Our member drivers enjoy driving you around; they love meeting new people and sharing stories. In February 2016, however, Uber unilaterally, and without any kind of consultation with drivers, cut fares by 15% in Perth and 20% in Queensland. As a rider, this means a great deal for you right? Wrong! Before I can explain why though, I need to explain what this means for drivers…
Let’s look at an example fare to start off with. Taking an average ride of 8kM, taking 16 minutes, and which costs the rider $15.60; the driver receives $11.06 after Uber’s commission and GST. Optimistically, a driver could possibly complete 3 such trips in an hour, plus at least an additional 1/3 as many kM without a paying rider in the car (on the way to a pickup, or waiting for a job). So, based on these numbers a driver takes home $33.18 for 32kM of driving.
The ATO says it costs $0.66 per kM to run a vehicle, which amounts to $21.12 for the 32kM traveled, which thus means a driver earns $12.06 pre-tax income per hour – well below minimum wage.
This is, as I mentioned, an optimistic scenario. Often, we drive for a considerable period without getting a job or get sent jobs that are 15-20 minutes away, and when we get there a rider simply wants to go around the corner for a minimum fare, which effectively means we are subsidizing your ride. In reality, most drivers now report pre-tax income of between $5 and $10 per hour.
These low fares are unsustainable for drivers and in many cases, it simply isn’t worth working for such little money. But of course, many drivers have taken out finance on vehicles based on their earning expectations from the previous rates of pay, which means they are now committed to driving just to pay their lease or loan.
So, other than hopefully having a moral objection to the exploitation of your driver, how does this affect you as a rider?
Well, You may have noticed a lack of water and mints lately, but most importantly, because so many drivers are turning off during slow periods and being more strategic about how and when they choose to drive, there has been a lot more (and bigger) surges, meaning that the cheaper prices are actually resulting in riders paying more on many occasions.
Whilst drivers, of course, love picking up a juicy surge fair, we know that it’s not economically viable for riders in the same way that crazy low fares are not economically viable for drivers.
We would like to see the same fare structure across Australia, matching the rates in Sydney, which are the only sustainable rates in the country currently. This would get drivers back on the road and earning a fair rate of pay, and reduce the instances of surge to all but the busiest times.