In early 2021, the already expensive rideshare fares in Seattle jumped another fifty percent, to the shock of commuters.
This hike in Uber fares also made taxi rides more competitive. However, what sparked the increase and why are Uber fares so expensive in Seattle?
Uber claims that fewer drivers on their applications, coupled with increased demand from riders, is resulting in a rise in the cost of a ride.
In response to the city’s new minimum-wage regulation for ride-hailing drivers, Uber also boosted its rates by 50% last year in Seattle, resulting in an additional price increase for Uber trips.
Table of Contents
- Is Seattle’s increase in Uber ride prices due to the city’s Fare Share policy?
- What are the opinions of city officials on Uber’s exorbitant prices?
- In Seattle, how much has the price of an Uber ride increased in the last few years?
- Has demand increased for Uber in Seattle?
- What is Uber’s strategy for curbing the increase in fares?
- What are union advocates saying about high Uber fares?
- Is Uber deliberately refusing to hire more drivers in Seattle?
- Is Lyft in the same boat as Uber when it comes to Seattle’s high fares?
- Is the Seattle Uber fare hike helping current drivers?
- How is public transportation easing the burden caused by reduced rideshare drivers in Seattle?
- Do rideshare drivers in Seattle have a favorable opinion of Uber?
- What have rideshare drivers in Seattle started doing instead?
- Is the business of ridesharing sustainable?
- Was profitability an issue for rideshare companies leading up to fare increases in Seattle?
- How much does a Seattle Uber driver make?
In non-surge times, a cab ride from the city center to the airport used to cost $35–$40. Now, it costs $55–$70.
On top of the scarcity of drivers in several metropolitan areas, Michael Wolfe of the industry-funded driver association Drive Forward feels that Seattle’s new Fare Share law is increasing rates.
Participating in Seattle’s Fare Share means that drivers get a base salary as well as benefits and expenses.
The city opened a dispute resolution center for drivers to work out their differences with ride-hailing businesses, which is funded by a 51-cent tax on each ride.
For years, the drivers’ union president, Peter Kuel, has fought tirelessly for a center like this one.
As Mayor Jenny Durkan points out, the city must investigate whether or not the increases are due to Fare Share.
If you have the privilege of contacting a car or purchasing a meal on your mobile, don’t you want to show your appreciation for the driver as well as the household behind it?” Durkan asked.
“No, I don’t think it’s fair for them to be treated unequally.”
As per Rakuten Intelligence, the price of a journey through a ride-sharing app such as Uber or Lyft grew 92% from January 2018 to July 2021.
There has also been a spike in the amount of time it takes for transportation to arrive. There simply are not enough drivers to go around.
Drivers for both Uber and Lyft were approximately 40% under capacity in early July 2021. To get drivers back, firms are investing millions of dollars in bonuses and base rates.
However, these ride-sharing companies may need to do even more to entice drivers back to their services.
Ridership has returned in force, which is great news. In addition to getting vaccinated and seeing loved ones, people want to dine out and have a drink with friends, according to Uber representative Harry Hartfield.
“Not all drivers have returned in the same numbers,” he says.
Uber uses surge pricing whenever demand is higher than the number of drivers in the area, something customers are currently seeing, he said.
Uber CEO Dara Khosrowshahi said at the J.P. Morgan Tech Conference that he wants to slash ride prices.
“In terms of supply, we’re still figuring things out.” Despite the improvements, “We’re not comfortable with the [estimated arrival time] and price levels we’re seeing,” he said.
With the support of $250 million in incentives and bonuses, Uber plans to increase the number of drivers – 33,000 additional drivers entered the platform during the week of May 17th, 2021 according to Hartfield’s estimate.
“It’s going to be a long time before we see a full resumption of traffic.” According to him, the new wage laws in Seattle mean that “much of that price hike is here to stay.”
Workers representing Teamsters Local 117, an advocacy group for rideshare operators, said the businesses’ “desire to appease shareholders” and quarterly profit demands are to blame for the rise in ride-hailing costs.
It’s “smoke and mirrors” to blame price increases on anything else, he added. According to Uber’s most recent earnings report, the venture-backed firm continues to lose money as it expands its client base.
Hartfield denied that price increases were motivated by profit-seeking motives.
