SAN FRANCISCO — When the pandemic pushed him to quit driving for Uber, Steve Gregg didn’t know he might be done with the ride-hailing apps for good.
Now vaccinated and in search of good work, Gregg says he is in no hurry to return to Uber or Lyft. He said unemployment tided him over during the pandemic and a recent move to Modesto, Calif., from the San Francisco Bay area had lowered his cost of living.
“I can never go back,” Gregg, 53, said in an interview before hedging, “I can never say never. … It was a great journey but it ended hard.”
Uber and Lyft are facing a supply shortage, as returning and newly vaccinated customers again flood the apps, only to find out there aren’t enough drivers to serve them. It’s resulting in longer wait times and higher fares for riders. The companies cited drivers’ ongoing hesitance regarding fears of contracting the coronavirus and lingering concerns that demand has dried up, even as customers in many major cities have resumed riding. Uber and Lyft are offering incentives and paying out what they say are record wages as they attempt to lure drivers back to the apps.
“One of our top priorities is to rebuild the driver base,” Uber CEO Dara Khosrowshahi said on Wednesday’s company earnings call. “With demand currently outstripping supply, driver earnings are at historically elevated levels.”
Lyft Chief Financial Officer Brian Roberts echoed those remarks on the company’s call this week, noting that the dynamic “led to record earnings for drivers in most U.S. cities.” The company’s CEO, Logan Green, said he expected drivers to return as gig workers come off unemployment as the year goes on and demand for delivery apps falls as businesses fully reopen.
“We think that in [the third quarter] and beyond, we’ll start to see some … trends that should give us real tail winds on the driver side,” he said on the company’s earnings call.
The shortage is in part prompted by workers such as Gregg, who left the app when the risks of driving during the coronavirus were highest and the vectors of transmission were not completely understood. Demand was down by as much as 75 percent in the United States as the pandemic set in, the companies said. Now Uber faces a supply shortage even as more than two-thirds of the ride-hailing demand has recovered, when gross bookings are compared with April 2019, according to Khosrowshahi.
Uber last month announced a $250 million incentive program to boost driver earnings in an effort to encourage drivers to come back. The company said median wages are also up in major cities because there are more customers seeking trips than drivers to provide them, hiking up fares.
But drivers said the coronavirus pandemic provided the first glimpse in years at what a life after Uber could look like. For many of them, it was a meaningful reset that gave them a better understanding of the toll the gigs had taken on their bodies, their mental health and their vehicles. It was the push they needed to finally begin their lives after Uber.
Some of the drivers said they realized the ride-hailing gigs were not the same jobs they signed up for in the early days of the apps. In the early days, they were incentivized with promotions and what they regarded as sustainable wages, taking more than $1,000 in pay from a full workweek. But as the apps took off, pay models changed and earnings slowly dwindled as drivers saw their weekly pay fall into the hundreds.
“It’s very much not a career,” said Lyft driver Bruce Blood, 34, of Los Angeles, who has taken advantage of the higher wages but has also dealt with the fallout. “Passengers are angrier. When they get in my car, they are angrier about the time they’ve had to wait or the price that they’re being charged.”
One day recently, for example, Lyft sent him 30 minutes out of his way to pick up a passenger who was in a foul mood. When Blood called to say he had arrived, the passenger hurled a profanity at him as he complained that two previous drivers had canceled. The passenger abruptly hung up and was hit with a no-show fee.
“I collected two dollars,” Blood said. “So that’s an example of what I deal with.”
Uber is also a changed business. Wednesday’s earnings report showed, for example, that Uber Eats made up almost two-thirds of the company’s gross bookings, or the total it takes in from customers. That was a complete reversal from the first quarter of 2019, when rides made up about 80 percent of the business.
Many of the drivers who stopped giving rides switched to delivering food, which was seen as a less risky gig but with lower pay. Harry Campbell, founder of the popular blog the Rideshare Guy, which provides information and resources for gig workers, said many turned to food delivery through Uber, DoorDash or other apps as demand exploded for delivery of meals and household items.
Uber’s tense relationship with its contract workforce has also played a part in the shortage, some drivers say. Through a ballot measure called Proposition 22, Uber and other gig economy companies in November defeated an effort to make California drivers full employees, which would have entitled them to benefits such as health insurance, a minimum wage and unemployment.
Khosrowshahi said on the call that driver earnings are at “historically elevated levels,” with median earnings of $37 an hour in New York and Philadelphia, $36 in Chicago and $33 in Austin, well over what drivers might typically earn. Experts said that lines up with what drivers have been finding as they have logged back onto the app.
“It seems like the good old days again, with strategic drivers averaging $40 to $50 per hour in major cities right now but I don’t expect it to last,” Campbell said.
But even with higher earnings potential, drivers are under little impression the changes will last.
Uber passenger Jonah Bliss experienced the effects of the driver shortage firsthand. The Los Angeles resident, 33, said he had difficulty finding a nearby ride twice in a matter of weeks.
One morning, as he sought to travel three miles between residential neighborhoods, his app indicated the driver was 10 minutes away. That was longer than usual, but he accepted the ride. But as time went on he saw the driver wasn’t inching any closer; in the mean time, Uber offered him quicker rides for higher fares, all the way up to about $65.
Uber swapped drivers until one finally arrived after about half an hour, and the trip cost $25 — double what he would typically pay. He had a similar experience traveling from his apartment in a densely populated neighborhood to a doctor’s appointment, as he waited 15 minutes for a driver to show up.
“It was like, if I needed to rely on this regularly, I would just have to bake in an extra 20 minutes to get anywhere,” he said.
The Prop 22 campaign drew attention to the harsh working conditions and meager wages drivers can face on the job. And for some drivers, it exhausted any goodwill they might have toward the apps, which are now in need of workers.
Uber made changes aimed at placating drivers in an effort to show they were independent of its control, and thus didn’t need to be made employees under the state law. But amid the driver shortage, Uber has rescinded at least one of those options for California drivers: the ability to set their own fare multipliers, which had resulted in some passengers receiving offers to be picked up faster if they paid higher, and sometimes even exorbitant, fares.
“I think if you’re a smart driver, you wouldn’t trust anything that Uber says,” said Maryann Hrichak, 63, who drove for Uber from 2014 up until July 2019.
Hrichak recalled how she joined the app at a time when it was growing and the competitive wages, combined with driver incentives and opportunities to meet new people and explore the city, made the experience worthwhile, even fun. But that impression didn’t last. As time went on, she said, her $1,500-per-week earnings dwindled to half of that, if she was lucky, and even less some weeks. Uber’s treatment of drivers left a sour taste in her mouth.
“Uber started chunking away at the drivers’ pay,” she said. “I think they slowly chipped away until they exhausted all the goodwill. You couldn’t make any money. … The trust has been eroded, and I don’t know, when you erode trust like that in a company like Uber, I don’t know how you get that back.”
Uber spokesman Matthew Wing said the onus is on the company to gain drivers’ trust.
“Drivers have a lot of choices — it’s our job to earn their trust every day and make driving with Uber worth their while,” he said.
Gregg, the driver who moved from the Bay Area city of Antioch to Modesto during the pandemic, was conflicted as he learned about all Uber was doing to bring drivers back into the fold.
“I’ve seen what they’re capable of,” said Gregg, who has been involved in organizing efforts in support of drivers. “The bear is still the bear: You don’t stick your head in their mouth.”
At the same time, he added, “I could I think be lured into doing it on the side or something.”