According to a research paper sponsored by Uber, it makes no sense for the company to raise fares because the free market would soon return to an equilibrium and the drivers would earn the same as they did before.
Uber Technologies researchers even provided a scenario in which Uber doubles the rates from $ 1 dollar per mile to $2 dollars. In the short run, drivers would see their income rise so they’d be enticed to work longer hours (the paper claims). But because the service is more expensive, the market would have fewer riders.
And because there is an oversupply (more drivers or drivers that are working more hours) and a lower demand, drivers would be paid more per mile but they would work less because there is less work to do. In about two months, researchers say, their hourly earnings would return to the initial levels.
We find that when Uber raises the base fare in a city, the driver hourly earnings rate rises immediately, but then begins to decline shortly thereafter,
the study states.
Flaws in the Study
However, the analysis, just like the other studies funded by Uber, tends to present the ride-hailing company as part of a perfect free market, in which the supply and demand are all that matters. Uber researchers fail to mention that the company influences the market through higher payments for drivers during busy periods and higher rates for certain customers.
The Independent Drivers Guild, which advocates for the rights of Uber drivers in New York, criticized the study. The guild’s head Ryan Price slammed the conclusion that Uber has no way of boosting wages as “ludicrous”.
Ryan underlined that the firm is getting up to double the fees it is giving to its drivers like 220% fees. Plus, if there is money for driverless technologies and flying cars, there should be funds for a raise for drivers too.
Image Source: Pixabay