Pixel Envy

Written by Nick Heer.

Uber and Lyft’s AB-5 Fight Reveals Their Reliance on Full-Time Drivers

Tyler Sonnemaker, Business Insider:

“As these companies went to IPO, they used drivers as the bank account … so that they could look better for investors,” Nicole Moore, a part-time Lyft driver (pre-pandemic) and volunteer organizer for Rideshare Drivers United. “We lost 25% to 40% of our income last year, and we’re way below minimum wage.”

There have been clear beneficiaries of that approach: Uber and Lyft founders, early investors, executives, riders, and to a certain extent, part-time drivers who have made some side-income through the apps.

However, by building a business model around skirting labor costs for a significant number of drivers who are effectively working full-time, the companies have passed those costs to taxpayers, pensioners (whose investments in Uber and Lyft stock made private investors enormously wealthy), and other companies who do pay into social safety net programs like unemployment insurance.

Ride sharing companies created two primary innovations: they made getting a taxicab seamless for users, and they offloaded costs to a staggering degree to create the illusion of lower prices. We should encourage the first, but it does not require the second. Ride sharing companies shouldn’t get to lose billions of dollars of venture capital funds in predatory pricing schemes while under-compensating drivers and having the rest of society pick up the tab. That isn’t innovation; it’s exploitation.