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- Uber has much to celebrate after posting its first annual profit last week.
- However, Uber drivers are frustrated that their pay has declined.
- On the same day Uber announced a $7 billion share buyback, thousands of drivers went on strike over pay.
Dara Khosrowshahi had a lot to celebrate this Valentine’s Day.
The Uber CEO was able to do something on February 14 he’d never managed to do in previous years: head into an investor update with a $1.1 billion annual operating profit to showcase.
Such was the confidence following its first annual profit that Uber went into the update by announcing a $7 billion share buyback plan to return capital to investors too — another first for the ride-hailing giant.
The moment marked a clear shift in momentum for Uber, which had posted nothing but big losses since being founded in 2009 by sticking to an expensive, Silicon Valley-style growth-at-all-costs strategy.
“Given those enormous losses, many people questioned whether Uber could ever make money,” Khosrowshahi said on the investor call on Wednesday. “Fast forward to today and that question has been asked and it's been answered: Uber's stronger than ever.”
However, not everyone is celebrating.
Drivers are feeling squeezed
Some Uber drivers are feeling squeezed on pay. That's fueling frustrations among arguably the most important people in the business.
Frustrations came to a head on Wednesday as thousands of drivers across the US went on strike over concerns that they’re making less money now on ride-sharing platforms like Uber than they were previously.
Ahead of the protests, Justice for App Workers, a coalition representing some 130,000 rideshare drivers and delivery workers, prepared plans to refuse rides from airports in 10 cities, including Chicago, Philadelphia, and Pittsburgh over pay and conditions.
In a post on X, the coalition said: “Workers across the country are going on strike to demand higher pay, better safety protections, and more.”
In a statement, Uber dismissed the scale of the protests, claiming the company had "seen no impact" on operations. "In fact, in most markets, there are more drivers on the road today than there were during the same period last week," an Uber spokesperson said.
That doesn't mean drivers aren't feeling angry about a drop in pay that they say they've experienced, with data backing them up. Gridwise Analytics, a data firm analyzing the gig economy, found average monthly gross earnings for Uber drivers fell 17% last year.
Drivers point to a few different reasons for the drop in earnings they've experienced.
For one, drivers have seen various perks offered by Uber slowly disappear.
One such perk was a “boost” of extra dollars drivers could earn for each ride they would complete during a certain time of the day, typically during busier periods.
One East Coast driver, told Business Insider that where they would previously earn an extra $4 from boosts for each ride they completed in a certain hour, they are now effectively limited to $4 for a total hour.
Another perk that drivers say they are seeing less of are “ride challenges” such as Quests, which unlock lower service fees for drivers who complete a certain number of trips.
Drivers could elect to complete a quest, for instance, of 30, 40, or 50 trips, with each quest offering differing bonuses. In 2022, the East Coast driver noted that they could earn $180 from completing a 30-trip quest. That same quest can now offer as little as $15.
“Each week, I was able to clear $600-$800,” the driver said. “Now that Uber has taken away any and all of my bonuses or boosts, I can only clear $300 to $400. This is of course while I'm working the same amount of hours.”
An upfront fares policy rolled out in 2022 has been another point of criticism for drivers, who often complain that the fares they're presented with before deciding whether to accept a trip don't match what they get at the end of it.
Uber takes different factors into account to determine the fare through this policy, such as time and distance, as well as ride demand at pick-up and drop-off points.
A more contentious issue among drivers has focused on whether or not Uber is taking a bigger slice of their fares.
Uber contends that its own take rate from fares in the US after deducting commercial insurance, is below 20%. In a Medium blog post published in December, the company contended that its portion of the fare goes towards “costs to build, operate, and improve” its apps and platform.
The company said that while its prices had gone up in recent years, the portion going to Uber "remained relatively flat" and that the "vast majority of total fares have continued to go where they belong: into drivers' pockets."
Uber acknowledged that in the US, its take is “higher than the global average.” However, it puts that down to “higher third-party fees” in the country.
In a statement, an Uber representative told BI that “the vast majority of drivers are satisfied,” and that “as of last quarter, drivers in the US were making about $33 per utilized hour."
Yet it seems that not all drivers are satisfied — and Uber will be hoping that number doesn't keep rising. In its new era of profitability, it will likely face even more pressure from its drivers.