Uber pay slashed, say drivers as company files to go public
Uber is facing a backlash from its drivers after changing its pay structure in 20 cities across the US.
Drivers in San Francisco and San Diego, where the change was implemented last week, say that their earnings have fallen as a result of changes to how their pay is calculated.
The news comes as the company reportedly filed confidential paperwork for an initial public offering this week with the US Securities and Exchange Commission. A spokesperson for the company declined to comment.
The ride sharing app began to change the formula for how it pays drivers in cities across the US in July.
Uber pays its drivers based on a formula consisting of separate base fare, distance and time rates. The company has re-calculated the formula for the first time since the app was launched so that greater weight is given to time and less is given to the distance travelled.
The new formula means that drivers will make less from long journeys and more from slower, shorter rides.
In San Francisco, for example, an Uber driver has gone from making $1.33 a mile to 91 cents a mile. At the same time, Uber has raised the payment for time spent on each ride from 24 cents a minute to 39 cents a minute. Rates in the surrounding Bay Area, including Oakland and South Bay, differ.
Under the new system, the only journeys drivers stand to be paid more for are those under an average speed of under 20 miles an hour. For journeys with an average speed above 20 miles per hour, drivers will make less per ride.
Drivers say that the change in formula has on average decreased their pay. On one online message board used by Uber drivers, a commenter noted that most people are losing around 10pc of their earnings.
However, Uber argue that its drivers overall earnings should not be affected by the changes. It says it has revised the rates as part of an initiative to make their earnings more consistent.
An Uber driver who has worked for the company for three years in San Francisco is boycotting the app as a result of the change. Layla Ghajarieh says that she learnt of the changes a few days before they were implemented, which she says was announced to drivers on Thursday via a push notification to the app.
“A lot of people don’t pay attention to the notifications. Even after a week, they aren’t aware of the change,” she said. The change in rates has impacted drivers pay significantly, she says. “The millage is where we make our money,” she added.
Silicon Valley Rising, which campaigns for the rights of low-paid workers in the technology industry, represents roughly 500 Uber drivers in the Bay Area. The recalculation amounts to a reduction in rates, according to Jeff Ordower from SVR. Uber and other tech companies are “exploiting an expendable labor pool of people bouncing from one platform to another”, added Ordower.
Uber says that the adjustment is not designed to either increase or decrease payments and that drivers' earnings have remained on average the same.
“We are constantly working to make earnings more consistent and dependable for drivers, while making our service more reliable for riders," said a spokesperson for the company. He added that the amount paid by passengers should remain similar, as the weight of the fare is shifting from mileage to time.
Uber could be valued at as much as $120 billion in an offering. It has previously said that it plans to go public in 2019. Its closest rival, Lyft, which is also expected to IPO next year, also filed paperwork this week with the SEC for an initial public offering.
