Uber and Lyft struggle with driver shortage as demand soars

Portrait of driver wearing protective medical mask

Around this time last year, Uber and Lyft saw demand plunge for their flagship ride-hailing services as fear of the coronavirus kept most people at home. By May 2020, Uber’s ride bookings had plunged 80 percent from their level a year earlier.

But now, as people get vaccinated and some states are relaxing public health restrictions, demand for rides is soaring. And Uber and Lyft are struggling to recruit enough drivers to meet their needs.

“It takes forever to get an Uber now,” a man outside Boston’s Fenway Park told the local NBC 10 television station. Another man who had just completed an Uber trip to Fenway said he’d waited 16 minutes for his driver to arrive.

Uber is stepping up recruitment

It’s not surprising that drivers would be in short supply. The risks of catching COVID haven’t gone away, so people are still taking a health risk when they drive passengers. At the same time, the economy is bouncing back, bolstered by the last year’s high saving rates and lavish stimulus spending. Many people who were working as Uber or Lyft drivers in early 2020 have moved on to other jobs.

More fundamentally, recruiting drivers takes time and effort. Uber and Lyft spent billions of dollars building up their pool of drivers in the first place.

Uber says that as a result of driver shortages, drivers can make a lot more money now than they did before the pandemic. One of the best-paying cities is Philadelphia, where Uber says drivers are making an average of $31 per hour. Other high-paying cities include Chicago (almost $29/hour), Miami, and Phoenix (both about $26/hour).

These figures include the time drivers are waiting between rides, but they don’t include expenses, which Uber says average around $4 per hour.

On Wednesday, Uber announced plans to sweeten the pot further by offering drivers incentives worth $250 million.

Some regions face specific challenges

While ride-hailing companies are facing shortages across the country, some regions have been hit especially hard. Boston is one of them. Uber says that Boston-area riders are suffering particularly long wait times because Gov. Charlie Baker has declared a state of emergency that effectively prohibits Uber from using surge pricing. Surge pricing helps to balance supply and demand not only by paying drivers more but also by encouraging riders to wait or take alternative forms of transportation.

Meanwhile, in California, Uber says it’s reconsidering features that let drivers in the Golden State see ride destinations and set their own prices. The changes were adopted early last year as part of Uber’s effort to convince the courts that its drivers were independent contractors rather than employees. But Uber recently told the San Francisco Chronicle that the system wasn’t working well—that drivers were cherry-picking the most lucrative rides and declining the rest. That exacerbates the already poor user experience created by the driver shortage, since it means that customers with less lucrative rides may struggle to match with a driver.