5 ms·

As Uber gears up for IPO, many Indian drivers talk of shattered dreams

49 points by howard941 8y ago

googlemike 8y ago
"To be sure, many drivers from Uber are still earning more than they could get in other blue-collar jobs in India. The national minimum wage in India is only about $2.50 a day." No substantial article here folks. Just negative sounding clickbait because "Uber" is in the title.
- ryder9 8y ago
  Odd you call them out for "clickbaiting" yet yourself selectively post quotes __________________________ But as Uber slashed incentives, Raut’s earnings dwindled swiftly. His income dropped to about $540 a month this year and he defaulted on his taxi loan payments. Deciding after an accident that he couldn’t afford to fix the vehicle, he quit Uber and now his monthly income, from a new job driving a truck, has crashed to $200. “There is no benefit in driving for Uber ... my life was much better just as a cook,” said 26-year-old Raut.
  - xyzzy_plugh 8y ago
    Should that be surprising? What requires more skill/effort/education? What are the prevailing wage?
    - adjkant 8y ago
      When the company advertises much higher income for drivers and then slashes it you can only place so much blame on the driver for not understanding complex economics and politics that led to the issue. I think there's a very clear moral case again Uber (and others) for false advertising and clear manipulation of drivers. Legal, likely not but IANAL.
      - ryan_j_naughton 8y ago
        The fares/wages aren't fixed and change due to market conditions, just like in almost every other industry with a commoditized market. Drivers are truly commoditized, so their wages should compete down towards the prevailing wage for unskilled labor in India (or at least for chauffeur wages). It isn't a surprise at all and doesn't seem immoral. The real injustice is the financially binding contracts the drivers signed for their vehicles. I work at Fair Financial, and we are Uber's primary partner to get drivers into cars in the US. Our cars don't have any long-term commitment so drivers can return them whenever they want. Thus, if the pay isn't good enough from Uber, they don't feel trapped and simply can decide it isn't worth it and walk away.
        adjkant 8y ago
        > It isn't a surprise at all and doesn't seem immoral. If their advertising was not saying the exact opposite it'd be fine. That is not what they either said or implied. The pay cut alone is not what makes it immoral. Flexible contract are great - why do so many drivers not have them though? Plus, it should be noted that the market of riders and drivers is not causing the cuts. The fundamental flaw in Uber's business model is causing the problem as they push towards a very far off goal of profitability.
        ryan_j_naughton 8y ago
        >Plus, it should be noted that the market of riders and drivers is not causing the cuts. The fundamental flaw in Uber's business model is causing the problem as they push towards a very far off goal of profitability. That's a ridiculous statement. `Uber's business model` is as a market connecting drivers and riders. If they need to be profitable, then they need to stop subsidizing rides. The result is that either prices for customers have to increase or drivers' wages decrease. Given that drivers are highly commoditized unskilled labor, they don't have any pricing power to maintain higher wages.
        adjkant 8y ago
- aadityachauhan1 8y ago
  "Mounting debt from taxi loans was a key concern. Many drivers took loans to buy cabs, while some leased cars from the companies themselves." I think this is the aspect the article is trying to point out. The earnings have halved from what they used to be. The drivers went all in based their lives/future on sustainable earnings from Uber and then were all but abandoned by Uber.
  - MuffinFlavored 8y ago
    Why did Uber change the rates? Was it driven by an influx in drivers coupled to a relatively stable demand for rides?
    - adjkant 8y ago
      It was driven by Uber needing to become profitable and either having to raise ride prices (and lose customers) or lower driver cuts. If there was an abundance of drivers you'd see Ubers/Lyfts waiting around with no one in them constantly, which is not my experience based on wait times in major metropolitan cities (NYC, Boston, SF, LA), where drivers usually are booked for the next ride before they even drop me off. It's also misinformation and deceptive advertising by Uber and others that don't educate drivers on the real costs of driving for them when it comes to gas, car wear and tear, surge pricing models and how it affects them, etc.
      - rightbyte 8y ago
        It was a similar story in London where people borrowed money for cars, then Uber cut pay stranding people with loans. Uber seems to use "incentives" and some kind of quest system rather than just paying the drivers the full amount. It's similar to bonus systems on casinos, where the goal is to keep the player hooked.
  - SamReidHughes 8y ago
