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Uber, Lyft driver shortage causing higher fares

Customers experiencing longer waits, higher fares as Uber and Lyft deal with driver shortages

Many drivers changed careers after COVID-19 hit. Now, customers are having a hard time getting timely and cost-effective rides.

CLEVELAND — It’s likely your favorite rideshare company is another casualty in the labor shortage caused by COVID-19. 

If you have recently opened an app like Uber or Lyft, you may already be seeing higher fares and longer wait times as fewer drivers get behind the wheel.

“I think this return to work has been jarring for the Ubers and Lyfts of the world,” Michael Goldberg, business and entrepreneur professor at Case Western Reserve University. “You had a lot of folks out of work because of the pandemic.”

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Over the past year, fears of contracting the coronavirus led many rideshare drivers to find other jobs, while riders looked to find other means of transportation. 

According to the Washington Post, rideshare demand was down 75 percent in the United States in the early months of the COVID-19 pandemic. But with many states reopening as vaccination rates steadily rise, some rideshare companies are finding that there aren’t enough drivers to chauffer the many customers newly re-flooding rideshare apps. The problem is now causing some users to experience longer wait times and higher fares. 

Additionally, new research shows that as the pandemic may have stopped people from riding in an Uber or Lyft, it certainly didn’t stop anyone from ordering food for delivery. rideshare drivers also turned to food delivery, as demand for delivered meals and groceries exploded and social distancing became the norm.

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Uber released its first-quarter earnings last month, and the data shows a nation that turned to food delivery more so than ever before. The company’s food delivery service, Uber Eats, made up roughly 60 percent of its profits during the pandemic. In 2019, Uber rides made up 80 percent of profits for the company. 

So why the high price for a ride? Goldberg says it may be used to help bring drivers back to the rideshare apps. 

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By offering drivers record high wages, paid for by the customers, Uber and Lyft are hoping to attract hesitant drivers. 

Uber and Lyft are now charging customers surge prices in place of regular prices, and offering drivers record wages, which Goldberg says is a good way to lure drivers back.

“They’re starting to incentivize with bonus payments to get that pool of labor back in, so, I do see more Uber and Lyft drivers returning to work at these higher surge pricing levels.”

The Washington Post reports that over 60 percent of rideshare demand is back the way it was before COVID-19, and Uber says its seen a 25 percent increase since February in new drivers going through its onboarding process.

Uber also recently announced a $250 million incentive program to pay current drivers more, including a $1,000 re-signing bonus to incentivize former drivers to return.

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Editor’s note: The video in the player above is from a story published on Feb. 5, 2021.

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