Why Uber, Lyft's Rides Continue To Pinch?
Americans hailing an Uber Technologies (NYSE: UBER) or a Lyft Inc (NASDAQ: LYFT) ride still face high prices due to a crisis of drivers, the Wall Street Journal reports.
Both companies report Q3 results next week and will likely address the labor crisis and price surge. The sloth in the return of ride-hailing companies' drivers despite the expiry of the federal unemployment perks triggered the crisis leading to the fare upsurge.
The drivers are earning more, and riders are bearing the inflated prices. The fares dipped during the late spring and summer in states that opted out early from the federal unemployment benefits, compared with states that did not.
The effects of the September expiration of benefits could eventually trickle down to the rest of the country, albeit slowly. The nationwide average ride-share fare declined just 3% during the first three weeks of October versus a record high in July.
The U.S. riders, on average, have still paid 22% more for a ride so far in October versus January and 30% more versus October 2019. "Now there's so many people that want to go out and do things" that drivers haven't kept pace with how quickly riders have returned, Lyft President John Zimmer said.
Concerns over contracting Covid-19 and pandemic-related school and child care disruptions have discouraged the drivers from resuming service. Others retired early or stepped away from the workforce temporarily, probably for a better work opportunity or to become full-time parents.
Openings in traditional jobs might have also attracted some drivers. Uber and Lyft are gradually pulling the plugs on bonuses in areas where more drivers resumed service.
Uber and Lyft are phasing off rider discounts to control costs and prove that they can grow without the dirt-cheap prices.
Price Action: UBER shares closed higher by 1.30% at $44.36 on Monday.
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