Recently, it has come to my attention that Uber drivers from New York to San Fransisco are enraged over their company’s policies. They claim that Uber is a greed-driven company that cuts costs on the backs of its drivers, in order to keep fares low for customers. They also claim Uber uses a misleading tipping policy, as well as a driver rating system which is unfair and can suspend a driver or deactivate their privilege to drive.

 

How Drivers Have Reacted To Company Policies:

 

  • As many as 2,000 angry New York Uber drivers protested their “low pay” by not picking up incoming call requests. NyPost.com
  • The drivers protested with picket signs in front of the San Francisco Headquarters. Mashable.com
  • Uber Drivers Network NYC is pressuring all drivers in the city to stop working. Facebook.com/uberdriversnetwork (As of October 23rd, 2014)

 Having been a customer of Uber, I can say with confidence that their mobile app is very easy to navigate, and their drivers are very prompt upon accepting rides. Although, a few of my drivers have indeed taken the longer route to my destination, despite having a GPS hooked up next to them. I guess small issues like that are part of doing business.

 My message to the protesting Uber drivers, who are complaining about ride compensation, is to seek out and use an alternative car service such as Lyft or Sidecar, because no one is forcing you to work for Uber. In a free market where companies compete for labor and customers, companies that treat their employees and customers well will succeed.

 If Uber is in fact paying you less than your labor is worth, then that is ample opportunity for another company to enter the market and absorb the most talented drivers.

 Allow me to elaborate on what I mean with this example: Say two burger-joints were opening up in the same town. They were both going to sell the same type of food, at the same price. Each company needs to hire 5 employees. There are ten employees available in the town, five of which are great and have high productivity, while the other five are slow and lazy. The first company offers their workers $10/hour, while the second company offers $12/hour. Clearly, all ten workers would apply to the second company first, since that one pays them better. Now, the second company has the ability to pick which five of the ten workers it wants, while the other company is stuck with the leftovers. They can choose the most qualified candidates, and for that reason their total output as a company will be better and they can serve customers better than the other. As a result, if their employees’ higher productivity makes up for that $2 difference in hourly wages, they will be more competitive, have more profits, and put the opposing burger place out of business. If the employees’ labor isn’t worth that two extra dollars, then the first company will do better, and the second one might go out of business for paying wages that are too high.


This same principle applies on a macro-level. More productive labor gravitates towards higher pay, because higher pay positions attract more skills and applications. Put simply, if Uber is in fact underpaying its employees, and the labor of the best drivers are worth more than they get, a competitor like Lyft or Sidecar could take the best drivers from Uber by raising wages to compete, and improve their businesses while hurting Uber. If they don’t, well that might mean that Uber employees are getting paid what the market determines their labor is worth. In which case, Uber is not ripping them off. Uber is paying a fair price given the industry that they are in.

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