    They can offer their services to other ride sharing companies, no? Ultimately consumers will take the best deal, and that means there can only be so many ride share drivers before the earnings get too low. It's like that guy in SF that recorded himself complaining to Kalanick that nobody wants to ride his limo. Somehow that's Uber's fault.
- toss1 8y ago
  No, it is specifically about Uber's practices. The point of the article is that Uber enticed people into a new way of earning a living with higher pay rates, kept these up long enough to convince the workers to go into debt to purchase a vehicle, then slashed the pay rates so much (~58%) that they cannot even afford to keep paying for the vehicle. This is not mere anti-Uber clickbait; it is a record of what Uber did. While it is probably within the law, it is certainly unethical exploitation of a very unequal power relationship. There is a reason behind the frequency of "negative sounding" headlines about Uber -- it is because they build a company on fundamentally unethical practices predicated on screwing the other guy first, whether it is the cities, the govt, the drivers, or their own employees -- whatever they can get away with. Perhaps that is OK, with you, but it is not the way to build a sustainable business or society.
- gramanat 8y ago
  Well, a typical personal driver, who drives a few times a day makes about Rs 15,000 a month - about $10/day. I would expect a Uber driver to make more in profit after taxi loan payments, depreciation and gas
- sharadov 8y ago
  Yes, they were better of earning 2.50/day, but then they got ensnared by deceptive advertising that promises a certain income. I don't expect a taxi driver with a basic education in India to figure that out. Everything about them from Travis Kalanick, to the harassment suits to them jacking up fares during the NYC explosions, speaks of a shady company.
zwieback 8y ago
I like Uber but I'm scratching my head. How do so many people buy into what's clearly an unsustainable business model? I get that right now they have a huge base but isn't it just bought with incentives? I don't really see a huge competitive edge in their app and all the non-core businesses they are competing in are already crowded.
- adjkant 8y ago
  But self driving is just around the corner!* [*] This will be true year after year (and Waymo will beat them to it even if it happens soon)
- Bombthecat 8y ago
  The same people making mega churches possible and believe that a pastor needs a 54 million dollar jet.
- TheCoelacanth 8y ago
  It turns out that people aren't great at recognizing that something is clearly unsustainable when there is a billion dollar marketing budget being spent on preventing them from recognizing it.
lostmsu 8y ago
How do you know this article is not by Uber to mislead potential investors into thinking they can reduce expenses at will by cutting driver pay? The examples in it are very selective.
chriselles 8y ago
Isn’t this largely a case of early adopter Uber drivers planning on, and feeling entitled to, temporary market launch subsidies being made permanent? It reminds of a friend who put together a few of the first Subway franchises here in NZ. I suggested he consider selling. He asked why. I responded by sharing with him how Subway will not stop adding new franchises until there is one on every corner of every intersection. Subway makes money on franchise fees and incremental sales,NOT average store sales(which plateau and sometimes collapse depending on cannibalisation). Uber is not a franchise, but I think the gig economy might require some similar plain language disclosure on how launch market subsidies are temporary and ethereal, not sustainable. Expecting launch market subsidies to remain indefinitely is dangerously naive and foolish. But companies like Uber could probably do a better job of communicating that and managing driver expectations in the market they manage. Trust comes in a lot of flavours.
h0l0cube 8y ago
The bias in many of the comments here is towards social darwinism and personal responsibility. But before we blame the drivers for taking out loans on the 'foolish' assumption that their pay would remain constant, remember that Uber benefited from their naivete with having extra drivers on the road. This breed and cull strategy is par for the course in the business world, but you can't say it's 'not immoral', it's just that the business world so rarely has any incentive to be moral. One incentive is that people hold them to account when they do something crappy like this.
grwthckrmstr 8y ago
I remember Uber offering $1000-$2000/mo to drivers in India back in 2016-17. Many left their other jobs, bought cars, took a loan. Then, bait and switch, those same drivers struggle to earn $500-$1000. They can't leave their jobs because of their loans. They sleep in the cabs, shit in public toilets, eat in the roadside stalls, and go home about once a week. I get reminded of all this every time I take a cab. I realise I'm ready to pay a bit more for my convenience so that someone doesn't literally suffer despite working all day.

