For ride-hail drivers, the future is paved with low wages and more gig work

16 May For ride-hail drivers, the future is paved with low wages and more gig work

Harry Campbell, the man behind the Rideshare Guy blog and podcast, is perhaps not only the most famous Uber driver, but also one of the longest serving. For the past five years, he has driven for various ride-hailing app companies, from Lyft to Uber. Over the course of a single year, a company like Uber only retains 3% of drivers who sign up–so Campbell’s five years is practically an eon.

Fast Company sat down with Campbell to discuss what he has learned during his ride-hailing tenure, where ride hailing is headed, and what’s in his new book, The Rideshare Guide.

Fast Company: Having been on the platform five years, I’m curious what you think five years later. How do you feel about it in general?

Harry Campbell: Five years ago there was a lot of initial excitement from really every different angle. From customers, from drivers, from the company. And of course, as you can imagine, five years later a lot of the excitement has waned.

But the thing that I’ve been surprised by is Uber: their metrics, their valuation, and the number of rides its given has gone up and up and up.

Over the years, obviously the rates have gone down and drivers are making less and less. Expenses, if anything, go up and drivers have to have more utilization to make up for it, because expenses are sort of becoming more and more of what drivers are earning.

FC: In 2017, after new CEO Dara Khosrowshahi joined, the company promised 180 days of change for drivers. For your perspective, what was the result of that?

HC: So the 180 days of change, I definitely would give Uber credit. I never thought they would add a tipping option and the 24-7 support line. So they definitely made some significant changes.

I think you could probably criticize that and say they took two, three, four  years. In 2017, it wasn’t a revelation that drivers wanted a tip option. That was probably the number one feature request you heard from drivers for two, three, four years. I think with 180 days of change they started instituting a lot of those features you would have expected at the start. And honestly it seems the 180 days of change, they probably did more during that campaign than they did in the history of the company. So, it sort of shows that if it’s a priority they can definitely improve the driver experience.

Still, the complaint is over earnings, and over rates and commissions Uber is taking through upfront pricing and other new initiatives that Uber is rolling out.

It seems like Uber is doing everything they can to not raise rates. I think it’s a little hypocritical, because in the past year they’ve raised the booking fee a couple times, which is the fee that goes 100% to Uber.

FC: What about bonuses? Those financial incentives Uber sends out to attract drivers?  Do they help drivers earn more?

HC: Uber sends out these weekly bonus offers and if you want to make the most money you have to drive the times and places that they say, so do you really have freedom and flexibility? Uber just lowers the rates to the point where you have to drive on bonuses, otherwise it doesn’t make financial sense.

One of our veteran drivers has done 15,000 trips in San Francisco and has a really high rating. He noticed a brand new driver was getting better weekly bonus offers than he was. And he said, “Hey, what’s up with that? I’ve been super loyal to Uber and you’re a brand new driver and you’re getting a better offer than I am!”

Uber obviously knows exactly what’s going [on] and what they’re doing–and drivers and now even passengers are left to figure it out. It could be a simple A/B test where Uber is seeing if they incentivize someone who didn’t drive very much last week, will [that make that person] drive more this week.

But when drivers start comparing information and sharing notes, it’s easy to assume the worst.

FC: What do you think about the future of ride hailing from a driver perspective? You’ve seen the numbers. There’s a crazy attrition rate–the earnings keep going down.

HC: In general, it’s an enticing job for a lot of people, but it also doesn’t retain a lot of people. I think Uber, in one of their surveys that they released… said that 68% of drivers quit after just six months. And their definition of an active driver is pretty generous–it’s like if someone has given a trip in the past month or two.

If you look at the [Bureau of Labor Statistics] numbers, there’s like [80] million hourly workers and [about] 2 million are at minimum wage and below, so there’s really a lot of people that are in need of hourly and service type work.

We are getting emails about [Lyft rental and Uber Xchange] programs every week and the number one complaint is that there are not enough cars available. And these are all drivers with very poor credit, no financing, that sort of financial profile, and they don’t own cars, and they’re looking into Uber and Lyft, because here is this job that will hire them and provide them with a car.

You can sort of see [ridesharing is] always going to attract workers, but I do think there are some pretty serious problems around the financial viability of the model in general.

FC: Uber had to shut down Xchange because it was losing the company money–also it was developing an increasingly bad reputation for preying on financially vulnerable drivers.     

HC: They said they lost $9,000 per car. Uber [was] so focused getting so many people to sign up for Uber to drive that anyone who needed a car was getting put into that Exchange leasing. For someone who was going to go out and do 50-60 hours a week it was a pretty good program, because it was unlimited mileage and you could return it within two weeks’ notice.

But for those drivers who didn’t realize they were literally going to have to be putting in 30-40 hours a week–and you can’t take weeks off with Exchange because you have a $200 a week payment–then it does look pretty predatory for those drivers.

FC: It’s also pretty contradictory to say that the platform is a flexible work option and then put drivers in a position where they have to work 50-60 hours per week.

HC: Right. Obviously Uber, if you’ve seen any of their commercials on TV lately, is touting that it’s the ultimate side hustle and that it’s flexible.

