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Uber and Lyft could prepare for a two IPOs in prime time, but that does not mean it's a good road for carpool unicorns. Careful scrutiny of the amount they pay to their drivers threatens to mask public registration amid the reaction of drivers seeking to unionize.
Uber cuts premiums, drivers feel pain
A minimum wage is now in place in New York ($ 17 after the expenses of Uber and Lyft drivers) and it seems that this momentum is spreading to the United States now. The main fears are that both companies are reducing drivers' driving costs in an attempt to improve their financial results for the media blitz before their IPOs.
We hear different points of view on the behavior of Uber in particular. There are stories like this, showing a driver who uses the platform to make money for bank managers, but more and more about cutting wages. It seems that recent changes to the driver premium structure make life difficult.
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Lyft and Uber Cars unionize in Los Angeles
In Los Angles, unionization seems inevitable, and the Guardian quotes Nicole Moore, who flew for both Uber and Lyft, confirming the carpool driver's fears for carpooling.
"Uber is preparing for its IPO, they really want to look good for their investors and create situations in which people risk being put on the street because they can not pay their rent … That's why we organize our activities. "
Pay is a delicate tightrope for the two carpool giants. LA is the jewel of the company given the lack of public transport and the high number of people with liver disease. They can not afford to lose their support there, but at the same time, businesses are increasingly under pressure from social justice initiatives and they can not go astray at a time when Public relations are essential.
IPO ratings mask huge debt
Some drivers worry that Uber can not afford to pay more because it's a $ 1 billion company. Well, their value is that the markets are high and people like the concept, not because they make money. They are a big loser of money, accumulating a lot of debt. Lyft is not different. Higher driving costs seem inevitable. They are already struggling in the red and a salary increase would only intensify this problem.
Uber and Lyft can not afford to pay more for drivers despite billions of dollars worth of valuations. | Source: REUTERS / Lucy Nicholson
Rising costs could hurt carpool advantage
Taxi drivers have strong unions and a well-established business sector. If you choose to drive for a disruptive business, there will be growing pains. When your car exists mainly to move other people, you are only a taxi using an app. Like taxi drivers, the costs are high and the profit margin is slim, which means you are not earning money. If you started driving Uber some time ago, it makes sense that you would lose your salary because more drivers are on the road. Lyft getting into the fray only exaggerates this problem. It is clear that the demand for pbadenger cars is also a key parameter, and this may diminish as costs increase.
Carpool drivers can unionize as they please, but if this resulted in costs for bikers reaching the price of a traditional taxi, they could give the opportunity to outdated services to make a return with an investment minimal in advanced technology. This would further increase competition on the road and further damage the profitability of Uber and Lyft.
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