Transportation

Taxi Unions Slam New Uber Pricing System

May 24, 2017 
By Steven Wishnia

New York, NY – Unions representing New York City taxi drivers denounced Uber’s new “route-based pricing” system, saying it reduces the share of the fare that actually goes to drivers.

The policy, which drivers were required to sign on to by May 22, sets prices for trips based on the route, not the length of the trip in mileage or time. “This is not a rate cut. You’ll earn the same amount, for the same trip,” the company said in an email to drivers May 19.

“We price routes differently based on our understanding of riders’ choices so we can serve more people in more places at fares they can afford,” an Uber spokesperson told LaborPress May 23. “Riders will always know the cost of a trip before requesting a ride, and drivers will earn consistently for the work they perform with full transparency into what a rider pays and what Uber makes on every trip.”
“We price routes differently based on our understanding of riders’ choices so we can serve more people in more places at fares they can afford,” an Uber spokesperson told LaborPress May 23. “Riders will always know the cost of a trip before requesting a ride, and drivers will earn consistently for the work they perform with full transparency into what a rider pays and what Uber makes on every trip.”

However, drivers’ pay will still be based on mileage and time, even if customers pay more. “Uber’s surreptitiously introducing a new pricing system resulting in drivers earning a smaller portion of fares is yet another example of the company exploiting its workforce,” Amalgamated Transit Union President James Hanley said in a statement. “Make no mistake, this so-called ‘route-based pricing’ is just another way for the company to collect more money from riders while their drivers continue to struggle to make ends meet.”

The system grew out of an “upfront pricing” initiative” Uber introduced in April 2016, intended to tell passengers exactly how much a trip will cost before they get in the cab. Any extra cost above the basic fare, however, goes to Uber, and the driver doesn’t see any of it, San Francisco Uber driver Christian Perea wrote on the Rideshare Guy blog last September.

When he paid $19.20 for a trip home from the nearby suburb of Daly City, Perea wrote, the driver’s share was only $12.65—what it would have been if Uber’s 20% commission and a $1.55 booking fee had been deducted from a $17.36 fare. Uber kept the $1.84 difference.

“$1.84 isn’t a ton of money,” Perea wrote, “but it’s not insignificant either, and if you multiply that by the tens of millions of rides that Uber does a day, there are some pretty big stakes here.”

In a related situation, Uber on May 23 agreed to pay drivers in New York City an estimated $900 each for underpaying them for the last 2½ years. Since 2014, the company said, it had been taking its commission, generally 25%, off the full fare, instead of collecting it from the net fare after the 8.875% sales tax and a 2.5% contribution to the “black car fund” for workers’ compensation were deducted.

For example, on an $18 fare, the sales tax and black-car fund contributions would be $2.05. If Uber calculated its commission after those deductions, the driver should get $11.96. But when it took its cut off the full fare, the driver got only $11.45. That’s “small change out of the average fare but totaling millions of dollars over more than two years,” said a spokesperson for the Independent Drivers Guild, a Machinists-affiliated group representing black-car and ride-share drivers, told LaborPress.

“Uber’s theft of drivers’ hard-earned wages is the latest in a long history of underhanded tactics in this industry,” International Association of Machinists District 15 President Jim Conigliaro Jr. said in a statement. “This is exactly why we have been calling for industry-wide pay protections to stop the exploitation of New York’s drivers once and for all.”

“The news of this egregious and suspicious error comes as no surprise to the men and women who work for the company,” added Michael Cordiello, president of Amalgamated Transit Union Local 1181-1061, which has also been organizing drivers in New York City. The revelation, he added, “underscores the need for local governments to force on-demand transit services like Uber to have clear and honest pay practices.”

May 24, 2017

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