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Why drivers are winning the labor war between Uber and Lyft

The Uber Technologies Inc. logo is seen on the ground at Ronald Reagan National Airport in Washington on Nov. 26, 2014. (Andrew Harrer/Bloomberg)
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Ordinarily I'd have ridden an Uber or taken my bike across town, but it was a chilly February morning and Lyft had just given out a handful of free promotional rides that week. So Lyft it was.

As it turned out, it didn't make much difference which of the two ridesharing services I chose. My driver worked for both companies.

Uber has long been the leading rideshare service for part-time drivers who want to earn a little cash on the side. But motivated by the possibility of more pay and better benefits, some drivers have begun working openly for multiple services. Some drivers I've spoken to acknowledge the practice is common among their peers, though not all do it. Regardless, the result is a new chapter in the quiet war among Uber, Lyft and others over a vital resource for their businesses — labor — with drivers reaping the benefits.

This isn't the first time we've heard about rideshare companies fighting for drivers' loyalty. Last summer there was an epic blowup over reports by the Verge that Uber was resorting to "sabotage" in its attempt to identify and poach drivers away from Lyft.

As the New York Times' Neil Irwin pointed out then, there's nothing inherently abhorrent about this strategy. In fact, it might be the sign of a healthy labor market as the apps each do their utmost to connect the most drivers with the most riders. But the reports about poaching also revealed a flawed assumption: That rideshare drivers would ever work exclusively for one company or another.

In fact, what we're seeing now is a growing refusal by drivers to play by that assumption, particularly amid criticism and even protests over how much Uber will pay. A public debate over wages last year saw Uber initially claiming that its drivers earned, on average, as much as $25 an hour in New York City. After a backlash among drivers pushing back against that figure, a company study showed that across all cities drivers earned, on average, $19 an hour (and $30 an hour in New York). Uber also keeps cutting its prices for riders — the last one came in January, according to Uber — which is good for consumers but puts the squeeze on disgruntled drivers and increases the incentive to look elsewhere for work.

This reddit thread — which is representative of many others — highlights how drivers have begun to divide their time, with one user asking:

Hey guys I'm going to be doing my Lyft mentor ride today. I have been a Uber only driver for 9months. Is it OK to let Mentor know that I am also a Uber Driver with a very good rating or is this a don't ask don't tell kind of thing?

The first reply, from a Denver-based driver who claims to work for both Uber and Lyft, reassures that there's no problem. (Indeed, spokespeople for both Uber and Lyft confirmed that there are no policies at either company prohibiting drivers from signing on with other platforms. Uber now also attempts to retain drivers with perks like discounts on auto maintenance and vehicle financing.)

Lyft is a much more driver-friendly platform. In my city I can be busy with lyft for an entire evening (for the first time ever), earn more per mile, and get about 10% of fares in tips (or more.) People in Denver are making a choice to use lyft over uber right now

Combining apps offers a number of advantages to drivers. It gives them a wider choice of potential fares by adding together Lyft users and Uber users. Choosing the closest fare cuts down on wasted time, money and fuel between trips. And in what could become a problem for riders, drivers have actually taken to driving less in an attempt to earn more.

How does this work? At least one driver has figured out how to game Uber and Lyft's incentive systems to get more drivers on the road.

"I've noticed Uber drivers have started to turn off their apps, wait for surges and turn them back on when the surges are 2X+," wrote the driver, referring to Uber's system of surge pricing that raises rates during periods of peak demand. "Drivers are getting smarter, and driving less miles for more pay. This is what Uber is doing to us with the pay cuts."

This tactic may help drivers earn more at a time when many obstacles threaten to eat into their revenue: gas, insurance, repairs, a relatively new car — much of which has to be covered by drivers themselves.

But there are wider implications, too. If drivers are actively removing themselves from the labor supply, that decision directly affects the availability of rides for customers using a given service.

Without drivers, rideshare apps are simply a fancy bit of software. So it's in Uber and Lyft's interest not just to attract drivers to their side, but also to keep them happy while they're there. And even then, the companies have to admit that some mercenary behavior is inevitable, anyway. When drivers are frustrated, drivers will seek to exert power in one of the few ways they can: By leaving. The real trick is to stem the attrition as much as possible.

As we wound our way past Union Station, my driver told me he could've picked a nearby Uber fare instead. But getting there would've taken him a few extra minutes out of his way. That made me — a Lyft fare — the more attractive choice.

Then, as if to show he was owned by no one, my driver fired up a third ridesharing app, Sidecar.

Correction: This post has been updated with more specific driver earnings information.