- The ride-hailing service reduced uberX rates by 15 percent
- Company says lower prices will increase rides and earnings
Hundreds of Uber drivers went on strike outside the company’s New York City offices Monday, chanting and holding signs with slogans like "Uber is Wal-Mart on Wheels," to protest price cuts.
Last week Uber Technologies Inc., the ride-hailing leader, reduced rates on its basic service, uberX, in New York City by 15 percent. A trip from Midtown to LaGuardia Airport is now $37.12, compared with $43.67 before.
Uber’s reasoning is that lower fares spur demand so drivers don’t have as much down time between trips. Over the past weekend, drivers spent 39 percent less time without a fare and as a result saw a 20 percent increase in hourly earnings compared with two weekends earlier, the company said.
The drivers disagree. They say the new policy simply makes them work longer.
“It took me a lot of time and hassle and nerves and stress to make the same amount of money I did in previous weeks,” said Farrukh Khamdamov, a 26-year-old driver with Uber for a year who spearheaded an online campaign for the strike.
Khamdamov said that, for instance, now it could take five trips to make $20 whereas before the fare cut he might have made that amount in two rides.
A crowd of a few hundred drivers gathered outside of Uber’s Long Island City, New York, offices at noon. The street was blocked off from traffic and policemen surrounded the protest.
Paul Ryod, 50, was an Uber driver for almost two years. He said he hasn’t been driving for the San Francisco-based company since Friday, when the price cuts were announced.
“I refuse to go on the streets for less,” Ryod said. “We can’t understand how we’re going to make more money if the fares are less and we have to work twice as hard to be making the same money.”
Omar Omar has been driving for Uber for more than three years. He says that even though lots of drivers want to leave the company, many are signed up for car loans through Uber and are locked in for the term of the loan. Car payments are automatically deducted from weekly earnings, according to the company website.
"They call us partners, but where is the partnership? We’re not involved in any part of the decision-making," Omar said. "Why don’t they lower their commissions?"
In North America, Uber has come closer to profitability, even with lower fares, in large part by taking a bigger proportion of driver’s wages. The company now pockets as much as 30 percent of a driver’s fares, up from 20 percent two years ago. Over the first three quarters of 2015, Uber lost $1.7 billion on $1.2 billion of revenue.
Uber and Lyft have been criticized for a business model that’s built on contractors, who typically pay their own expenses and aren’t protected by minimum wage and overtime laws. The companies don’t pay for drivers’ unemployment insurance, workers compensation or Social Security. Uber may have to change strategies if drivers are able to win rights as employees or form unions. Wing said the company is offering to meet individually with every driver that wants to discuss their concerns and review their earnings.
Zufar Narzihulov, 28, said he looked at switching to Lyft, but saw that they also dropped their prices.
"I know there are other alternatives launching and I know drivers are looking for ways to exit," Narzihulov said. "Drivers are the key role here -- we’re making the dollars bringing their commission."