And that’s the thing: you can use it in that sort of side hustle type way, but I think what ends up happening is that you have a lot of drivers who don’t have a lot of other options and they are working full time. And if you’re working 50-60 hours per week, you can imagine that you don’t get to take advantage of the flexibility. You don’t get to work only the most profitable hours and so it’s basically a full time job–but without the benefits, the support system, without the stability.

FC: Would you recommend driving for Uber given everything that you know now?

HC: I think that basically, it’s good for everyone to try it, because at the end of the day you do have a couple million drivers out there doing it. And even though a lot of people do end up stopping, there are a lot of rewarding experiences.

And even thought it may be more of a short term thing, I still think that it can be valuable and it’s still something a lot of people [do because] they may not have other options. They may not be able to get another job and even if they only end up working for Uber for six or 12 months, I think it’s better to have a work opportunity like Uber than to have nothing at all.

When you look at full-time work and making this into a career–I understand if people are in that situation, but it’s definitely not something I would not recommend. Because the work is clearly not designed for that. So full-time work is not something I recommend, but part-time there are a lot of benefits you can take advantage of.

FC: Saying that driving for Uber is better than nothing is setting a pretty low bar.

HC: If I didn’t have the blog going, I wouldn’t be driving for Uber any more, because I have other things that I can do to make money and other interests.

I have talked to thousands of drivers and a lot of older drivers who frankly can’t get hired in the workforce. One of the things that I noticed from talking to so many of these older drivers: they may not depend on Uber for income, but it’s difficult for them to find part-time work, to get back into the workforce. Or they need work on top of their social security or payments they have coming in from their pension.

One of the good things about Uber is that they have such a low bar. Everyone and anyone can work for them. They don’t discriminate based on gender or sex or anything like that. The problem is once there’s millions of drivers doing it, it’s not such a good thing because there’s a lot of competition.

FC: What about Uber Eats?

HC: Out of all the delivery business, I think UberEats is the one, if any of them are going to make it.

FC: I see a lot of drivers in forums recommending against driving for Uber Eats. Why is that?

HC: You go to the restaurant and the food’s not ready. You’re sitting there, you’re waiting, and then you go out and deliver some food item–and then your next passenger gets into the car and he’s like, “Hey, it smells like a McDonald’s burger in this car,” because everyone orders fast food on Uber Eats. Then you get rated lower because of it.

So I think they definitely have some logistics issues to work out in the future. But I think food delivery in general is a tough business and out of all of them Uber Eats is doing the best.

FC: Have you seen any efforts to unionize drivers, and what has that looked like?

HC: So in New York there’s IDG, which is Independent Drivers Guild. They’ve probably had the most success.

I think the challenge that you see in a lot of other cities–and there are definitely organizing efforts that have started online–is accountability and how unreliable people are. Herding a bunch of drivers into a Facebook group is extremely difficult and getting them to protest or to turn off their app or do something that would affect Uber’s bottom line and make them listen is challenging.

A lot of [drivers] want the same things. They want higher pay, they want to be treated better, they want to feel more like independent contractors, but organizing them over those issues is tough because part-time drivers aren’t as invested as someone who depends on this to put food on their table.

FC: What does automation and the eventual advent of driverless cars mean for the Rideshare Guy business? Do you feel like your business has an expiration date?

HC:  Uber and Lyft–both of their typical response to that question is that in the future self-driving cars are going to make taking an Uber even cheaper and there will be more demand and basically there’s always going to be a need for human drivers because of that. So I don’t think there’s going to be any cliff where one day no one’s going to need Uber and Lyft drivers.

At the same time, I think ride share is starting to intersect with a lot of these different aspects of mobility and that’s personally what I’m interested in. A good example of that is the bike share and scooter craze that’s exploding. Bird, for example, is using a network of on-demand workers to charge these [rentable] scooters every single night. So I went out, signed up to be a charger, tested it out, and started charging scooters.

It’s very similar to driving for Uber and Lyft, just less interaction with people. When these companies first launch, it’s pretty lucrative. If you have a large truck or van, you can easily wrack up 10 or 20 [scooters] and make $100 a night in just an hour or two of work.  And I suspect, similarly to Uber and Lyft, the pay will come down over time.

My blog may not be as much Uber- and Lyft-driving content in the future, but I think that somewhere in that mobility space there’s definitely going to be a place for these drivers and for me. I’ve worked for Uber and Lyft, I’ve delivered food, done the Bird charging, and really at the end of that day these are all sorts of logistics businesses–whether you’re moving burritos or scooters around. Every job is a little different, but the gist is the same and the challenges are pretty similar too.    

FC: Tell me about the new book. How does it differ from the blog?

HC: It’s more of a guide for drivers. One thing that we’ve heard [about driving for Uber or Lyft] is, it’s not rocket science, but it’s harder than it looks. You have a lot of people who get into this looking to make a couple hundred bucks a week and they start doing it and they’re like “Oh shit, this is a little bit tougher than it looks.”  It’s kind of the ultimate combination of customer service, dealing with drunk people, running your business, and also safe driving in general.

And you know, I think those factors all combine to make it a little challenging for people who maybe have never worked in a customer service job or aren’t as familiar with technology. What most drivers don’t realize is that they’re actually running a business and they have to track all their miles, they have to track all their expenses. Well, they don’t have to but they’re going to want to. They should if they don’t want a huge ginormous tax bill at the end of the year.

Source: Fast Company