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UBER Raises Prices in California to Pay for Worker Benefits

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Zacks Equity Research
·3 min read
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Uber Technologies UBER has raised prices for customers in California, effective Monday, in order to cover the cost of additional benefits that its workers are liable to receive as part of Proposition 22 (Prop 22), which was passed by California voters in November.

Uber, its rival Lyft LYFT and other gig economy companies invested as much as $200m in Prop 22, a ballot initiative, to be exempted from California’s labor law, which would have forced it to classify its workers as employees. While Prop 22 allows Uber to maintain the independent contractor status for its drivers and delivery people in California, it requires the company to provide workers with a number of benefits, such as a certain amount of guaranteed earnings, a healthcare stipend and accident insurance for on-the-job injuries.

To pay for these perks, Uber, carrying a Zacks Rank #3 (Hold), is levying additional charges of up to $1.5 on each ride and up to $2 on deliveries. Lyft, carrying a Zacks Rank #5 (Strong Sell), is yet to raise prices for its rides.

Uber Technologies, Inc. Price

Uber Technologies, Inc. Price
Uber Technologies, Inc. Price

Uber Technologies, Inc. price | Uber Technologies, Inc. Quote


Amid the coronavirus pandemic, Uber’s rides business is witnessing a significant downturn, thanks to low ride volumes. However, its delivery business is experiencing a boom with online order volumes from homebound customers increasing.

To focus on its core ride-hailing and delivery platforms, the company is exiting side businesses. Earlier in the month, there was news that it will sell its flying taxi unit, Uber Elevate, to Joby Aviation, a California-based startup developing electric aircraft. Prior to that, it entered into a definitive agreement with Aurora Innovation to sell its self-driving unit Advanced Technologies Group or ATG.

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