Why won’t this work?
Maybe because of Economics 101?
This week we are hearing from many in the media, Uber Opponents, Uber Deniers and sad to say, many Uber Drivers that the income of a producer of a service moves in lock step up and down in proportion to the amount the price of that service moves up or down.
I don’t want to make fun of people who make this mistake due to ignorance of Economics 101.
HOWEVER, there are many, many people who know exactly why you can’t just boost prices by 20% to boost income by 20%.
Those of you consciously lying to feed this bizarre “solution” to managing working people’s income need to think through who benefits and who is hurt by your lying.
Unlike many media reports, three articles by Danielle Furfaro in the New York Post this past week explain how it is in fact possible for the price of a service to go down while income of the service provider goes up.
The confusion on this issue for Uber is the inability by many to describe the importance of how many hours per day a driver has a paying butt in her seat instead of how much money she makes PER RIDE.
Please listen to these words. Focus on:
Uber Driver Income PER HOUR, not on
Uber Driver Income PER RIDE
Focus on Uber Driver Income PER HOUR, not PER RIDE
Furfaro reports on the first day of its price cuts, Uber reigned as the cheapest ride in town — averaging about 20 percent less than traditional cabs for the same routes taken at the exact same time…
When Uber drops prices by 20%, their drivers grab a whole lot of rides that used to go to medallion drivers. If the increase in rides per hour is high enough compared to the decrease in the income per ride, then the Uber driver makes MORE PER HOUR than before the price cuts.
Month after month for over three years, drivers have relentlessly abandoned driving for the Big Taxi Medallion Monopoly and defected to Uber BECAUSE THEY MAKE MORE MONEY. The defection rate from 2013 already exceeds 15%.
Is this really that difficult to understand?
Furfaro summarizes the price cuts by emphasizing their role in competing AGAINST MEDALLION TAXIS:
“…Uber is going for the jugular in the escalating Big Apple cab wars…the base fare in the Big Apple goes from $3 to $2.55 and the per mile rate will go from $2.15 to $1.75 while the per minute rate will go from 40 cents to 35 cents…
…The price drop means that both Uber and drivers will make less per ride, but the company says it is worth it because they expect ridership to shoot up and for drivers to waste less time driving around without a fare.
…The last time Uber dropped its prices – in July of 2014 – time that the drivers spent without a fare in the car dropped by 42 percent. They expect to shave even more idle time off this time…
…Uber said…drivers…saw their earnings go up in the first days [after the price cut]…drivers have pulled in an average of 20 percent more, because they are now spending 39 percent less time sitting idle…
…Some drivers, who claim they sometimes wait for up to 30 minutes between fares, say they are happy with the change…potential customers say the price drop will make them more likely to use the ride-sharing company…
…But the spike in ridership will trigger more frequent surges — when Uber uses a somewhat unpredictable algorithm to jack up prices at peak usage times, such as during rush hour, holidays and inclement weather.
A company source said the rate cut will ease the blow of the surges — You might see more surges, but they will be low-level surge prices…”
Uber Strike Fizzles
Furfaro reports that only 400 drivers rallied outside of Uber’s headquarters on Monday February 1, 2016 to protest the new rate cuts. So less than 1% of Uber drivers are taking part in the “strike”.
The protesters…made three demands, [they want:]
Fares restored to the levels before Friday’s 15-percent cut
Uber to add a tipping option on the app
Uber to cut its commission to 10 percent
Furfaro also reports how “…in a strange twist, the New York Taxi Workers Alliance, which has traditionally represented yellow-cab drivers, organized the Uber protest and rally. Both Uber drivers and taxi drivers say this is the first step in the two groups working together to fix the problems that have plagued the industry…”
I have great respect for how unions have benefited the working people of our country. I just don’t see how twentieth century tactics and thinking will benefit workers in 2016.
Medallion taxi drivers are voting with their hands behind the wheel. They prefer the income, flexibility and working conditions Uber offers.
They reject Big Taxi’s sharecropper medallion system.
Mobilizing taxi drivers and Uber drivers together to preserve the Big Taxi Cartel’s egregious medallion scam is an unnatural act.
Sometimes promoting economic freedom AND social justice moves in lock step.