Taxi Driver Online

What’s going on with Uber drivers right now?

https://www.timeout.com/london/city-lif ... -right-now

Why’s it so hard to get a lift? And why do they always cancel? We spoke to cabbies to get to the bottom of London’s problem with ride-hailing apps

Picture the scene: you’ve stumbled out of the club at some godforsaken hour. Eyes blurry, mouth dry, you’re feeling wonkier than a bendy bus. Fumbling for your phone, you book an Uber to come and rescue you. But what’s this? A driver has accepted, but the tiny car on the screen keeps getting further and further away. Eventually, the ride gets cancelled. Your glimmer of hope begins to disappear, and you trudge towards the night bus instead, feeling like a powerless earthling defeated by the faceless overlords of ride-hailing apps.

You might have noticed that this is happening a lot at the moment. Last-minute cancellations, cars driving away when they’re within a hair’s breadth, struggling to have a ride accepted: getting an Uber in London feels as random and fruitless as trying to bag Glastonbury tickets. So what the heck is actually going on?

The short answer is: the demand for Uber currently outweighs the supply. According to an Uber spokesperson, since 2019 there’s been a 5 percent drop in the number of their drivers in London, but at the same time, demand for rides is up by 10 percent. During the pandemic many drivers left Uber, taking up delivery jobs or simply moving to different professions. A lot of them haven’t come back. ‘They realised that driving for Amazon was easier than driving passengers around,’ says Grant*, who’s been driving Ubers in London for more than eight years.

‘Lots of drivers aren’t British so when the pandemic came many of them went back to places they’re from,’ he adds. ‘And Brexit didn’t help either.’ But it’s not just the driver shortage that means app cabs are now more likely to cancel. App driving isn’t as lucrative as it once was, and cabbies need to make sure their work is worth their time.

Time is money

On top of all the usual reasons why drivers might not want you in their car – drunken behaviour, reeking of booze, you cradling a massive kebab – the cost-of-living crisis and rising fuel costs mean drivers are making less money than before, which has led to tweak the apps to get the most bang for their buck.

‘Every driver has got different tactics for how they play the system,’ says Grant, who’ll make around £350 on a good night. Although Uber prices went up by 10 percent in November 2021, off-the-chart inflation in the UK means that this hasn’t done much for the bank accounts of drivers. On top of that, Uber recently switched from basing fares on time and distance to fixed prices, meaning the taxi metre was effectively scrapped. For London drivers, where there are high levels of traffic, road works and tons of other reasons why journeys might get delayed, this is far from ideal. ‘This goes against the drivers,’ Grant says, who adds that mounting fuel costs are going to ‘cripple’ them.

‘The fares have become so low, drivers will not take the job. In the past, the minimum fare was £3 and it was £1.20 per mile. The minimum in London is now £4.30 and £1.06 per mile. Back then, petrol was 65p per litre, not £1.65 as it is today,’ another driver, Michael*, tells Time Out.

Dynamic pricing means drivers often straddle two apps and pick the rides that have the highest prices: if Bolt is surging, but Uber isn’t, drivers will cancel their Uber trips in favour of Bolt rides, or they’ll wait for prices to go up as high as possible before accepting any rides at all. ‘It's often because they work for local firms too or other apps and if they’re offered a better job, they cancel Uber,’ Michael explains.

Although drivers may incur waiting-time fees, time spent idle and miscalculated arrivals are still an issue. ‘Drivers don’t get paid for time,’ one driver, who wanted to remain anonymous, says. ‘If you’re going on a four-mile journey, the driver will get £7.50. It will take around five minutes to reach the passenger, five minutes waiting, and a 30-minute drive, so that’s a 40-minute round trip.’ Grant backs this up, explaining how he might only make £4.30 – the minimum fare in London – for a 20-minute round trip. This is worse in certain areas, like Shoreditch, meaning some drivers will avoid them altogether.

No-go zones

Low Traffic Neighbourhoods (LTNs) have been a major source of contention for Londoners over the past couple of years. For Uber drivers, LTNs simply mean wasted time, as many don’t want to squander precious minutes literally driving round the houses. ‘Uber’s navigation doesn’t know where the LTNs are,’ Grant says. ‘In Hackney and Dalston, where there are more LTNs, this is a particular problem.’

