Drivers for ride-hailing companies Uber and Lyft are planning a nationwide strike in various cities across the US. The drivers will be protesting over poor working conditions and low payment rates. The strike comes as Uber gets ready for its Initial Public Offering. Drivers in New York will start their strike between 7 and 9 A.M. They will be joining other drivers in Los Angeles, Chicago, and San Francisco. The announcement was made by the New York Taxi Workers Alliance. There was also another announcement by the Rideshare Drivers United, a body that represents Uber and Lyft drivers, noting that drivers will log out from their apps all day on Wednesday in some US cities including Los Angeles. Uber just recently cut the per mile rate in the city from $0.8 to $0.6.
Many drivers are demanding increased job security, livable incomes, and capping the commissions charged by Uber. They want a guarantee that at least 80% to 85% of the income goes to the drivers. Some analysts, however, warn that even though the two ride-hailing services may be ready to negotiate working conditions, they will not entertain any cuts on their commissions. In fact, when Uber filed its IPO papers, there was concern among investors that its fees were very low. The company charges 22% on all fares.
The unions representing drivers are, however, saying that the reason why they are pushing for these new demands is actually based on the paperwork filed by Uber in its IPO. They believe that the working conditions right now are unfair and it will get worse when the ride-hailing company goes public. The main area of contention is based on Uber’s future plans to go driverless. According to drivers’ unions, there’s increasing pressure on the ride-hailing service from Wall Street to boot the drivers. Many investors feel that the company is paying drivers too much money and the sooner it goes towards driverless cars the better.
However, the unions worry that such a move will put many drivers in tough conditions while making Wall Street investors richer. Uber has made it clear that it considers its drivers independent contractors and not employees. This removes any requirements of minimum wage, healthcare, overtime, and other benefits from all drivers. In its IPO filing, the company describes the employment status of its drivers as the biggest threat to its business. If indeed the drivers are somehow categorized as employees of the company, this would significantly limit Uber and its ability to make money.
Wall Street investors don’t want this. In order for them to make any money back from their investment, they need to limit driver involvement and it’s very likely that this will be happening sooner rather than later. Uber is hoping to offer an initial price range of between $44 and $50 per share on its IPO. This sets the company’s value as high as $91 billion. Both Uber and Lyft also have programs that offer drivers cash bonuses to purchase their shares. The strike is not expected to do much to change Uber’s and Lyft’s business model, though.