According to Rakuten Intelligence, between January 2018 and July 2021, the cost of ride-sharing apps like Uber and Lyft have gone up by 92%. Wait times for rides have also increased. The reason for this is a shortage of drivers.
In July 2020, the number of Uber and Lyft drivers went to 40% below the required capacity. As a result of the shortage, the two companies have begun to give incentives such as bonuses and base rates for drivers to return. However, more might be needed for the number of drivers to go up again.
Incentives by Uber and Lyft are not enough
Ben Valdez, a volunteer coordinator for Rideshares Drivers United and a driver, claims that the companies don’t view them as humans but instead see them as profits.
According to Uber’s website, companies make between $22-$37 an hour, depending on the city. Lyft, on the other hand, is known to offer several bonuses and incentives to drivers. However, this is not enough for drivers who need to rely on the service to make a living. For instance, Valdez said that he would make about $85 in 12 hours when the pandemic began to slow business down.
To make a decent living, many drivers have switched to food delivery. One such driver is Chad Polenz, who created Chad the Gig Economist. Polenz said that he would make about $200 a day after driving a short distance when he began working for DoorDash and Amazon Flex.
Food delivery was vital for drivers who could not make a living due to the pandemic. As a result, the ride-sharing revenue for Ube, which was 43% between 2019, went up by 179% in 2020.
Uber and Lyft have had high losses over the last two years
This shortage makes analysts doubt whether the ride-sharing business model is sustainable. Neither Uber nor Lyft has shown sustained profits since they opened. They have instead had big losses. In 2020, Uber lost $6.77 billion and $8.5billlion in 2019. Lyft, on the other hand, lost $1.75 billion and $2.60 billion in 2020 and 2019, respectively. They were first profitable in the last financial quarter. However, the report failed to include taxes and stock-based compensation.