49 points by howard941 8y ago

"To be sure, many drivers from Uber are still earning more than they could get in other blue-collar jobs in India. The national minimum wage in India is only about $2.50 a day." No substantial article here folks. Just negative sounding clickbait because "Uber" is in the title.

ryder9 8y ago
Odd you call them out for "clickbaiting" yet yourself selectively post quotes __________________________ But as Uber slashed incentives, Raut’s earnings dwindled swiftly. His income dropped to about $540 a month this year and he defaulted on his taxi loan payments. Deciding after an accident that he couldn’t afford to fix the vehicle, he quit Uber and now his monthly income, from a new job driving a truck, has crashed to $200. “There is no benefit in driving for Uber ... my life was much better just as a cook,” said 26-year-old Raut.
- xyzzy_plugh 8y ago
  Should that be surprising? What requires more skill/effort/education? What are the prevailing wage?
  - adjkant 8y ago
    When the company advertises much higher income for drivers and then slashes it you can only place so much blame on the driver for not understanding complex economics and politics that led to the issue. I think there's a very clear moral case again Uber (and others) for false advertising and clear manipulation of drivers. Legal, likely not but IANAL.
    - ryan_j_naughton 8y ago
      The fares/wages aren't fixed and change due to market conditions, just like in almost every other industry with a commoditized market. Drivers are truly commoditized, so their wages should compete down towards the prevailing wage for unskilled labor in India (or at least for chauffeur wages). It isn't a surprise at all and doesn't seem immoral. The real injustice is the financially binding contracts the drivers signed for their vehicles. I work at Fair Financial, and we are Uber's primary partner to get drivers into cars in the US. Our cars don't have any long-term commitment so drivers can return them whenever they want. Thus, if the pay isn't good enough from Uber, they don't feel trapped and simply can decide it isn't worth it and walk away.
      - adjkant 8y ago
        > It isn't a surprise at all and doesn't seem immoral. If their advertising was not saying the exact opposite it'd be fine. That is not what they either said or implied. The pay cut alone is not what makes it immoral. Flexible contract are great - why do so many drivers not have them though? Plus, it should be noted that the market of riders and drivers is not causing the cuts. The fundamental flaw in Uber's business model is causing the problem as they push towards a very far off goal of profitability.
        ryan_j_naughton 8y ago
        >Plus, it should be noted that the market of riders and drivers is not causing the cuts. The fundamental flaw in Uber's business model is causing the problem as they push towards a very far off goal of profitability. That's a ridiculous statement. `Uber's business model` is as a market connecting drivers and riders. If they need to be profitable, then they need to stop subsidizing rides. The result is that either prices for customers have to increase or drivers' wages decrease. Given that drivers are highly commoditized unskilled labor, they don't have any pricing power to maintain higher wages.
        adjkant 8y ago
aadityachauhan1 8y ago
"Mounting debt from taxi loans was a key concern. Many drivers took loans to buy cabs, while some leased cars from the companies themselves." I think this is the aspect the article is trying to point out. The earnings have halved from what they used to be. The drivers went all in based their lives/future on sustainable earnings from Uber and then were all but abandoned by Uber.
- MuffinFlavored 8y ago
  Why did Uber change the rates? Was it driven by an influx in drivers coupled to a relatively stable demand for rides?
  - adjkant 8y ago
    It was driven by Uber needing to become profitable and either having to raise ride prices (and lose customers) or lower driver cuts. If there was an abundance of drivers you'd see Ubers/Lyfts waiting around with no one in them constantly, which is not my experience based on wait times in major metropolitan cities (NYC, Boston, SF, LA), where drivers usually are booked for the next ride before they even drop me off. It's also misinformation and deceptive advertising by Uber and others that don't educate drivers on the real costs of driving for them when it comes to gas, car wear and tear, surge pricing models and how it affects them, etc.
    - rightbyte 8y ago
      It was a similar story in London where people borrowed money for cars, then Uber cut pay stranding people with loans. Uber seems to use "incentives" and some kind of quest system rather than just paying the drivers the full amount. It's similar to bonus systems on casinos, where the goal is to keep the player hooked.
- SamReidHughes 8y ago
  They can offer their services to other ride sharing companies, no? Ultimately consumers will take the best deal, and that means there can only be so many ride share drivers before the earnings get too low. It's like that guy in SF that recorded himself complaining to Kalanick that nobody wants to ride his limo. Somehow that's Uber's fault.
toss1 8y ago
No, it is specifically about Uber's practices. The point of the article is that Uber enticed people into a new way of earning a living with higher pay rates, kept these up long enough to convince the workers to go into debt to purchase a vehicle, then slashed the pay rates so much (~58%) that they cannot even afford to keep paying for the vehicle. This is not mere anti-Uber clickbait; it is a record of what Uber did. While it is probably within the law, it is certainly unethical exploitation of a very unequal power relationship. There is a reason behind the frequency of "negative sounding" headlines about Uber -- it is because they build a company on fundamentally unethical practices predicated on screwing the other guy first, whether it is the cities, the govt, the drivers, or their own employees -- whatever they can get away with. Perhaps that is OK, with you, but it is not the way to build a sustainable business or society.
gramanat 8y ago
Well, a typical personal driver, who drives a few times a day makes about Rs 15,000 a month - about $10/day. I would expect a Uber driver to make more in profit after taxi loan payments, depreciation and gas
sharadov 8y ago
Yes, they were better of earning 2.50/day, but then they got ensnared by deceptive advertising that promises a certain income. I don't expect a taxi driver with a basic education in India to figure that out. Everything about them from Travis Kalanick, to the harassment suits to them jacking up fares during the NYC explosions, speaks of a shady company.

