Updated: Oct 16
Uber Technologies inc. (UBER) pioneered the rideshare industry since their inception in 2009. The taxi cab business manages to survive in New York City, and other metropolitan areas where the height of the buildings affects the GPS location system that Uber uses to find the closest driver and fastest route. Outside of niche areas in major cities, the buzz is all about Uber and Lyft.
But part of the reason that everyone loves them, is because their pricing is extremely competitive with taxi cabs and even public transit in some spots. If they increased their price even by just $5 a ride, that could persuade some users to look for other options.
Uber drivers are asking for higher pay and more considerable benefits. Originally Uber and Lyft declared their drivers as independent contractors, which means their only required to pay wages, not benefits such as healthcare, 401k, dental, etc.. The drivers are now asking for employee status, which requires the companies to spend much more per driver for their labor.
These companies weren't designed to operate with the drivers acting as employees. Uber and Lyft argue that the drivers are labelled as employees because they have far more freedom over their hours of operation; they can maintain any schedule they desire. However a lot of these drivers drive more than 40 hours per week. The drivers argue that the amount of labor they put into the company should yield benefits, and thus desire the employee status.
If Uber grants employee status to all drivers, it won't be able to offer competitive prices and its sales would plummet. A compromise between Uber and regulators seems to be on the horizon. My best bet is that it'll offer employee status benefits to drivers that fit a certain criteria, and they're probably going to make it incredibly strict so it has to pay the least amount of people their benefits. But Uber, truthfully, only has to wait for fully autonomous vehicles.
Estimates suggest we could see wide-spread usage of autonomous driving vehicles by as early as 2030. Uber's business model would shift to operating fleets of autonomous driving vehicles and their charging stations. The faster the technology innovates, the faster Uber can become an autonomous chauffer service, which would allow them to scale and grow internationally at a much faster rate, as well as finally become profitable.
As it sits today, if Uber can't afford to pay its drivers fair wages, then it shouldn't be allowed to operate as a company. If the business model fails, then the company fails; Uber shouldn't be given special treatment. Though I would expect an expedient recovery from them and others alike once the technology catches up with their business plan. Once they operate their own vehicles and set their own prices, I wouldn't expect them to treat us with much mercy.