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UberPool Fare Hikes Hit Low-Income Neighborhoods in Chicago Hardest, Analysis Shows

A Reuters analysis of ride-hail data in Chicago shows that rising fares for shared rides, which were most often booked in low-income neighborhoods, resulted in lower ridership.

by Edward Ongweso Jr
Nov 27 2019, 4:42pm

Scott Olson / Staff

On Tuesday, a Reuters report revealed that Uber fare hikes for shared rides were effectively pricing out low-income, predominantly Black and Hispanic neighborhoods in Chicago, where most pool rides were booked.

A recently passed law required ride-hail companies operating in the city to release fare data. Reuters' analysis of that data revealed that while shared ride fares spiked since January, single ride fares have remained stable. Over this period of increased fares, Reuter's analysis showed, shared ridership fell.

While Chicago's data doesn't distinguish between Uber, Lyft, or Via—the three major ride-hail companies there—Reuters notes that analytics company Second Measure reports that Uber has the lion’s share of the market in the city at 72 percent.

“We want Pool to be available to as many people and in as many cities as possible and to do that it has to be financially sustainable for years to come," an Uber spokesperson said in an emailed statement, adding that Uber has traditionally seen losses on shared rides, and to offer them it needs to "increase match rates and price rides sustainably."

On Tuesday, Chicago expanded its congestion tax on ride-hail companies for their role in worsening traffic—a well-established issue both in the United States and Europe. The tax increases fees on single rides and lowers them on shared rides, while also introducing new surcharges on weekday rides in the downtown area. In the company’s statement, the Uber spokesperson took issue with the tax still levied on shared rides.

"We supported the City’s proposal to reduce fees on shared rides, and we wish that it had removed fees on shared rides altogether. It makes no sense that passengers in a solo taxi ride in the Loop will pay no tax while those taking a shared trip far from downtown will.”

The result of lower ridership for shared rides, presumably in the low-income areas that book them most frequently, is yet another example of how crumbling infrastructure that has made public transportation unreliable or nonexistent leaves vulnerable people exposed to the whims of corporations.

Uber’s business model is fundamentally unprofitable as it relies on investor subsidies to offer rides at anti-competitive prices. To hit Uber CEO Dara Khosrowshahi’s 2021 profitability target, the company doesn’t have much room to navigate: it has to either increase fare prices or cut labor costs. Currently, the company is pursuing both.

The price hikes revealed by Reuters' analysis of Chicago's data demonstrate the pricing side of the equation. On the labor side, Uber has tried to introduce constant wage cuts that have pushed drivers into longer shifts to cover mounting expenses. Nationwide driver strikes on the eve of Uber’s IPO were the first glimpse of pushback, but now Uber is facing global backlash for basing its business model on exploiting drivers.

In some of its largest markets, including France, London, California, New York City and New Jersey, Uber is facing entrenched resistance to its mistreatment of drivers, whether it be for their employment classification, working conditions, wages, or autonomy.

Like many places around the world, Chicago is walking a tightrope when it comes to providing public transit and hosting private-sector transit companies in the same city.

Uber’s messaging assures cities that its relationship is mutually beneficial, even as it directly competes for public transit for riders and revenue in some regions. Whether a public transit system can co-exist with a private one is still an open question, especially when the private element—Uber especially—has a business model that requires an eventual monopoly to succeed.

Tagged:
Chicago
taxi
uberpool
ride hail
driver protests
congestion tax