How Uber and Lyft pass on extra costs to consumers
Uber and Lyft just announced that the increased gig worker rights and benefits offered under the passed Prop 22 bill will come out of the pockets of the consumers. Consumers in California will begin having to pay a “California Drivers Benefits Fee” as an extra fee on top of their ride fare. That means that both companies who now have to provide drivers with limited benefits and rights have essentially passed on these costs to the consumer. This behavior is indicative of a worrying trend we are seeing from tech startups with deep pockets.
For some context, Uber and Lyft just recently ensured that gig workers in California would never gain employment status with access to full-time benefits such as paid time off, health care, pension plans, and other taxes employers should pay. Instead, they packaged Prop 22 as this amazing deal for gig workers that would ensure they have increased gig worker rights moving forward. And these extra benefits do exist, although they are strictly based on the time spent engaged, which is anytime you spend after accepting a ride to just after dropping of the customer. Furthermore, other benefits only activate once you drive a certain number of hours. While this sounds good for gig workers, it will likely ensure that only a small segment of drivers actually receive the benefits, considering how competitive the landscape is.
Uber and Lyft have perfected a model where hundreds of drivers fight over neighborhoods that can likely only support a dozen drivers full-time. So both companies do employ many contractors, they are all just fighting for scraps. This ultimately has led to 30% of drivers not even earning any money after expenses and taxes and will ensure that most drivers will never earn these additional Prop 22 promised gig worker benefits.
Now I’m sure most of us don’t mind paying a little extra for a ride that is already very cheap. But this isn’t what Uber and Lyft sold to consumers from the start. Rides have been gradually becoming more and more expensive and the money made by drivers has been routinely decreasing over the years as well, partly due to the competitive business model mentioned before. Both companies are clearly showing that they cannot be touched. Being untouchable only stands to benefit one group of people. The shareholders.
It is just so disappointing to see that companies who promise to bring communities together are actually tearing them apart from within. Both Uber and Lyft are perpetuating the capitalist hellish nightmare where rich venture capitalists pay for cool tech companies to create products and services for unrealistic prices based on unrealistic business models. Rock bottom prices are offered to consumers, which seem great at first but gradually are increased while the money to be made for drivers continues to decrease. In addition, these companies use the gig worker model to offset most operating costs and pass them onto their contract workforce. This gig worker model disproportionally preys on those without a college degree and focuses largely on workers from immigrant backgrounds and marginalized communities. We need the government to step in and help the people who are in desperate need of being treated with a shred of dignity and respect.
Interested in the details of Prop 22 and what it could mean for your job? Check out the video below.
That is all for now. Leave a comment and tell me what you think about Uber and Lyft. Consider leaving a clap or three if you enjoyed the content. Have a good day.
