If you’re out there driving with Uber or Lyft you’ve probably felt how much business has picked up in the past couple of months. Demand has soared as vaccination rates increase and lockdowns ease, which spurred the ridesharing giant to commit $250m to driver bonuses¹ back in April. Below, we’ll dig into where that money is going and how much of it has made it to your pockets here in Seattle.
First, what’s driving the increase in demand?
In King County, 72% of residents now have at least one vaccination. These trends are in line with other major metro areas and are leading to the easing of restrictions on gatherings, restaurants/bars and travel. This means more people emerging from their homes and turning to ridesharing options. Uber cited a 9% increase in national rider bookings during March while Lyft reported a 7% increase in revenue.
Where did all the drivers go?
It’s no secret that demand for ridesharing plummeted across the world in 2020. Given Seattle hourly earnings on Uber/Lyft declined by 26% last year from Q1 to Q2, many workers churned off the platforms due to a combination of financial and/or safety concerns. How many of these workers ended up on alternative gig platforms like food or grocery delivery is difficult to tell, but the exodus was real and it’s going to be a challenge for the ridesharing giants to lure workers back post-pandemic.
So what does that mean for driver earnings?
Even before the “stimulus,” rideshare earnings for both Uber and Lyft had steadily increased since the beginning of the year. Uber drivers saw a whopping 38% increase in hourly earnings from January to April while Lyft drivers have seen a strong, but more modest 22%. Lyft has continued to see an uptick so far in May, coming in at $33.86/hr v. Uber’s $35.43/hr - slightly declining from its April peak.
Uber’s second (and now largest) business line, UberEats, has also seen a noticeable uptick in hourly earnings even as the pandemic begins to come to an end. From January to April workers saw their earnings increase by 17% to over $25/hr, which we’ll see below was primarily driven by a big increase in incentives.
The stimulus is largely getting deployed to food
While earnings have increased across all three platforms in the first five months of the year, incentives or bonuses have had a greater impact for certain platforms over others. Uber’s ridesharing business has actually seen a declining average incentive per trip - down to ~$1.70/trip the last few months in contrast to January when they were spending $3.28/trip. Lyft has been very consistent with their incentives, keeping them more or less stable at ~$1/trip through the first part of the year.
The platform that has really seen the bulk of the $250m appears to be Uber’s burgeoning delivery business; Uber Eats.
Amongst the Solo community, we’ve seen UberEats workers take home a 5x increase in bonuses/incentives from January to April - peaking at $2.75/job last month. This is in addition to the $600 referral bonus the company had been running for new drivers in the Seattle market. Even as restaurants open up for in person service, it appears food delivery continues to be a major driver of growth for Uber that isn’t immediately going away.
Big increases in incentives to start the year, but will it last?
The $250m “stimulus” was a big number for Uber to tout as they look to lure back workers to their platform post pandemic. It’s becoming more obvious that Uber isn’t just a ridesharing platform anymore and that they’re continuing to spend on the supply side to keep up with eater demand and the food delivery leader, DoorDash. Lyft has taken a more muted approach - allowing demand to carry driver earnings and subsequently hoping that alone brings drivers back.
As a worker, take advantage of these opportunities to earn more with platforms that are driver constrained (assuming you’re comfortable with people riding in your car). Uber’s current shortage is a great opportunity to diversify your portfolio of jobs and ride one of the highest earning platforms available in the city at the moment. While Uber has begun to pull back incentives, the increasing rideshare demand is anticipated to continue and food delivery doesn’t seem to be slowing down either.
At Solo, we’ll continue to track the trends and moves of these companies and what it means for workers in the coming weeks. In the meantime, check out Solo’s Earnings Forecast tool to better plan your work day, earn with certainty.