zwieback 8y ago

I like Uber but I'm scratching my head. How do so many people buy into what's clearly an unsustainable business model? I get that right now they have a huge base but isn't it just bought with incentives? I don't really see a huge competitive edge in their app and all the non-core businesses they are competing in are already crowded.

adjkant 8y ago
But self driving is just around the corner!* [*] This will be true year after year (and Waymo will beat them to it even if it happens soon)
Bombthecat 8y ago
The same people making mega churches possible and believe that a pastor needs a 54 million dollar jet.
TheCoelacanth 8y ago
It turns out that people aren't great at recognizing that something is clearly unsustainable when there is a billion dollar marketing budget being spent on preventing them from recognizing it.

lostmsu 8y ago

How do you know this article is not by Uber to mislead potential investors into thinking they can reduce expenses at will by cutting driver pay? The examples in it are very selective.

chriselles 8y ago

Isn’t this largely a case of early adopter Uber drivers planning on, and feeling entitled to, temporary market launch subsidies being made permanent? It reminds of a friend who put together a few of the first Subway franchises here in NZ. I suggested he consider selling. He asked why. I responded by sharing with him how Subway will not stop adding new franchises until there is one on every corner of every intersection. Subway makes money on franchise fees and incremental sales,NOT average store sales(which plateau and sometimes collapse depending on cannibalisation). Uber is not a franchise, but I think the gig economy might require some similar plain language disclosure on how launch market subsidies are temporary and ethereal, not sustainable. Expecting launch market subsidies to remain indefinitely is dangerously naive and foolish. But companies like Uber could probably do a better job of communicating that and managing driver expectations in the market they manage. Trust comes in a lot of flavours.

h0l0cube 8y ago

The bias in many of the comments here is towards social darwinism and personal responsibility. But before we blame the drivers for taking out loans on the 'foolish' assumption that their pay would remain constant, remember that Uber benefited from their naivete with having extra drivers on the road. This breed and cull strategy is par for the course in the business world, but you can't say it's 'not immoral', it's just that the business world so rarely has any incentive to be moral. One incentive is that people hold them to account when they do something crappy like this.

grwthckrmstr 8y ago

I remember Uber offering $1000-$2000/mo to drivers in India back in 2016-17. Many left their other jobs, bought cars, took a loan. Then, bait and switch, those same drivers struggle to earn $500-$1000. They can't leave their jobs because of their loans. They sleep in the cabs, shit in public toilets, eat in the roadside stalls, and go home about once a week. I get reminded of all this every time I take a cab. I realise I'm ready to pay a bit more for my convenience so that someone doesn't literally suffer despite working all day.