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For those paywalled out, here is the meat. > The dilemma is laid bare in a recent study by Uber, conducted in cooperation with a New York University assistant

For those paywalled out, here is the meat. > The dilemma is laid bare in a recent study by Uber, conducted in cooperation with a New York University assistant professor, that found that no matter which direction fares go, drivers inevitably take home about the same earnings over time. That is because of how easy it is for drivers and riders to jump on and off the system, according to the study > When there is a fare cut, drivers’ pay per trip falls but riders flood the service, offering more business. A price hike eventually lures more drivers than Uber needs and scares away riders. The changes are short-lived as an equilibrium is reached after about eight weeks, and drivers’ average pay comes out the same. > All of this means Uber, and other ride-sharing services, must lean heavily on pricey incentive payments—cash for completing a certain number of rides a week, say—to bring driver earnings above what typically amounts to around minimum wage

taneq 9y ago
Thanks! > All of this means Uber, and other ride-sharing services, must lean heavily on pricey incentive payments—cash for completing a certain number of rides a week, say—to bring driver earnings above what typically amounts to around minimum wage This seems kind of obvious to me. Uber's main drawcard for drivers is that there's almost no barrier to entry. Most jobs earning more than minimum wage have some significant barrier to entry (required qualifications, experience, skills, knowing the right people etc.) and so if Uber pays more than minimum wage, anyone in a minimum wage job will switch to driving for Uber. This lowers individual earnings for drivers until other low-barrier-to-entry minimum-wage jobs become competitive again and drivers start switching back to those jobs.
- chrisbennet 9y ago
  You need a suitable car in order to drive for Uber don’t you? That would be a barrier for entry for many minimum wage employees I think.
  - crdb 9y ago
    Uber owns and runs rental car companies, such as Lion City Rental in Singapore, whose fee structure is designed specifically for the car-less to sign up as drivers (minimum rental duration for discounts to apply, a discount based on Uber rides driven, etc.). Lion City Rental has grown so fast as to affect the price of the car ownership permit [1]. Anecdotally, about 1 in 20 of my drivers in Singapore owned their cars. [1] http://www.straitstimes.com/singapore/transport/uber-bids-continue-to-prop-up-car-coe-prices http://www.straitstimes.com/singapore/transport/uber-bids-co...
goialoq 9y ago
> must lean heavily on pricey incentive payments ...or they could raise driver's revshare, and have drivers compete based on quality metrics instead of only price. This is a submarine article using handwavy logic to rationalize drivers' low pay due to Uber corp's market power. I doubt that the care hire market coincidentally balances at almost exactly the legal minimum wage for employees.
- malandrew 9y ago
  That's exactly what incentives do. They increase driver revshare.

taneq 9y ago

Thanks! > All of this means Uber, and other ride-sharing services, must lean heavily on pricey incentive payments—cash for completing a certain number of rides a week, say—to bring driver earnings above what typically amounts to around minimum wage This seems kind of obvious to me. Uber's main drawcard for drivers is that there's almost no barrier to entry. Most jobs earning more than minimum wage have some significant barrier to entry (required qualifications, experience, skills, knowing the right people etc.) and so if Uber pays more than minimum wage, anyone in a minimum wage job will switch to driving for Uber. This lowers individual earnings for drivers until other low-barrier-to-entry minimum-wage jobs become competitive again and drivers start switching back to those jobs.

chrisbennet 9y ago
You need a suitable car in order to drive for Uber don’t you? That would be a barrier for entry for many minimum wage employees I think.
- crdb 9y ago
  Uber owns and runs rental car companies, such as Lion City Rental in Singapore, whose fee structure is designed specifically for the car-less to sign up as drivers (minimum rental duration for discounts to apply, a discount based on Uber rides driven, etc.). Lion City Rental has grown so fast as to affect the price of the car ownership permit [1]. Anecdotally, about 1 in 20 of my drivers in Singapore owned their cars. [1] http://www.straitstimes.com/singapore/transport/uber-bids-continue-to-prop-up-car-coe-prices http://www.straitstimes.com/singapore/transport/uber-bids-co...

goialoq 9y ago

> must lean heavily on pricey incentive payments ...or they could raise driver's revshare, and have drivers compete based on quality metrics instead of only price. This is a submarine article using handwavy logic to rationalize drivers' low pay due to Uber corp's market power. I doubt that the care hire market coincidentally balances at almost exactly the legal minimum wage for employees.

malandrew 9y ago
That's exactly what incentives do. They increase driver revshare.