The Daily Update: Taximageddon

One headline that we never thought we would see flash across our screens here at SSC is that of Uber’s struggle with a shortage of drivers. In New York the problem is so bad that Uber is spending USD250mln on temporary bonuses to get more drivers on the road. Fewer drivers means higher prices, with prices up by nearly 50% according to some estimates. Here in London some have noticed that some Uber rides are costing more than the little black buses now. In New York those Uber drivers that are working are earning as much as $40 per hour, compared with $25 an hour at the start of the year.\

Sunny Madra, a Ford executive, recently said on social media that after spending 20 mins trying to hail a yellow cab at JFK airport he called an Uber. His ride to Midtown Manhattan, about 19 miles, cost him $249, just $13 less than his flight from California to New York.\

The reasons for the reluctance of Uber drivers to return to work are varied. In the US many believe that unemployment benefits are too generous, which were extended to the gig economy, so many are happy to take the money, at least until that stops in September. Also demand for other types of gig economy workers has risen. With takeaway, grocery and parcel deliveries exploding during the pandemic, many feel it safer and easier to deliver goods rather than people, especially the drunk ones.\

However, Uber said it is seeing drivers return. Last week more had signed up towards the end of May than at any other point in the year so far. As the unemployment benefits expire in September, Matthew Daus, the former chairman of the Taxi and Limousine Commission, believes New York could see ‘taximageddon’ in Q3 with a surge of drivers returning. As he said ‘I fear that there’s going to be a ton of vehicles in the streets searching for work and there’s not going to be enough work until the holidays at least’.