Other Londoners told us they had cars cancelled after drivers realised the trip would go into the ULEZ. While black cabs don’t have to fork out the £12.50 a day to pay for the low emission zone, if they don’t have a ULEZ-compliant car, Uber drivers have to foot the bill themselves, only being paid back £1.50 per trip from Uber.

Many drivers will also avoid places they know they’ll get a lot of drunk and unruly ‘problem passengers’. ‘A lot of drivers, if they see a job and it’s going into Soho on a Saturday night, they won’t accept it,’ Grant says. ‘There’s one nightclub in the West End I actually now avoid because every time I’ve picked people up from there they’ve been a pain in the arse.’

The road ahead

While Uber is trying to combat the driver shortage, it’s not been plain sailing for the company. ‘It’s really hard and long to get through the TfL licensing funnel,’ says a spokesperson from Uber. ‘We currently have 800 drivers who are going through the process which takes up to ten months. And it can cost drivers in excess of £700. There’s also a backlog from the pandemic.’ Soon, Uber also plans to introduce multi-stop fees for time spent at on-trip stops.

But all in all, with the shortage of drivers, app cabbies are able to be more picky about the jobs they accept. And we can’t blame them for wanting to maximise their moolah: times are tough. ‘We don’t get much in the way of tips,’ Grant says.

Londoners better get used to forking out more and waiting longer for a taxi. Otherwise, they’re destined for night-bus purgatory.

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IDFIMH

F***wit.

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IDFIMH

“The minimum in London is now £4.30 and £1.06 per mile”

And he can still ‘make’ £350 a night ?

And he has got to give 25% of that to Uber.

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IDFIMH

Those are peasant rates for a mega expensive dump that is London.

Is that £350 per night for a 12 hour shift?

If so, in London that is in all likelihood less than minimum wage.

Would probably be doing a high amount of fares for that so fuel costs for the night over £50, I reckon.

After other expenses not really worth the hassle especially with the crime in London and gang problems etc.

I am surprised it's not a major issue for London in general in securing a cab ride especially at peak times.

However, I think public transport such as buses and underground is 24 hour service so most likely there is always an alternative to a cab service and probably saves time waiting for a taxi too.

Agree in general terms with what you say, Mr Rebel, but as someone very (in) famous once said, "You can't buck the [labour] markets."

In other words, in the final analysis, what determines drivers' earnings is more about the labour market than fares per se.

Which is economics 101, but is generally ignored by contributors on here.

For example (and as I've said numerous times before), the assumption by many seems to be that if you doubled fares overnight then drivers would double their take. Of course, in reality that wouldn't happen, except perhaps in the very short term, and even assuming a lack of transparency as regards the increase so that punters weren't aware that fares had doubled, and even assuming people unaware of the fare 'hike' would pay it at the end of the trip.

Ditto your point in the Inverness thread.

So Grant says drivers are taking 40 minutes to do a £7.50 job, yet he can earn £350 a night?

Of course, that's no doubt comparing a worst-case scenario for a single run with a best-case scenario for a (long) night shift.

Either that or they think there's 48 hours in a day, and they're working double shifts

This is why the government is not doing much about immigration despite all their bleating.

The inconvenient truth is that immigrants are the "monkeys" who will work for peanuts. I would think that quite a number of them will find themselves driving for Uber or other pirate hire operators in order to give consumers their cheapo prices the rest will probably end up in Lincolnshire crop picking.

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lack of modern legislation is the iceberg sinking the titanic of the transport sector

@StuartW.

True.

The labour market is just that. A market that cannot be set (despite minimum wage laws) by governments or anyone else when that market is free.

I do think those rates for London though are too low and perhaps they would be a higher if the market was more healthy.

For example, with Uber and Adduson Lee there is a couple of giants with some medium sized firms in the London area but competition is limited in my opinion.

Doesn't TFL have a crazy tariff scheme in place for PH firms with operating licenses?

Paying very high costs the more cabs you have working in your company?

Prevents any other smaller firms from gaining market share.

