $115 for cashflow purposes.
- mistercow 9y ago
  I think the previous commenter is incorrect based on the wording shown in the article. That said, since this is part of a study, it does seem somewhat plausible that they'd do an offer like that just to see what the psychological impact was.
- 9y ago

charred_toast 9y ago

The most top-voted Hacker News comments are always just Astroturfed, regurgitated, circlejerk PR that always seem to slyly play the devil's advocate. Who are these educated and responsible citizens that come out of the woodwork to defend the huge and vulnerable billion-dollar companies, ultra-humanitarians, or just ambitious, above-average students studying for a reading comprehension exam? I'll take my downvote now, please.

randyrand 9y ago

Isn't this also true for anyone that has to pay money to commute to work?

inerte 9y ago
Or food to have energy to work, or clothes to not be ridiculed by your peers, or shelter to be well rested so you can maximize shareholder value?
taneq 9y ago
The difference is that your own workplace isn't charging you money. Imagine if your boss said "hey, there's a spot for some overtime work this weekend, the first person to pay me $100 gets it". Would that be OK?

justhackedme 9y ago

Uber is a scum company. Most "tech companies" are.

matt_the_bass 9y ago

It seems that Uber is frequently receiving bad press for practices that outrage a lot of people. The impression I get is most commenters on HN take issue with many of these practices. Yet at the same time, they seem to be one of the poster boys of the SV new economy. To me this seems at odds with the HN community. I'm curious if others find this as well.

jerkstate 9y ago
I think that Uber is now a case of throwing good money after bad. The company is clearly going to fail, but so much venture money is at risk they are treated as if they're successful, or going to be successful. The longer the charade continues, the worse it's going to be in the end.
- askafriend 9y ago
  It is far from clear that the company is going to fail. In fact, there are more signals that point to the company's eventual success than it's failure. It's the quality of that success that is at stake, if anything. Not all successes are created equal. All internal metrics from what I've heard are rapidly increasing with no signs of stopping. The recent negative PR doesn't really affect their core business and their operations are so well oiled at this point that even not having a CEO for a while really had no major impact. Look, I get it. Uber is easy to rag on and they've bought themselves no favors through their past actions. But let's look at this objectively. There are many parts of their business that are unprecedented and to pretend we know how this is going to play out for sure is impossibly naive. For example, they even have a 20% stake in China's Didi and that's a huge piece of the puzzle internationally. Ride sharing is here to stay, and the market will only grow. That much is clear. What Uber’s position in a mature market looks like is what’s unclear.
- matt_the_bass 9y ago
  That could be. Google (Alphabet) obviously has moved on after an early investment in Uber. Alphabet has announced leading a big round Lyft [1]. 1. http://www.latimes.com/business/technology/la-fi-tn-lyft-alphabet-google-20171019-story.html http://www.latimes.com/business/technology/la-fi-tn-lyft-alp...

quickthrower2 9y ago

Unethical because guess what people who drive for Uber probably care a lot about losing $115 and will work their ass off: i.e. drive fatigued, perhaps kill someone ... to make sure they don't.

lucaspiller 9y ago
It’s an interesting point. In my experience traditional taxis are just as bad as ride-sharing taxis, and their ability to use bus lanes means they usually end up driving 80km/h+ through the city rather than be stuck in traffic. I have noticed that drivers of car sharing schemes (where you pay per minute) are a bit eratic at times though. I’m not sure if that’s because they are inexperienced drivers, or just the mentality of “I need to rush, this is costing me money!”.
- tomjakubowski 9y ago
  Where are traditional taxis allowed to drive in bus lanes? edit: Googling turned up that this seems to be a thing in at least San Francisco, London, Dublin, Wellington (NZ), Sydney, and a few smaller UK cities.
  - akaa 9y ago
    In vienna, austria taxis can use buslanes.
  - quickthrower2 9y ago
    Yes, it's that way in Sydney where I live. I remember loving it getting a taxi to a job interview. I always thought, if you are rich don't bother with a car & chauffeur just get a taxi everywhere, and get their faster.
deleted 9y ago
[deleted]

notliketherest 9y ago

I love it. They're literally trying things that have never been done before. Look, at the end of the day, these drivers can just as easily 1) go to lyft, or 2) get a "real" job. And Uber can't afford for either to happen. This is pure capitalism, pure economics, pure financial calculations. We'll see how it works out, and they'll probably drop it at some point, but hell, let's give it a shot. If it's as "terrible" as everyone is bitching about, it won't hold up. What's your problem?

