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What this makes me think is that the market for drivers (or at least good drivers) is in high demand and they are a limited pool with more leverage than is reco
by po 13y ago
What this makes me think is that the market for drivers (or at least good drivers) is in high demand and they are a limited pool with more leverage than is recognised. That means they can probably command higher prices which will ultimately have to be passed along to consumers somehow.
- anigbrowl 13y agoHigher input prices are not wholly passed along to consumers, although this is a common misconception. The degree to which prices go up vs producers accepting a smaller profit depends on the elasticity of consumer demand. Where this relates to the apportionment of a tax burden, it's known as tax incidence, which is probably the best search string to start with.
- xivzgrev 13y agoIt's a fair point. I think you'd have to segment labor market a little more, by personality (silent & professional/fun & engaging). My thought is that Lyft does well with the second type, and Uber is recognizing value in that market. I don't think it will drive up costs though. Here Uber is not promising them a higher rate - just switching bonuses. Uber has strong incentives not to offer higher rates, changes their whole cost structure. This is just a recruiting expense. I don't see these services implementing multiple tier payment structures, because that would have to be passed to consumer and then pricing gets complicated when all you want is a ride now. Now I think you're absolutely right the supply is tight. Lyft has some serious driver shortages as it is, and this is not helping matters. I wonder when they'll start letting drivers share cars (or even use a third party car such as Zipcar), but that would help open up the SF market to labor that is constrained by not having a car of their own (which, I'd estimate that's quite a few people).