With more big firms in London they would have to attract drivers. This would only be done by increasing fares.

There is no way you could even live in average accommodation in London on those rates.

There are other factors at play also.

Cheap capital has not helped the UK on the whole for people who sell their labour to get by in the world.

Mr Rebel, not sure I get your point about the TfL fees. Yes, Uber will be paying over £2m for a five-year op's licence, while an op with 20 cars will pay £4,800.

But a quick calculation (and correct me if I'm wrong) suggests that while a firm with 20 cars will be paying about £50 per car per year, Uber only pays around £10 per car per year. So it's like an economies of scale thing, and of course the TfL fee structure hasn't deterred Uber's expansion from zero to nearly 50,000 cars in around a decade

In any case, that's more about the market for businesses like Uber, Addy Lee and the smaller players, rather than the labour market for drivers. The latter will simply go where the money is, so to that extent the labour market evens out the earnings for individual drivers.

And don't really get your point about fares either - of course, doubling fares is an extreme example, and the effects are normally more subtle, but effects there will be nonetheless.

So double fares and you'll lose customers, and attract more drivers, so to that extent you'll end up back near where you started in terms of driver earnings. Which is kind of demonstrated by your contradictory point that higher fares to increase earnings will attract more drivers...up the fares, and you get more drivers, and to that extent end up back at the starting point as regards individual earnings.

Of course, things aren't quite as straightforward as that in reality, but I always think of things in terms of the labour market, and that to that extent the fare level doesn't matter so much, in the long term at least.

And an important factor in the labour market equation is how that's affected by driver supply, and to that extent how much the market decides drivers should earn.

So, for example, if they give a badge to anyone who can drive, then hardly surprising that drivers won't earn much.

But they might earn more at nights, because it's unsocial hours with anti-social customers, thus an unpopular job and thus the supply of drivers is stifled.

And if the licensing authorities make it more difficult to get a badge (the Knowledge of London, most obviously), then this barrier to entry helps earning capacity (which in turn is why Uber doesn't like the 'red tape' attached to getting badges elsewhere and how that's related to the driver 'shortage', which in turn demonstrates how a barrier to entry depresses driver numbers, and thus increases earnings).

Then there's local labour market conditions - high unemployment and/or low wages will mean more drivers in the trade, and lower earnings.

At the level of the more global labour market, of course the big issue is, er, the movement of labour across borders. As Edders said earlier, an obvious entry level job for migrant labour are the taxi or private hire trades. So the supply of drivers suppresses wages. Pretty obvious, but not an opinion that's particularly popular in mainstream opinion.

But, of course, anyone who knows the trade knows the facts here, and also how to that extent Brexit has been positive for driver's earnings, helped also by the lockdown-inspired exodus of older drivers.

@StuartW

My point on the TFL fees was the operator's licence pricing as you mentioned.

Isn't that regulated by TFL?

Anyway, the pricing system might have changed since I last saw the proposals upon implementation a few years ago so if it is now on an economy of scale then my argument relating to that was incorrect.

But it still does not change the situation much.

Uber's expansion from 0 to 50,000 cars was a consequence of cheap capital as per my prior argument (ie QE and low artificial interest rates).

That rapid expansion would be close to impossible from a regular taxi company hence why only Uber have achieved it.

Like any industry you have a varied range in labour cost across different areas and municipalities based on many dynamics. Generally these costs are balanced out and truly reflect the actual local cost of living in each specific area in a free market.

My point was if Uber was not in London the chances are fare prices would be higher on average. That assumption is based on more leading bigger companies as opposed to just ADD Lee and Uber dominating the London market.

Those two companies (although different business models) know that they can tailor their pricing structure so that drivers will earn closely the same regardless of what company they choose to work for.

With more competition (ie smaller companies with ambition to gain market share from Uber's dominance) other businesses would increase their prices to attract drivers away from Uber and ADD LEE weakening their competition and strengthening their position.

Smaller rival companies increasing their prices would make their service more reliable (higher prices less demand so quicker service from less jobs) making their drivers running costs lower and creating more happier drivers from less stress which would manifest in better personal service to their customers etc.

