HIGHLIGHTS
- Consumer fares are unaffected by the driver earnings algorithm. Uber currently operates a comparable scheme in California.
- Some Uber drivers expressed dissatisfaction with the new algorithm, claiming it was arbitrary.
In an effort to recruit more drivers, Uber Technologies is testing a new driver earnings algorithm in 24 US locations that allows drivers to check pay and destinations before taking a trip and increases the incentives for drivers to take short rides.
The modifications, which are presently in test programmes, are the most extensive adjustments to Uber's driver compensation algorithm in years, and they come at a time when the business is still attempting to re-engage drivers who left at the onset of the epidemic. Consumers' fares are not affected.
Drivers have long wanted the right to check the cost and location before taking a trip, but Uber has refused, claiming that it would allow drivers to cherry-pick trips or discriminate against clients in low-income areas.
Uber already has a similar programme in California, which was developed in the aftermath of a 2020 state dispute over gig worker rights to demonstrate that its drivers are independent contractors.
However, the business stated that its most recent fare experiment in the United States has nothing to do with gig worker legislation. The test has been implemented in places across Texas, Florida, and the Midwest where changes for gig workers are not on the agenda.
"Gig work is quite competitive, not only with Lyft but also with other platforms, and we believe this capability significantly improves our platform's competitiveness vs others," said Dennis Cinelli, Uber's head of mobility in the United States and Canada.
Cinelli stated that the salary adjustments will have no effect on consumer costs at this time, adding that the modifications "aren't financial elements."
Uber declined to comment on the financial implications of the changes, which might result in increased charges for short journeys.
Cinelli stated that the firm has not witnessed any prejudice by drivers in California since the policy's implementation in 2020. "We wouldn't have rolled it out at this time otherwise," he added, adding that Uber has the option to deactivate drivers who refused rides based on race or low-income regions on several occasions.
Cinelli explained that providing drivers with upfront compensation data meant the firm had to cut revenues for longer journeys to prevent drivers from skipping short rides. According to Uber, data from some locations with upfront pay reveal a 22 percent average boost in driver earnings for trips where the distance to the pickup site is greater than the distance of the journey itself.
Some online organisations received a mixed bag of answers from drivers. Some employees complained that the new formula looked random and that it no longer permitted them to compute compensation on a per-mile (per-kilometer) basis.
"High gas prices have already devastated my profits, and now Uber is taking even more money away from me on long rides," said Kevin Hernandez, a Houston driver.
Other drivers in online communities stated the upfront fee information allowed them to choose only higher-paying rides, with numerous drivers uploading screenshots of improved profits after the algorithm change was implemented.
Expansion will be determined by drivers. "If we don't see it attracting and retaining drivers, we won't roll it out any further," Cinelli added.
