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Uber and Lyft drivers plan 24-hour strike to protest pay

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MoneyWatch headlines: Ghosn bail, Uber drivers, big Tesla loss 01:09
  • Uber and Lyft drivers in eight U.S. cities plan to stop taking rides for the ridesharing services on May 8 as part of a protest to demand better pay and working conditions.
  • The planned work stoppage comes as Uber is preparing for an initial public offering that could value the company at upwards of $100 billion.
  • Drivers for the companies want a minimum wage of $28 an hour, which they say amounts to $17 after gas, tolls and other expenses.

Although Uber's planned initial public offering next month is likely to turn some current and former employees of the ridesharing service into instant millionaires and billionaires, the biggest IPO in years may do much less for one party -- the company's drivers. That's why thousands of Uber drivers in eight U.S. cities plan to turn off their app for 24 hours on May 8 to protest what they regard as the company's stingy wages.

In Los Angeles, some 4,200 members of Rideshare Drivers United will stop taking rides for both Uber and Lyft platforms and hold a rally at Los Angeles International Airport, according to organizers with the labor group. Uber's chief rival, Lyft made its high-profile debut on Wall Street last month.   

"We provide an essential service, but Uber and Lyft investors are the only ones reaping the benefits," Karim Bayumi, a Lyft driver who usually works at the airport, said in a statement.

Timed to come a day after Lyft reports earnings and as investors await Uber's public debut, the protests are also planned in seven other cities: Boston, Chicago, Minneapolis, Philadelphia, San Diego, San Francisco and Washington, D.C. Uber's IPO is expected to value the company at upwards of $100 billion. 

Wage cut in L.A.

Uber last month cut driver compensation in Los Angeles from 80 cents a mile to 60 cents. Lyft also eliminated a surchage that had allowed drivers to earn more than their base rate of 79.5 cents a mile. The drivers want Uber to reverse the 25 percent cut, as well for the company and Lyft to guarantee drivers a minimum rate of $28 an hour, which they say amounts to $17 after gas, tolls and other expenses.

The demand would echo a wage rule now in effect in New York City that guarantees drivers a minimum gross wage of $27.86 an hour, so that pay after expenses would be at least $17.22. Uber noted in an email to CBS MoneyWatch that it did not contest the rule. Lyft, which filed suit to block the ruling, did not return a request for comment.

"If they are able to do that in New York, they should be able to do it in Los Angeles and the rest of the country," Ridshare Drivers United organizer Brian Dolber told CBS MoneyWatch. "I did drive part-time for a short period when I was an adjunct professor, so I know what it's like to rely on the gig economy to try to make ends meet," added Dolber, also an assistant professor of communications at California State University San Marcos. Uber and Lyft take as much as 70 percent of the payment for each ride, he said.

Unlivable wage?

Uber is taking some steps to sweeten drivers' pay. The company said it plans over the next few days to hand out a total of $300 million in a one-time bonus to 1.1 million qualifying drivers around the world. In the U.S., the payouts to some drivers will range from $100 to $10,000, depending on the number of trips they've completed. The top reward, which Uber is billing as a "driver appreciation" payment, will go to people that have completed 20,000 trips as of April 7.

"At least Uber is recognizing that drivers deserve more, but what Uber and Lyft need to do is pay a livable wage," Dolber said. "These are really peanuts they are handing out in comparison to what drivers need to make through the year."

An 2018 analysis by the Massachusetts Institute of Technology found that Uber and Lyft drivers made a median wage of as little as $8.55 an hour before taxes -- that is above the federal minimum wage of $7.25 an hour but below the minimum in California and many other states. 

"We need a minimum per hour rate to compensate for the fact that we sometimes miss out on bonuses," said Sinakhone Keodara, a Lyft driver in Los Angeles. 

Rise in fatal crashes

Some Uber and Lyft drivers report working more than 70 or 80 hours a week to earn enough to get by, a potential safety issue to them as well as the public. Meanwhile, ridesharing has led to a 3 percent increase in crash-related fatalities in the U.S. cities where the service has been introduced, accoording to a recent study by researchers from the University of Chicago, Rice University and the National Bureau of Economic Research.

One of those researchers, John Barrios, an accounting professor at the University of Chicago's Booth School of Business, said it's not clear that working as a driver for either company full-time is sustainable, given Lyft and Uber are competing on price. 

"As long as they're classified as independent contractors, they are limited to what they can do," Barrios said of the drivers. "The strike and protesting is more geared toward a government intervention," he said.

Both Uber and Lyft say in regulatory filings that their businesses would be adversely affected if the 3.9 million drivers on its platform were classified as employees instead of independent contractors. 

The tradeoff both face is "the cost of labor versus the convenience that they need to have a stable supply of drivers," Barrios said. If Uber and Lyft were to bring on drivers as employees with set hourly rates and benefits, their business model no longer makes sense, he added.

Uber's platform connects 3.9 million drivers in over 700 cities around the world, according to its regulatory filing. Despite its vast scale, the company described itself as just getting started, stating: "Only 2 percent of the population in the 63 countries where we operate used our offerings in the quarter ended December 31, 2018."

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