The hottest job around? It may be driving for Uber. The San Francisco ride-hailing and food delivery service claimed late on Wednesday that it had begun to “fire on all cylinders” as more economies approach normality. Quarterly gross bookings, driven by Uber Eats, hit an all-time high of almost $20bn. Yet the company seemingly founded on a model of labour arbitrage now faces an ascendant worker class.
Uber admits that it has a shortage of drivers, in spite of ride-share demand not yet fully recovering. Workers in markets like New York, Philadelphia and Austin are in effect seeing wages approach $40 an hour. At the same time, Joe Biden’s administration is actively adopting an assertive pro-worker orientation.
Uber needs drivers. Bookings in Uber’s food delivery business nearly tripled, yet it remains a money loser. The segment’s operating loss was a juicy $200m in the last quarter. Ride-sharing remains profitable on an operating basis, although Uber says ridership levels are still only about two-thirds of where they were two years ago. If levels were higher they would simply highlight the supply side issue. Market forces are the biggest boon for Uber drivers. The company says it is offering incentives to bring drivers out of their homes and back into their cars. It has admitted that its commission or “take” rate will suffer in the immediate term.
Regulatory heat is not fading away either. The Biden administration this week withdrew a previous Labor Department rule that would made it easier to classify Uber workers as contractors. The US labour secretary had also said that gig workers may indeed be employees. Uber has already taken a $600m revenue accrual related to a UK decision that will allow workers to claim extra pay and benefits.
Uber shares have more than doubled from their pandemic lows. But they are down a fifth from their recent peaks. Even as the market opportunity grows, workers are the ones winning over shareholders for now.
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