Open thread June 21, 2019 Dan Crawford | June 21, 2019 7:45 am Tags: open thread Comments (2) | Digg Facebook Twitter |
Uber subsidizing 40% of fare. To break even Uber would have to raise prices overall 66% (40 down = 66 up). That would not include anything for the drivers — just cancel Uber’s red ink.
For drivers to get their 20% of a cancel-red-ink fare increase, 66% would have to reflect 80% of the overall raise. 66% divided by 4 = 16.5%. 66% + 16.5% = 82.5% fare increase.
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Surge pricing would have to be lower — leading to higher overall pricing — assuming Uber could hold on to its entire customer base — I leave it to your imagination.
Uber’s Path of Destruction
By Hubert Horan
“Most taxi demand is low-income; higher fares would shrink traffic and reduce utilization. Taxi demand is sociologically bipolar: 55 percent of demand comes from people earning less than $40,000 per year while 35 percent comes from people earning more than $100,000.10 Demand from lower-income people is driven by access to jobs in areas (or at times of day) when transit service is poor or nonexistent. Given the current income distribution of riders, any attempt to balance supply and demand will either drive lower-income passengers out of the market or result in wealthy customers being charged less than they might be willing to pay. Uber does not have the lower cost structure needed to improve service while keeping fares low, and apparently realizes that only a small portion of the market is willing to pay fares that would cover the true cost of its service. Higher prices would also reduce vehicle utilization and destroy any notion that Uber’s business has exceptional growth potential.”
All of which means Uber may have no prospects of becoming a decent paying employer — no matter how much the American labor market changes.
Only 4% of Uber drivers remain on the platform a year later
Come to think of it: these numbers prove that Uber couldn’t stay afloat ever if they didn’t have to pay drivers — but they will have to have human-watch drivers even in driverless cars — at least for many years — at minimum wage. Ha!