Skift Take

Uber in New York is already cheap. This is too cheap to be sustainable. At this rate Uber should hope it can replace drivers with driverless cars before they totally revolt.

Uber drivers plan a strike outside the company’s New York City offices Monday to protest price cuts.

Last week Uber Technologies Inc., the ride-hailing leader, reduced its uberX rates in New York City by 15 percent. A trip from Midtown to LaGuardia Airport is now $37.12, compared with $43.67 before.

The lower fares mean drivers don’t have as much down time between trips, said Matthew Wing, an Uber spokesman. Over the weekend, drivers spent 39 percent less time without a fare and as a result saw a 20 percent increase in hourly earnings compared with two weekends earlier, Wing said.

“We expect this positive trend to continue, but if for any reason the price cuts are not giving drivers more business and better earnings, we will consider changing them as we have in other cities,” Wing said.

More than 1,000 people are expected to show up outside of Uber’s Long Island City, New York, headquarters at noon, according to Pix11 news.

“It took me a lot of time and hassle and nerves and stress to make the same amount of money I did in previous weeks, ” said Farrukh Khamdamov, a driver with Uber for a year who spearheaded an online campaign for the strike.

Khamdamov said it now takes five trips to make $20 whereas before the fare cut he could make that amount in two rides.

Last month, San Francisco-based Uber reduced rates by 10 percent to 45 percent in 100 cities across North America in an effort to increase demand in demandduring the winter slump.

In North America, Uber has come closer to profitability, even with lower fares, in large part by taking a bigger proportion of driver’s wages. The company now pockets as much as 30 percent of a driver’s fares, up from 20 percent two years ago. Over the first three quarters of 2015, Uber lost $1.7 billion on $1.2 billion of revenue.

Uber and Lyft have been criticized for a business model that’s built on contractors, who typically pay their own expenses and aren’t protected by minimum wage and overtime laws. The companies don’t pay for drivers’ unemployment insurance, workers compensation or Social Security. Uber may have to change strategies if drivers are able to win rights as employees or form unions.

This article was written by Selina Wang from Bloomberg and was legally licensed through the NewsCred publisher network.

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Tags: labor, money, uber

Photo Credit: Uber on an iPhone. Skift

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