Uber Spends $250M to Lure Drivers While Gutting Their Rights

Uber is spending hundreds of millions to recruit drivers as vaccinations increase while working to keep them misclassified as contractors.
April 9, 2021, 1:00pm
Uber Spends $250M to Lure Drivers While Gutting Their Rights
Drew Angerer / Staff
On the Clock is Motherboard's reporting on the organized labor movement, gig work, automation, and the future of work.

On Wednesday, Uber announced it was launching a $250 million "driver stimulus" to help attract drivers onto the platform as it anticipates demand to rise with vaccinations. 

The ride-hail company was hit particularly hard by the pandemic, reporting last April that business had plummeted by 80 percent. Rides were largely being offered by a small group of drivers forced to risk infection or starve, with paid sick leave being hidden behind criteria that worked like perpetually moving goalposts.

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The new program will give drivers money for making a certain number of trips, but incentives will change based on location. One example Uber shared with reporters was Austin, where drivers would have to do 115 trips to receive $1100. This is an old strategy for Uber: incentive-based pay and guarantees to gin up the supply of drivers, keep waiting times low, and to do all this without permanently increasing labor costs. It'll prove to be important for the ride-hail company as more of the country gets vaccinated and demand begins to pick back up―already riders are complaining about longer wait times in major cities for Uber like Boston and Las Vegas.

"In 2020, many drivers stopped driving because they couldn’t count on getting enough trips to make it worth their time,” Uber wrote in a blog post announcing the program. “In 2021, there are more riders requesting trips than there are drivers available to give them—making it a great time to be a driver."

Uber did not respond to Motherboard’s request for comment. 

Uber is no stranger to huge employee-retention funds, primarily because it struggles to keep its workforce. For years, Uber has needed to spend hundreds of millions on recruiting drivers because it burns through over 90 percent of its workforce each year. At the same time, however, the company has viewed incentives as “excess” and unsuccessfully tried to reduce the cost to appear closer to profitability. In the third quarter of 2019, Uber spent $259 million on "excess" driver incentives only to see that amount grow to $316 million one year later. For the first nine months of 2020, the company spent over $900 million on this line item. Uber did not report fully what it spent on driver incentives the following quarter. 

At the same time that Uber is trying to lure drivers back and get them to work more and for longer,  the company is considering major changes and ramping up its war on labor law and workers rights in the United States and elsewhere. In California, Uber may roll back features it introduced to convince the courts that drivers were independent contractors. It has also tested the waters by introducing self-written regulations in Canada, Massachusetts, Illinois, and New York that would preserve its exploitative business model. 

A short-term injection of cash may convince some drivers to start working on the platform again, but the job they will be returning to is one that has no chance of getting any better as long as Uber gets its way.