peatmoss 9y ago
> What's your problem? My problem is that Uber has a bunch of venture capital that it can use to entice and entrap vulnerable populations into an exploitative relationship. It's only "pure capitalism" if one has a shockingly naive view of economics that ignores all of the preconditions that are required for a free market. For example, information symmetry, which is laughably not true given that Uber controls the dispatching with algorithms that are opaque to drivers. As time approaches infinity, yes, I believe the market will sort out many issues with Uber. In the meantime, I think they have the potential to grind up and spit out many people.
- ryanmarsh 9y ago
  "Capitalism" and "free markets" are not the same thing, in fact they are in contention with each other. The natural end of pure capitalism is monopoly and exploitation of labor. I think you might have an idealistic view of what these words mean. Currently, both are on display in all their glory. You think Uber drivers don't know what the other apps pay?
- notliketherest 9y ago
  "it can use to entice and entrap vulnerable populations into an exploitative relationship" And here's the root of the matter - the belief that individuals shouldn't be expected to stand on their own two feet, to critically think, to judge with reason, and be held accountable for their actions. Indeed, the belief that these people are UNABLE to take care of themselves, and to use reason to make personal, individual decisions. Well, I believe that freedom means the ability to voluntarily engage in transactions, with the full weight of responsibility on the individual not to be an idiot. I voted Republican - let me guess what party you voted for.

yalogin 9y ago

No matter what the motive for this, it does not look good for the future. Uber kind of showed its hand here. What is the guarantee that they will not ask for a fee to get rides in the future? Or may be ask for a recurring fee of some sort as a privilege to drive for them? I know I am extrapolating too much here may be, but the path is there.

isostatic 9y ago
A recurring fee to drive for them sounds just like the charge to hire a radio in legacy minicab firms.

Invictus0 9y ago

I don't have any issue with this; it's basically just opt-in A/B testing. Better than other companies that force their A/B testing on you randomly. The conditions of the deal are pretty obvious, it's not like they're hidden in some abstruse legalese. The only potential issue with this is that Uber could manipulate the driver/passenger matching so that the driver doesn't come out ahead.

indubitable 9y ago

I do not understand the sensationalism. I think there would be reason to be upset if Uber decided to enforce a system where if you drive less than $x per week then y% of your nominal rate is cut. However, this is a incentivizing system, not a coercing system. In other words instead of punishing those that do not drive as much, it's rewarding those that do. It's effectively the equivalent of a loyalty card availability in industries of all sorts. You pay $xxx for a card to get a y% reduction on transactions through a certain time period. If you engage in a high volume of transactions, it's +EV and you purchase it. If you don't then it's not +EV and so you don't purchase it. The industry operator profits in either case since their margins exceed the real value of your discount, and so it is win-win for them.

mathattack 9y ago
I agree. This is just a way to encourage supply in a busy period by asking for an early commitment. Drivers get paid more for committing to work, and people get lower fares because of less need for peak surcharges. This is the market working. Nobody is forced to accept it.
- hamilyon2 9y ago
  How do you know people will not pay peak surcharges? This is pure conjecture.
  - mseebach 9y ago
    If Uber is successful in getting drivers on the road in anticipation of high demand in a given area at a given time, they will not need to activate the surge charge.
    - GrantSolar 9y ago
      They may not need to, but that doesn't rule out it happening
- alex_hitchins 9y ago

sitkack 9y ago

How is this not a Pay to Work Scam? [0] [0] https://www.consumer.ftc.gov/articles/0243-job-scams https://www.consumer.ftc.gov/articles/0243-job-scams

mseebach 9y ago
By virtue of the fact that it's optional and if you don't accept it, you can still drive under the originally agreed terms?
- sitkack 9y ago
  So A/B test employees ability to pay, but also control how many jobs they will get with your scheduling algorithm. You have just given the employee an opportunity to make less, but at a guaranteed rate. What kind of dystopian future is this?

deleted 9y ago

[deleted]

miguelpais 9y ago

Is Uber trying to be another real world enactment of Animal Farm? The resemblance doesn't seem to be a coincidence.

Rainymood 9y ago

I have studied behavioral economics. I think that not many people will take this offer for a number of reasons. The most important one is that losing 115 now and then having to earn it back feels significantly worse than losing 0 now and earning 115. At least that is what prospect theory predicts. That aside, if Uber is a profit maximizing entity why would Uber offer this promotion if it isn't worth it for them? I'd be very very sceptical on Uber's attitude towards consumers .. uhmm I mean drivers/"employees".

sologoub 9y ago
I’m guessing they are trying to get more drivers on the road during Halloween and by giving them this promotion they essentially lock people in to drive during that time to make up the earnings they prepaid, and potentially make a bonus.

vermontdevil 9y ago

This is a part of an academic study. So I wonder if Uber went to the researchers with this proposal or the other way around. And what would the researchers be studying?

occultist_throw 9y ago

And this is only the facet of the real story here. https://www.youtube.com/watch?v=JGwZcR0q6VE https://www.youtube.com/watch?v=JGwZcR0q6VE Uber is an old scan. - By Richard D Wolff We legislated and regulated the old Taxi Cab industry when there was no insurance, bad employees, criminal activities, badly maintained vehicles. And someone can move in and laugh at the laws, and offer it for cheaper (Uber). Its only time until they die, or are regulated themselves.

vgrocha 9y ago

I think there's another side to this: Uber is hedging the supply of drivers in a period of high demand. By asking them to pay, the drivers are effectively committing to drive in that period. Sounds like an interesting idea given all the outrage with price surges.