That type of working environment (higher profit margins and less stress etc) would quickly be recognized by drivers outside the company (due to word of mouth etc) and drivers would migrate to those companies offering better benefits to their drivers.

That potential is not feasible as it currently stands.

Uber to a certain extent has a semi-monopoly. Perhaps slightly too strong a word to use but they have an advantage nevertheless which effects drivers in the market there. The London customers benefit the most because they are in all likelihood getting a cheaper service than what otherwise would be.

And that's why that journalist (and probably many others in the city) struggles to get a cab. If prices were higher they wouldn't struggle to wait.

In any industry if the service is poor (either due to too high prices or unreliable & unprofessional service etc) in a lot of cases it is usually due to a monopoly of some kind. A free market with competition the demand would get satisfied. AT THE RIGHT PRICE. In London in relation to cabs that price is probably higher.

Don't forget all the help they had from Cameron and Osbourne pulling on Johnson's leash and passing the deregulation act

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lack of modern legislation is the iceberg sinking the titanic of the transport sector

Mr Rebel, for what it's worth the TfL fee structure is here:

https://tfl.gov.uk/info-for/taxis-and-p ... his-page-3

Not sure about your point about cheap capital and QE and low interest rates fuelling Uber's expansion, since all firms could potentially access cheap funds like that.

In fact, I think loan capital is generally cheaper than share capital, and Uber has relied on the latter via Wall Street. On the other hand, it all reminds me of the dot com boom, when startups could raise oodles of cheap capital irrespective of the financial fundamentals and future profits etc.

But don't really want to get bogged down on the price of capital and how that's financed expansion etc. But, of course, no one can disagree that Uber's expansion has been fuelled by $billions of Wall Street funding, which has enabled it to quickly penetrate new markets, predatory pricing, blah, blah, blah.

But the reason I think that's not so relevant to the drivers' earnings is because the market for despatch platforms is different to the labour market for drivers.

Yes, if Uber wasn't in London prices might have been historically higher, and higher than they are at the present moment. But to a large extent that would just mean that there would be more drivers in the trade, as is often demonstrated by operators and councils justifying fare increases to the extent that it would help attract more drivers.

And, of course, the PHD market is relatively flexible and elastic, and not like the HCDs and the Knowledge of London, which as a consequence won't adjust so quickly to a high-fare vs low-fare environment, or other market movements or shocks.

On the other hand, the Supreme Court decision on employment status, the VAT issue, and lockdown and Brexit stifling the supply of drivers have all been instrumental in pushing fares upwards. Which has and hasn't helped drivers, because the VAT just goes to the Treasury, Uber is taking a higher commission to pay for the worker status goodies on the one hand, while the shortage of drivers has obviously helped in terms of surge pricing and more work generally.

But, again I think the bottom line is that poor earnings overall are due more to the labour market than fares and whatever platform drivers happen to work for.

And, yes, Uber certainly holds a 'dominant position' in the market in terms of maybe competition law, if not a semi-monopoly, but again I think that's more about consumers and platforms than drivers per se, because the dominance favours Uber as compared to other platforms. Drivers will just go where they'll earn more, and to that extent the labour market will even out any advantage the platforms have with regard to other platforms, while individual drivers are just price-takers in labour market terms.

Correct me if I'm wrong, but I think the phenomenon that you describe in terms of happier, less stressed drivers meaning better service to customers is called 'efficiency wages'?

But as long as the platforms have an open-ended approach to taking on drivers, that can't really happen, because of the labour market keeping wages below efficiency wage level. Maybe if a platform restricted the number of drivers it takes on, say, and to that extent they could raise fares. But the fare-setting has to be seen in terms of competitors, so to that extent the higher fares wouldn't be sustainable.

Edders, yes the Deregulation Act certainly helped Uber (and others) along, but that was set in play by the Law Commission's investigation, which I doubt Uber influenced, at that stage at least, because that was before or at about the same time Uber landed in the UK. Of course, Uber and the Tory party dimension a few years down the line may have smoothed the path to passing the legislation, but it certainly didn't originate simply because of Uber.

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lack of modern legislation is the iceberg sinking the titanic of the transport sector