“Wall Street investors are telling Uber and Lyft to cut down on driver income, stop incentives, and go faster to Driverless Cars,” Bhairavi Desai, executive director of the taxi alliance, said in a news release. “With the IPO, Uber’s corporate owners are set to make billions, all while drivers are left in poverty and go bankrupt.”
The drivers union is calling for greater job security, a livable income and a cap on the ride-hailing companies’ commissions to guarantee that drivers receive 80 to 85 percent of a fare.
Drivers in Boston, Chicago, Minneapolis, Philadelphia and San Francisco also are participating in the work stoppage.
Uber is expected to raise about $9 billion in its IPO on Friday, the latest in a string of highly valued tech companies hitting the public market. Lyft, which went public in late March, surged during its first day of trading, but plummeted soon after. It is trading at $62, about 14 percent below its initial $72 price.
After Lyft’s disappointing debut, analysts said, several tech companies recalibrated their IPO strategy, pricing more conservatively to build momentum and sustain investor demand. Uber, which was once forecast to debut at more than $100 billion, is expected to set an IPO range of $44 to $50, giving it a $91.5 billion valuation at the high end.
Though Uber helped pioneer the ride-hailing economy, it loses a staggering amount of money (an estimated $1 billion in the first quarter of 2019), even as it relies on a vast network of drivers who are paid as little as 60 cents a mile. Investors are banking on those drivers eventually being replaced by autonomous vehicles, but experts have questioned the viability of the business model since such technology is possibly a decade away.
Uber and Lyft say that if they convert their fleets to self-driving, they could cut the cost of their rides by three-quarters, allowing them to turn a profit. But the driver protests highlight the industry’s existing challenge in fairly compensating its workforce.
“We do see added risk from Uber aiming to take greater share of the fare from drivers and expect that the more Uber pushes here, the more drivers will fight back and protest, increasing the likelihood of regulations (particularly at the state level in the U.S. and in Europe) of minimum wage guarantees,” said Daniel Ives, an analyst at Wedbush Securities.
Uber drivers make, on average, $21 an hour, according to a recent Stanford University study the company participated in. Lyft said the average hourly pay for its drivers comes to more than $20. The vast majority of this workforce is part time, company and survey data show.
“We know that access to flexible, extra income makes a big difference for millions of people, and we’re constantly working to improve how we can best serve our driver community,” Lyft said in a statement. It said its drivers’ hourly pay has increased in the past two years.
Uber said in a statement: “Drivers are at the heart of our service — we can’t succeed without them — and thousands of people come into work at Uber every day focused on how to make their experience better, on and off the road.”