In a blog post today, Uber said it will be cutting its fares this winter in 48 of its most recently added cities in order to lure more users to the service.
In the same post, the company said it will guarantee driver wages in every city where it is cutting its prices. This assurance is important, since the company has faced fierce criticism from both drivers and the media over its wage policy. Some drivers claim that lower prices have cut their take-home pay substantially.
But Uber claims that decreased fares translate into more trips and, ultimately, higher wages. In the image above, Uber seems to be arguing that, in Chicago, although fares have dropped 23 percent, average hourly bookings have gone up 12 percent.
Still, the average effect means that not everyone benefits all the time from wage changes. Indeed, I frequently hear complaints from Uber drivers in San Francisco that their wages have dramatically declined over the last year.
Uber seems to be taking this to heart.
In the past, Uber has implemented price cuts without a guarantee for drivers. However, this time around, we’re trying a new approach. We’re so confident in the earnings gains drivers will see that we’re making earnings guarantees in every city where we’re cutting prices. We feel that it is important for drivers to have this kind of certainty and comfort going into a price cut.
The sharing economy was supposed to be a buffer against the long recession. It remains to be seen whether ridesharing services can really help under-employed workers make a decent wage.
Update: Uber has given a few more details. According to an email from a spokesperson, in order to get the earnings guarantee, drivers:
“Must accept at least 90% of trips
Must average at least 1 trip/hour
Must be online for 50 minutes of every hour worked”
More details to come…
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