Additionally, Welter disputed Uber’s claim that a lack of drivers is prompting pricing increases, saying, “They have drivers pounding on their big doors currently.”
As of December, Mawiir Deng was unable to renew his for-hire license, which had expired three years earlier.
Companies such as Uber and Lyft have responsible for filing driver applications on account of relevant parties per King County policy.
This is the story I get every time I contact Uber,” Deng lamented. “I’ve done everything they’ve asked of me, yet they still won’t.”
Washington’s courts and DMV offices were shut down for a while during the pandemic and several are again functioning at reduced capacity with reduced personnel levels, according to Hartfield.
Similarly, a representative for Lyft blamed the pricing rises on a lack of drivers. Lyft spokesperson Eric Smith said in an emailed statement that the demand for trips began to outweigh the number of available drivers.
It started earlier in spring 2021 as vaccines began to roll out and individuals began to get back on their feet.
In the past several weeks, Uber has added thousands of drivers, and this has already improved the rider experience.
Peter Kuel, who has been driving for Lyft for five years and is head of the driver’s union, says that even when rates rise, drivers are not enjoying the rewards.
While driving from Bellevue, Washington, to Renton, Washington, he learned that the customer had selected the wrong drop-off destination and that he had earned $16 even though the passenger paid Uber $38.
Surge pricing for Uber and Lyft coincides with transportation providers in the Puget Sound region extending operating hours, service schedules, and the number of passengers allowed onboard due to easing pandemic restrictions.
Trains are now arriving every eight minutes during rush hour on Sound Transit, thanks to the restoration of service.
According to King County Metro’s managing director, Bill Bryant, the agency is currently trying to determine whether it can return to pre-pandemic capacity levels for riders.
For the first time since April, Metro has boosted its capacity for passengers by 40%.
A couple was exhausted and hungry after their trip, so they scheduled a $43 Uber from SeaTac to their house in the Leschi neighborhood, which generally costs approximately $30.
The price hikes are “making me want to take Link more,” the wife stated.
According to Ben Valdez, a driver as well as a volunteer organizer for the group Rideshare Drivers United, “The businesses don’t look at us as human beings and they simply regard us as profit.”
One driver says once things began slowing down, he barely earned $85 over a 12-hour workday.
According to Uber’s website, drivers can earn anything from $22 per hour in Orlando to $37 hourly in New York City.
Stimuli and rewards for drivers are plentiful at Lyft. However, the services provided by corporations are insufficient for individuals who are still dependent on ride-sharing platforms to make a living.
As a result, many drivers, such as Chad Polenz, the author of Chad the Gig Economist, have turned their attention to food delivery, which is becoming increasingly popular.
It was “like making $200 a day, simple,” for Polenz, after he learned about Amazon Flex, Doordash, and InstaCart.
However, despite Uber’s ride-sharing revenue decreasing by 43 percent between 2019 and 2020 (according to its 2020 yearly results report), its delivery revenue climbed by 179 percent over that period.
The lack of drivers raises doubts about the viability of the ride-sharing business model. As a result, neither firm (Uber nor Lyft) has ever maintained a profit and instead has suffered enormous losses as compared to the majority of other publicly traded corporations.
Before the pandemic, Uber lost $6.77 billion in 2017 and $8.51 billion in 2019. According to an adjusted EBITDA basis, Lyft lost $1.75 billion last year and $2.60 billion in 2019, but last quarter it became profitable for the first time.
Even before the pandemic, when Uber and Lyft were rapidly expanding, profitability was a challenge for these companies.
To entice new users, these ride-sharing companies were subsidizing the cost of rides by offering promotions, discounts, and even cutting the cost of rides.
As a result, a portion of the funds earned by these firms went into lowering the cost of rides and ensuring that drivers were satisfied with their wages.
The bottom line is more important for Lyft and Uber now that they are publicly traded firms.
According to Indeed, an Uber driver in Seattle can expect to make $39,530 a year, 17% less than the nationwide average.
Nine data points from employees, users, and Indeed job listings in the past 36 months were used to calculate salaries.
However, it should be noted that these are rough estimates based on third-party information.
Depending on where you live, the state’s minimum wage may be higher or lower than what drivers get paid.